Labour Account Australia methodology

The purpose of the Australian Labour Account is to support macro-economic analysis requiring data on peoples’ participation in paid employment and related production over time. Its development provides an opportunity to significantly improve the quality of aggregates such as the number of jobs occupied within each industry, measures of hours worked, and labour productivity growth.

The concepts and definitions underlying the Australian Labour Account are built on International Labour Organisation (ILO) fundamentals, and expands them to ensure consistency with the System of National Accounts (SNA08). The result provides a set of core macro-economic labour market variables derived through data integration, with both an industry focus and time series dimension.

The Australian Labour Account does not include analysis of persons, jobs, hours and payments by age or gender, as for most policy purposes these needs are adequately met from the existing Labour Force Survey, labour demand business surveys and Census publications produced by the ABS.

The Australian Labour Account, in essence, is a system for compiling a set of core labour market statistics from existing data. The output is a set of tables that provide a systematic and consistent view of the core variables over time.

Labour Account statistics are arranged in four "quadrants": Jobs, Persons, Labour Volume and Labour Payments.

In the compilation process, residual differences remain between the estimated number of filled jobs based on business sources and those derived from household sources. These differences remain after making adjustments for known conceptual and scope differences. They represent measurement error in the respective sources, and are reflected in the "statistical discrepancy" series highlighted in the "unbalanced" tables. In the balanced tables, separate business and household estimates have been replaced by a single "filled jobs" estimate. Consequent adjustments are also made to estimates of employed persons, hours worked and hours paid for. The harmonised, or "balanced", filled jobs series are based on a more detailed industry by industry investigation of the underlying sources of measurement error. This process is ongoing, and the balanced tables reflect the current state of this work. Affected series are likely to be subject to further revision.

It is important to note that measurement error refers to the unavoidable sampling, non-sampling and modelling uncertainty, rather than a mistake or omission.

Accounting conventions are necessary to define the scope and treatment of activities that occur within the economy. The production and residency conventions adopted in the Australian System of National Accounts (ASNA) are used in the Australian Labour Account to determine the scope of activities covered, and the size of the economy measured.

The scope of the Australian economy defined by these conventions embraces the activities of all enterprises resident within Australia's economic territory engaged in the production of goods and services, which fall within the scope of the National Accounts production boundary. The Labour Account relates to the employment of all persons in jobs created by those enterprises. In this context:

• an enterprise is a productive undertaking maintained and controlled by one or more households, corporations or "quasi-corporations" that are resident in Australia's economic territory. Enterprises include (for example):

                                  i.   business operated by unincorporated self-employed trades persons,
                                  ii.  family operated farms,
                                  iii. large corporations such as the major commercial banks and supermarket chains,
                                  iv. Government departments and agencies like Centrelink and the ATO, and
                                  v.  schools and hospitals operated by the state, or by religious organisations and charities.

• the National Accounts production boundary embraces the production of all goods and services, with the exception of services produced by household controlled enterprises solely for consumption by the household itself. This exclusion relates to (for example) the cooking of meals for household members, household washing and cleaning and care of dependents. However, the "shelter services" provided by owner occupied dwellings are included within the production boundary.
• Australian economic territory includes all geographies under the control of the Australian Government, i.e. the Australian mainland, off-shore islands, Antarctic territories, Australian embassies and military establishments in other countries, and Australia's exclusive maritime economic zone. It excludes foreign embassies and military establishments in Australia.
• an enterprise is considered "resident" if the "economic interest" of its controlling institutional unit (household, corporation or quasi-corporation) is centred in Australian economic territory.
   

The main objective of the Australian Labour Account framework is to incorporate labour input aggregates (persons, jobs, hours) which describe supply and demand in the labour market, as well as labour related payments (as income and as costs). The framework covers all types of employment including employees, self-employment and contributing family workers.

The Australian Labour Account provides a conceptual framework through which existing labour market data from different sources can be confronted and integrated, with the aim of producing a coherent and consistent set of aggregate labour market statistics.

The Australian Labour Account framework has been designed to conceptually align with the ASNA framework. This enhances compatibility with national accounts and productivity estimates.

Household side and business side data are confronted to help identify and address gaps and inconsistencies in the source data sets.

Data confrontation is the process of comparing data that has generally been derived from different surveys or other sources, especially those of different frequencies, in order to assess their coherency, and the reasons for any differences identified.

The Australian Labour Account framework has four distinct quadrants: Jobs, Persons, Labour Volume and Labour Payments. The four quadrants are linked by a set of identity relationships, which the aggregate statistics must satisfy.

Some relationships in the framework are direct:

• Employed Persons = Number of Main Jobs (at the total economy level)
   

Other relationships are considered indirect, such that the relationship is based on an average or ratio measure:

• Average Hours Worked per Job = Hours Actually Worked/Filled Jobs
   

Adjustments for scope and conceptual differences between data sources are required in compiling the Australian Labour Account.

Scope adjustments are made in each of the four quadrants in the Australian Labour Account to ensure coherence.

Filled Jobs (business sources) is mainly based on summing estimates from two different business surveys. Data from a third source is added to account for employment in an industry division that is outside the scope of the primary sources. The following scope adjustments are made:

• add the number of persons from known industries excluded from primary business survey sources,
• add the number of persons employed in the permanent defence forces,
• add the number of unpaid contributing family workers,
• add the number of child workers who do not work for an employer as they are excluded from business surveys, and
• subtract the number of persons from specific industry subdivisions duplicated in primary sources to avoid double counting.
   

Scope adjustments made in one quadrant may be applied to another quadrant, and flow through to a third quadrant, based on the identity relationships.

Filled Jobs (household sources) is based on the number of jobs held by people employed in main jobs and secondary jobs sourced from the LFS, which is a household survey. Scope adjustments made to Filled Jobs (household sources) are similar to those made to Filled Jobs (business sources), to align the employed person estimates from the LFS with production boundary and residency concepts present in the business surveys. The following scope adjustments are made to Filled Jobs (household sources) to address LFS scope exclusions:

• add the number of persons employed in the permanent defence forces,
• add the number of child workers,
• add the number of main jobs held by non-resident visitors to Australia,
• add the number of secondary jobs held by non-resident visitors, and
• subtract the number of jobs held by Australian residents working in Australia for overseas businesses or organisations.
   

A job is a set of production related tasks that can be assigned to and undertaken by a person, and for which they are usually, but not necessarily, remunerated either in money or in kind. Jobs are created by enterprises. A "filled job" exists where an enterprise establishes explicit or implicit employment contracts with individual persons to undertake the job. Estimates of movements in the number of jobs in the economy provide a measure of labour market performance and capacity.

Defining a job is difficult. In the language used in national accounts, a job is an economic activity through which people engage in production. However, a dictionary definition is perhaps easiest to comprehend: a task or piece of work, especially one that is paid.

In the context of the Australian Labour Account, a job is a set of production related tasks that can be assigned to and undertaken by a person, and for which they are usually, but not necessarily, remunerated either in money or in kind.

The Jobs quadrant in the identity relationship diagram provides data on the number of jobs, both filled and vacant, including the number of main jobs and the number of secondary jobs.

In the "Balanced" Labour Account tables, employment estimates from business surveys are reconciled with employment estimates from household surveys to produce a single harmonised Filled Jobs time series. Detailed information on data sources and methods used to compile Jobs data is in the ABS Labour Account companion publication Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0).

The size of the labour force is a measure of the total number of people in Australia who are willing and able to work. It includes everyone who is working or actively looking for work - that is, the number of people employed and unemployed together as one group.

The official measure of the population of Australia is based on the concept of usual residence. This concepts refers to all people, regardless of nationality, citizenship or legal status, with some exceptions. By convention, persons are considered to be "usually resident" if they have been or intend to remain in Australia for at least 12 out of 16 consecutive months.

The scope of the population in the Australian Labour Account includes all persons who contribute to Australian economic activity (as defined by the production and territory conventions of the ASNA), irrespective of their residency status.

There is not always a one-to-one relationship between jobs and people, insomuch as a job can be vacant, or one person can have more than one job. Therefore, the number of jobs in an economy will be greater than the number of persons employed.

Industry estimates for the unemployed population are based on industry of last job worked (within the last two years) from the Labour Force Survey, and do not necessarily equate to the industries in which the unemployed are currently seeking work, nor do they include those who have never held a job previously. As such, care should be exercised when interpreting estimates of unemployed persons (and therefore the total labour force) on an industry basis.

The Persons quadrant provides statistics on persons employed, persons looking for and available for employment, and persons with potential for further employment. Detailed information on data sources and methods used to compile Persons data is in the ABS companion publication Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0).

The data item Labour Account labour force total is the sum of Labour Account employed persons and Labour Force Survey (LFS) unemployed persons. Labour Account employed persons includes adjustments to the Labour Force Survey employed persons statistic to account for coverage and conceptual differences between the SNA based Labour Account and the LFS. No parallel adjustments have been made to the Unemployed total number which is taken directly from the Labour Force Survey.

The data item Labour Force Survey unemployed persons are classified by Industry according to their last job held.

The data item Labour Force Survey underutilised persons include Labour Force Survey underemployed persons plus Labour Force Survey unemployed persons.

The data item Labour Force Survey underemployed persons are classified by industry according to their main job held.

The Labour Volume quadrant describes the relationship between the hours of labour that are supplied by individuals and the hours of labour that are used or demanded by enterprises. It quantifies the number of hours worked by persons in all jobs. These data have a direct link to National Accounts and productivity statistics, as they are measures of labour input used in the production of goods and services.

Measuring changes in the level of hours worked for different groups of employed persons is important in order to monitor working and living conditions, as well as analysing economic cycles. Information on hours of work enables various analytical insights such as: classification of employed persons into full-time and part-time status; the identification of underemployed persons; and the creation of aggregate monthly hours worked estimates.

The Labour Force Survey is the primary source for household side hours worked data. Statistics relating to hours paid are based on business survey data, namely the ABS Survey of Employee Earnings and Hours, Australia (cat. no. 6306.0). Detailed information on data sources and methods used to compile Labour Volume data is in the ABS companion publication Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0).

The Average hours worked per job item is derived by using a flow measure (hours actually worked) divided by a stock measure (filled jobs at the end of the quarter). Users are advised to take account of conceptual and scope differences when comparing these data with other estimates measured at the same point in time, such as average weekly hours.

The data item Available hours of labour supply is the sum of Labour Account hours actually worked in all jobs and Hours sought but not worked. Labour Account hours actually worked in all jobs includes adjustments to the Labour Force Survey hours worked number to account for coverage and conceptual differences between the SNA based Labour Account and the LFS. No parallel adjustments have been made to the Hours sought but not worked number, which is taken directly from the Labour Force Survey.

The Labour Payments quadrant accounts for the costs incurred by enterprises in employing labour and the incomes received by people from their labour provision. It can be described as the cost of labour, and reflects the interactions between jobs, persons and labour volume (hours worked).

The measure of total labour costs is based on the concept of labour as a cost to employers and includes wages and salaries, employers’ social contributions (typically superannuation and/or social insurance payments), and all other general employee costs borne by the employer such as training costs, use of recruitment services, payroll tax and so on. Any government subsidies, rebates or allowances for wage and salary payments paid to employees are deducted from employers’ labour costs.

Labour Payments data are primarily sourced from underlying data from two ABS National Accounts publications: Australian System of National Accounts (cat. no. 5204.0) and the Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0). Detailed information on data sources and methods used to compile Labour Cost data is in the ABS companion publication Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0).

The Average labour income per person item is derived by using a flow measure (total labour income) divided by a stock measure (employed persons at the end of the quarter). As such, users are advised to take account of conceptual and scope differences when comparing these data with other estimates measured at the same point in time, such as average weekly earnings.

After adjusting for conceptual and scope differences between data sources, a statistical discrepancy remains between the number of filled jobs as reported by businesses and the number of filled jobs as reported by households.

These discrepancies represent the cumulative impact of data source error, including survey error and modelling error. Survey error includes both sampling error and non-sampling error.

Sampling error is the predictable variability arising from the use of samples, rather than a complete enumeration of the populations of enterprises and households (i.e. a census). It refers to the difference between an estimate for a population based on data from a sample and the 'true' value for that population which would result if a census were taken.

Non-sampling error is caused by factors other than those related to sample selection. Non-sampling error can happen at any stage of a survey and can occur in non-survey data sources. An example of non-sampling error could be missing data or misclassification in government administrative records used directly in the Australian Labour Account. Error could occur in the industry classification of sponsored visa holders, or in the reported number of persons in the permanent defence forces.

Modelling error reflects errors embedded in the modelling assumptions used in the Australian Labour Account, for example in assuming that the proportion of children aged under 15 years who work has remained constant since 2006, or in assuming that quarterly Business Indicators, Australia (cat. no. 5676.0) employment movements accurately reflect quarterly change in the latest available annual data.

Data are not available for earlier parts of some series of the Australian Labour Account, and missing data have been estimated through applying movements or proportional distribution from a conceptually related series to observed Australian Labour Account data. Data estimated in this way should not be considered to be as statistically robust as data based on observed and comparable survey estimates.

In compiling the Labour Account, residual differences remain between the estimated number of filled jobs based on business sources and those derived from household sources. These differences remain after making adjustments for known conceptual and scope differences. They represent measurement error in the respective sources, and are reflected in the "statistical discrepancy" series highlighted in the "unbalanced" tables. In the balanced tables, separate business and household estimates have been replaced by a single "filled jobs" estimate. Consequent adjustments are also made to estimates of employed persons, hours worked and hours paid for. The harmonised, or "balanced", filled jobs series are based on a more detailed industry by industry investigation of the underlying sources of measurement error. This process is ongoing, and the balanced tables reflect the current state of this work. Affected series are likely to be subject to further revision.

Balancing decisions for Agriculture, forestry and fishing; Mining; Manufacturing; Electricity, gas, water and waste services; Construction; Wholesale trade; Retail trade; Accommodation and food services; Transport, postal and warehousing; Information media and telecommunications; Financial and insurance services; Administrative and support services; Professional, scientific and technical services; Public administration and safety; Education and training; Health care and social assistance; Arts and recreation services were mostly business survey sources. Balancing decisions for Rental, hiring and real estate services and Other services were mostly household survey sources.

In original terms the discrepancy between household sources and business sources was 312 thousand jobs, or 2.2% of the household estimate, in the March quarter 2020.

Adjustments made to filled jobs through this process flow through to two other quadrants in the Australian Labour Account: Persons and Labour Volume.

The number of employed persons is adjusted proportionally with adjustments to filled jobs, after taking account of the level of multiple job holding in the particular industry.

Any adjustments made to filled jobs on the household side has a corresponding adjustment to the number of hours worked. This adjustment is calculated by multiplying the adjustment to filled jobs, by the average hours worked in each industry.

Any adjustments made to filled jobs on the business side has a corresponding adjustment to the number of hours paid for. This adjustment is calculated by multiplying the adjustment to filled jobs, by the average hours paid for in each industry.

More detailed information on the methods for deriving seasonally adjusted and trend estimates are described in Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0).

Seasonal adjustment is a statistical technique that attempts to measure and remove the effects of systematic calendar related patterns including seasonal variation to reveal how a series changes from period to period. Seasonal adjustment does not aim to remove the irregular or non-seasonal influences, which may be present in any particular data series. This means that movements of the seasonally adjusted estimates may not be reliable indicators of trend behaviour.

It is important to note that the methods used in seasonal adjustment do not force the sum of the estimates for each quarter of a year to equal the original annual total.

Seasonally adjusted estimates have seasonal effects removed, but they still contain the irregular elements, which may be of particular interest when analysing industry data. The Labour Accounts methodology and confrontation framework has addressed some of the quarterly sampling variability that may be seen in a single survey source. As a result, the industry analysis in this publication has a greater focus on seasonally adjusted data, with the remaining irregular movements being reasonably indicative of the actual state of the labour market, rather than measurement error.

For analysis of the underlying behaviour of the labour market, the ABS recommends using trend estimates. These are produced using a statistical smoothing technique, in order to dampen the irregular element.

For more information about ABS methods for deriving trend estimates and an analysis of the advantage of using them over alternative techniques for monitoring trends, see Information Paper: A Guide to Interpreting Time Series - Monitoring Trends (cat. no. 1349.0) or contact Time Series Analysis by email at Time.Series.Analysis@abs.gov.au.

For those who are less familiar with national accounts, as well as other newcomers to the field of national accounting, the United Nations provides an introduction to some basic concepts and structures of the SNA National Accounts: A Practical Introduction. This information is freely available from the UN Statistics Division web site. [https://unstats.un.org/unsd/publication/SeriesF/seriesF_85.pdf].

Eurostat, the statistical office of the European Union, provides similar introductory information on national accounts with its Building the System of National Accounts website[http://ec.europa.eu/eurostat/statistics-explained/index.php/Building_the_System_of_National_Accounts] as does the OECD’s Understanding National Accounts(http://www.oecd-ilibrary.org/economics/understanding-national-accounts_9789264027657-en).

Detailed information on the Australian System of National Accounts is available in the ABS publication Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0).

Detailed information on the Australian Labour Account is available in the ABS publication Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0).

Detailed information on the labour force and labour force statistics is available in the ABS publication Labour Statistics: Concepts, Sources and Methods (cat. no. 6102.0.55.001).

The Australian Labour Account provides a set of core macro-economic labour market variables derived through data integration, with both an industry focus and time series dimension.

It builds on the International Labour Organisation (ILO) fundamentals and expands them to ensure consistency with the System of National Accounts (2008 SNA). The Labour Account also extends the analytical utility of National Accounts data, through providing a labour market-specific perspective.

The experimental Australian Labour Account has been developed to provide a framework for integrating data from a number of sources (including household survey, business survey, and administrative data). The result is internally consistent estimates of key labour market variables, which more effectively enable the description and analysis of the state and dynamics of the Australian labour market. These core variables can help users make sense of seemingly inconsistent labour related data, which are often based on different reference periods, populations, concepts, definitions and methodologies.

These inconsistencies are magnified when data are disaggregated by industry or sector, or in analysis requiring the combination of data from both business and household sources, for example combining output and hours worked by industry to derive industry productivity growth rates. There is a risk that users may draw inappropriate conclusions from the use of different labour statistics without an informed understanding of which data to use in which circumstances.

For example, consider the following questions:

It depends on when you ask this, who you ask, and how you ask the question.

Based on the answers provided by "responsible adults" from the households where workers live, the basic approach used in the Labour Force Survey, there were 12.8 million people employed in Australia in 2018-2019.

Based on the answers provided by "responsible representatives" of businesses and other enterprises where they work, the approach adopted in business surveys, there were 13.6 million filled jobs in Australia in 2018-2019.

First, they are counting different things - for example, the Labour Force Survey asks about a person’s main job to identify employed and unemployed people, and people not in the labour force. However, the business surveys measure the number of "filled jobs", not the number of employed people. A person holding two jobs will be counted twice in a business survey, once by each employer.

When people in households were asked how many jobs they have, they told the ABS in 2018-2019 they had 13.63 million. Businesses reported they had 13.62 million filled jobs, which was 8,500 (or 0.1%) less than reported by households in the Labour Force Survey.

The second reason for the difference is that, in line with international standards, not everyone who has a job is in the scope of the Labour Force Survey. Similarly, some forms of work are not captured by reporting businesses.

People whose main job is in the permanent military forces are not reported by either businesses or households, and household representatives are not asked to report on jobs held by people intending to stay in Australia for less than 12 months. No employment by children under 15 years, either paid or unpaid, is reported by households. In addition, unpaid contributions of work to a family business or farm by family members of any age are not reported by businesses. If the ABS adjusts for these known differences, then the number of filled jobs reported by businesses would be raised to 13.8 million, and the number of filled jobs reported by households would increase to 14.2 million.

The remaining difference of 427,000 jobs, or 3.0% of the household based estimate, reflects the unavoidable measurement limitations related to measuring filled jobs and employment.

• Likely sources of measurement error in household based data include lack of knowledge about the jobs held by household members on the part of the person responding to the Labour Force Survey.
• On the business survey side, there is no single ABS business survey that collects employment data from businesses across the whole economy, and business based estimates of filled jobs are compiled from multiple sources, potentially resulting in a larger overall total measurement error than in any of the individual sources.
• Both business and household surveys are also subject to sampling variability. Divergences can further arise when estimating missing data, or modelling is required to offset data gaps and lags in the supply of information.
   

Based on hours worked reported by households, and after adjusting for defence force personnel, short-term visitors and children: 21,591 million hours were worked in 2018-2019. Businesses reported the number of "hours paid for" at 22,836 million hours. These numbers imply that hours paid for but not worked, mainly various forms of paid leave, exceeded hours of unpaid overtime (hours worked but not paid for). This pattern was consistent over time at a whole of economy scale.

The Labour Account provides a conceptual framework through which existing labour market data from diverse sources can be confronted and integrated, with the aim of producing a coherent and consistent set of aggregate labour market statistics.

The Labour Account helps address data coherence by:

• bringing together related labour statistics from multiple sources in a single set of tables;
• applying a consistent set of concepts across the data to explore statistical anomalies;
• making transparent adjustments to data to offset conceptual and scope differences; and
• making further informed and documented data adjustments to provide a balanced set of labour statistics.
   

The Labour Account consists of four quadrant tables: jobs, persons, volume and payments (see figure 1). Data in each table are available annually for 86 industry subdivisions, and quarterly for 19 high level industry divisions.

The Jobs quadrant provides statistics on numbers of filled jobs derived separately from business and household sources, plus data on vacant jobs to provide a total number of jobs in the economy.

The Persons quadrant includes statistics on numbers of employed persons, together with data on numbers of unemployed and underemployed persons.

The Labour Volume quadrant provides statistics on hours paid for (derived from business data) and hours worked (from household sources), plus data on additional hours of work sought by unemployed and underemployed persons.

The Labour Payments quadrant provides statistics on labour income and employment costs.

The Labour Account is able to combine data from the jobs, persons, volume and payments tables to calculate average hours worked, average remuneration (per person and per job), and average labour costs per job.

The scope of the Australian Labour Account is consistent with that of the national economy, as defined in the Australian System of National Accounts (ASNA), which follows the international standards set out in the United Nations System of National Accounts. The Labour Account includes all jobs created by enterprises engaged in the production of goods and services that fall within the scope of the National Accounts "production" boundary, operating within Australia's economic territory.

Labour Account employed persons are defined as all people who hold one or more of those jobs. Hours worked and paid for relate to productive activity in those jobs. Labour income relates to earnings derived from employment in those jobs and includes both Compensation of Employees, as defined in the ASNA, and an estimate of the labour related component of Gross Mixed Income. Labour costs relate to net employment related expenditure by businesses incorporating both labour remuneration, employment related intermediate consumption, and employment related net taxes.

The data sources used to compile Labour Account statistics do not always align completely with the ASNA. The household Labour Force Survey, for example, excludes permanent defence force personnel, short-term working visa holders and children under 15 from its count of employed persons, all of whom fall within the scope of the Labour Account and ASNA concept of employed persons. The Labour Account tables include "adjustments" to bridge the conceptual and scope gaps between the ASNA standard and the principal data sources. For example data obtained from the Commonwealth Government are used to "add in" defence force personnel. Commonwealth data on short term visa arrivals and departures are used to estimate the stock of potential employed persons in this category. Labour force participation and employment rates for resident cohorts with similar characteristics are used to estimate numbers of working short-term visitors. These adjustment methodologies are fully documented in the Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0).

Finally, the Labour Account includes balanced estimates of filled jobs, employed persons, hours worked and hours paid for that adjust for the remaining sampling and non-sampling error. These adjustments are based on analysis of data for each industry, making use of employment related statistics on production, taxes, wages and salaries to assess the relative plausibility of various estimates.

The Labour Account provides a time series of estimates of the number of employed persons, the number of jobs, hours worked and the income earned for each industry in one coherent framework. Historically, published statistics on employed persons in each industry have only been available for industry of main job. The expanded scope and additional data sources used in the Labour Account includes data for multiple job holders by industry of second, third and fourth job. For the first time, this enables an industry perspective of the total number of people employed in each industry in a time series. This could be used to better assess policy changes targeting a particular industry, providing a more realistic picture of the number of people impacted by the change.

The provision of time-series data on employment, hours and earnings, that are conceptually aligned with the Australian System of National Accounts data, will help improve macro-economic analysis and forecasting.

Consistent data on employment, hours and incomes will assist in assuring the quality of national accounts production and income data. A better alignment of hours worked with production (gross output and gross value added) at an industry level will improve the reliability of both labour and multi-factor productivity statistics.

The Labour Account is a complement to the existing suite of labour statistics. Users should continue to use the Labour Force Australia (cat. no. 6202.0) for headline employment, unemployment and persons not in the labour force as this is the data suite that is internationally comparable and aligned with International Labour Organisation conventions. If users require detailed dynamics essential for analysis of individual or household characteristics, such as household type, age, sex, income, occupation and educational qualifications, they should use the source data.

The Labour Account should be used for industry analysis of labour growth and performance in terms of people, jobs, hours and income.

Labour Account tables are likely to be of most value to people engaged in the use of labour statistics in macro-economic analysis, forecasting and in policy related research.

The experimental Australian Labour Account has been developed to provide a framework for integrating data from a number of sources including household survey, business survey and administrative data. The result is internally consistent estimates of key labour market variables, which more effectively enable the description and analysis of the state and dynamics of the Australian labour market. These core variables can help users make sense of seemingly inconsistent labour related data, which are often based on different reference periods, populations, concepts, definitions and methodologies.

The Labour Account provides a time series of estimates of the number of employed persons, the number of jobs, hours worked and the income earned for each industry in one coherent framework. Historically, published estimates of employed persons in each industry have only been available for industry of main job. The expanded scope and additional data sources used in the Labour Account include data for multiple job holders by their industry of second, third and fourth job.

For the first time, this enables an industry perspective of the total number of people employed in each industry in a time series. This could be used to better assess policy changes targeting a particular industry, providing a more complete picture of the number of people impacted by the change (see Figure 1).

The Labour Account consists of four quadrants: Jobs; Persons; Labour Volume and Labour Payments (see Figure 2 and 3).

The Jobs Quadrant provides data on numbers of filled jobs derived separately from business and household sources, plus data on vacant jobs to provide a total number of jobs in the economy.

The Persons Quadrant includes data on numbers of employed persons, together with data on numbers of unemployed and underemployed persons (derived from household sources).

The Labour Volume Quadrant provides data on hours paid for (derived from business sources) and hours worked (from household sources), plus data on additional hours of work sought by unemployed and underemployed persons (from household sources).

The Labour Payments Quadrant provides data on labour income and employment costs (from business sources).

The Labour Account combines data from the persons, jobs, labour volume and labour payments tables to calculate average hours worked, average remuneration (per person and per job), and average labour cost per hour worked.

The scope of the Australian Labour Account is consistent with that of the national economy, as defined in the Australian System of National Accounts (ASNA), which follows the international standard set out in the United Nations System of National Accounts.

Labour Account tables are likely to be of most value to people engaged in the use of labour statistics in macro-economic analysis, forecasting and in policy related research.

It depends on when you ask this, who you ask, and how you ask the question.

Based on the answers provided by "responsible adults" from the households where workers live, the basic approach used in the Labour Force Survey, there were 12.8 million people employed in Australia in 2018 -2019.

Based on the answers provided by "responsible representatives" of businesses and other enterprises where they work, the approach adopted in business surveys, there were 13.6 million filled jobs in Australia in 2018-2019.

First, they are counting different things - for example, the Labour Force Survey asks about a person’s main job to identify employed and unemployed people, and people not in the labour force. However, a person holding two jobs will be counted twice in a business survey, once by each employer. Business surveys measure the number of "filled jobs", not the number of employed people.

When people in households were asked how many jobs they have, they told the ABS in 2018-2019 they had 13.63 million. Businesses reported they had 13.62 million filled jobs, which was 8,500 (or 0.1%) less than reported by households in the monthly Labour Force Survey.

The second reason for the difference is that, in line with international standards, not everyone who has a job is in the scope of the Labour Force Survey. Similarly, some forms of work are not captured by reporting businesses.

People whose main job is in the permanent military forces are not reported by either businesses or households, and household representatives are not asked to report on jobs held by people intending to stay in Australia for less than 12 months. No employment by children under 15 years, either paid or unpaid, is reported by households. In addition, unpaid contributions of work to a family business or farm by family members of any age are not reported by businesses. If the ABS adjusts for these known differences, then the number of filled jobs reported by businesses would be raised to 13.8 million, and the number of filled jobs reported by households would increase to 14.2 million.

The remaining difference of 427,000 jobs, or 3.0% of the household based estimate, reflects the unavoidable measurement limitations related to measuring filled jobs and employment.

• Likely sources of measurement error in household based data include lack of knowledge about the jobs held by household members on the part of the person responding to the Labour Force Survey.
• On the business survey side, there is no single ABS business survey that collects employment data from businesses across the whole economy, and business based estimates of filled jobs are compiled from multiple sources, potentially resulting in a larger overall total measurement error than in any of the individual sources.
• Both business and household surveys are also subject to sampling variability. Divergences can further arise when estimating missing data, or modelling is required to offset data gaps and lags in the supply of information.
   

Based on hours worked reported by households, and after adjusting for defence force personnel, short-term visitors and children: 21,591 million hours were worked in 2018-2019. Businesses reported the number of "hours paid for" at 22,836 million hours. These numbers imply that hours paid for but not worked, mainly various forms of paid leave, exceeded hours of unpaid overtime (hours worked but not paid for). This pattern was consistent over time at a whole of economy scale.

The Labour Account is designed to complement the existing suite of labour statistics. Australia’s official labour force data are derived from the household Labour Force Survey and published in Labour Force, Australia (ABS cat. no. 6202.0), which remains the source of internationally comparable statistics on the labour force, employment and unemployment.

If you require detailed information essential for analysis of individual or household characteristics, such as household type, age, sex, income, occupation and educational qualifications, they should also use Labour Force Survey data.

The ABS has released four publications regarding the Labour Accounts:

• Australian Labour Account: Concepts, Sources and Methods (cat. no. 6150.0)
• Labour Account Australia, Experimental Estimates (cat. no. 6150.0.55.001)
• Information Paper: Australian Labour Account (cat. no. 6150.0.55.002)
• Labour Account Australia (cat. no. 6150.0.55.003)
   

Labour statistics are some of Australia’s most important economic and social statistics. Put simply, they provide information about people and their participation in the labour market, their success in finding employment, their earnings and other benefits, their type of work, their working hours and conditions.

Given the importance of high quality information on the Australian labour market, the ABS produces a broad range of labour statistics, drawn from a wide range of different sources. Some of these sources are very well known, such as the monthly Labour Force Survey, but others are less well known – particularly new collections like the fortnightly release of Weekly Payroll Jobs and Wages in Australia, the annual Jobs in Australia and the quarterly Labour Account.

A simple way of visualising this is to consider that ABS labour statistics are drawn from four key “pillars” of data, each of which is a bit different, but which provide complementary insights into the labour market.

Each of these pillars – the two traditional sources of household and business surveys, and the two more recent pillars of administrative data based statistics and Labour Account - provides important and unique insights to enable Australians to better understand their labour market.

A household survey approaches individual households to complete questions about their individual, family or household circumstances.

The key household survey that provides vital information about Australia’s labour market is the Labour Force Survey, and its related supplementary surveys.

Business surveys collect a broad range of information from businesses, including their performance, financial position or about jobs and employees.

Key business surveys with a labour market focus include Job Vacancies, Employee Earnings and Hours Average Weekly Earnings and the Wage Price Index.

Administrative data refers to information maintained by governments and other entities that is made available to the ABS for statistical purposes. It includes data used for registrations, transactions and record keeping, usually during the delivery of a service.

The ABS publishes employment information from the Linked Employer Employee Dataset (LEED), using Australian Tax Office information and ABS data. As a result, the LEED includes more than 100 million tax records over six consecutive years between 2011-12 and 2016-17, and provides information for over 2,200 different regions based on a person’s usual residence.

The ABS has also recently begun publishing weekly index measures of payroll jobs and wages, based on Single Touch Payroll data, from January 2020 onwards.

The Labour Account brings together data from separate administrative, business, and household sources, adjusting and confronting the various sources until a coherent picture of the labour market is established. It provides data on the number of employed persons, the number of jobs, hours worked and income earned for each industry. It provides the best labour market estimates for the 19 industry divisions each quarter and 86 industries annually.

Often there is only a single statistical data source on the ABS website that will include the information that you are after. However, for many labour market topics it is often the case that the ABS produces multiple statistics, each drawn from a different data source to enable different types of analysis. They provide important, complementary economic and social insights into the labour market, which is large, complex and dynamic.

It is therefore important to be guided by what you are looking to understand about the labour market. Is it to understand a topic where:

• demographic characteristics are important or it may be related to an activity outside of employment? Household surveys are often useful for this.
• specific employer or payroll information is important? Business surveys are often useful for this.
• detailed sub-population or geographic information is important? This is usually best sourced from administrative data, or the five-yearly Census.
• a comprehensive ‘best estimate’ of key labour market indicators (based on reconciled information from all of the available data sources) is important? The Labour Account is designed to provide this.
   

For example, in seeking to understand how many people are employed in jobs in Australia, you could use statistics from:

• Monthly Labour Force – which provides a timely indicator on changes in employment, unemployment and underemployment, including analysis by personal characteristics such as sex, age, occupation and employment status.
• The quarterly Labour Account – which is the best source of headline information on employment by industry. It provides an estimate of the number of jobs, hours worked, and associated labour income.
• The annual Jobs in Australia – which provides granular information on all the job relationship for more than 2,200 different regions across Australia. This rich dataset is based on more than 100 million individual records which allow for micro-data analysis of the Australian labour market.
   

Another common example is seeking to understand changes in wages over time, where you could use statistics from:

• Quarterly Wage Price Index - which measures changes in the price of labour in the Australian labour market. In a similar manner to the CPI, the WPI follows price changes in a fixed "basket" of jobs and is therefore not affected by changes in quality and quantity of work.
• The twice yearly Average Weekly Earnings - which provides data on average wages by industry, which provides insights into compositional changes in earnings over time.
• The two yearly Employee Earnings and Hours - which provides detailed data on methods of setting pay, hours paid for and detailed distributional earnings information.
• The annual Characteristics of Employment – which provides earnings by detailed socio-demographic and other characteristics.
• The quarterly Compensation of Employees measure in the National Accounts and quarterly measure of labour income in the Labour Account – which provide aggregate earnings measures,
   

Below is a list of some of the key labour statistics collections, organised into the pillars. In addition to improving the visibility of all of the available labour statistics, the ABS is also exploring how to better organise labour market information around themes and topics. This is being actively explored as part of the design of its new website, which will be launched later in 2020.

Labour Force, Australia (cat. no. 6202.0) - Monthly
Labour Force, Australia, Detailed - Electronic Delivery (cat. no. 6291.0.55.001) – Monthly
Labour Force, Australia, Detailed, Quarterly (cat. no. 6291.0.55.003)
Characteristics of Employment, Australia (cat. no. 6333.0) - Annually
Participation, Job Search and Mobility, Australia (cat. no. 6226.0) – Annually
Education and Work, Australia (cat. no. 6227.0) - Annually
Characteristics of Recent Migrants, Australia (cat. no. 6250.0) – 4 yearly
Barriers and Incentives to Labour Force Participation, Australia (cat. no. 6239.0) – 2 yearly
Retirement and Retirement Intentions, Australia (cat. no. 6238.0) – 2 yearly

Job Vacancies, Australia (cat. no. 6354.0) - Quarterly
Industrial Disputes, Australia (cat. no. 6321.0.55.001) - Quarterly
Average Weekly Earnings (cat. no. 6302.0) – 6 monthly
Employee Earnings and Hours, Australia (cat. no. 6306.0) – 2 yearly
Wage Price Index, Australia (cat. no. 6345.0) - Quarterly
Employment and Earnings, Public Sector, Australia (cat. no. 6248.0.55.002) - Annually
Australian Industry (cat. no. 8155.0) - Annually
Labour Costs, Australia (cat. no. 6348.0) – 5 yearly

Weekly Payroll Jobs and Wages in Australia (6160.0.55.001) - Fortnightly
Jobs in Australia (cat. no. 6160.0) - Annually
Personal Income in Australia (cat. no. 6524.0.55.002) - Annually

Weekly Payroll Jobs and Wages in Australia (6160.0.55.001) - Fortnightly
Jobs in Australia (cat. no. 6160.0) - Annually
Personal Income in Australia (cat. no. 6524.0.55.002) - Annually

Labour Account Australia (cat. no. 6150.0.55.003) - Quarterly

The ABS continues to strengthen the suite of labour market statistics, to ensure that Australia can effectively understand how its labour market, economy and society are changing over time and make informed decisions.

Traditionally, the Labour Force Survey (LFS) has been the primary source of information on employment by industry over time. However, industry information is not what the Labour Force Survey is primarily designed to measure, which is the labour force status of the population (that is, whether people are employed, unemployed or not in labour force) and their key demographics.

In July 2017, the ABS released a new labour statistics product, the Labour Account, which brings together a broad range of labour market statistics into one framework to be compared and confronted to produce a coherent picture of the Australia labour market, and its industries.

The ABS considers the Labour Account to be the best source of headline information on employment by industry. It has been specifically designed to produce the most comprehensive estimates for industries in Australia, drawing upon a broad range of data sources. It provides an estimate of the number of jobs, hours worked, and associated labour income that align very well with industry measures of output in the economy. In the future, it is expected to lead to improvements in the measurement of productivity.

The Labour Account is also the best source of quarterly private and public sector jobs information. While the annual public sector Survey of Employment and Earnings provides a robust level estimate of public sector employment, the additional scope and confrontation processes of the Labour Account provide the best indicator of the relative proportions and changes over time across both private and public sectors.

The comparative strength of the industry information in the Labour Account is that it is generally drawn from how businesses have been officially categorised, rather than how employed people (most of whom are employees) describe the business they work in. The Labour Account shows that there are a number of people in the labour market who, when responding to the Labour Force Survey, will describe the business activities that are most relevant to their job, rather than the actual industry of the business that pays their wages or salary. For example, an employee of a business engaged in engineering construction who works on a coal mine site may incorrectly describe their industry of employment as coal mining and not construction.

However, the Labour Account cannot provide all of the information that survey data can, and there is still an important role for other detailed information, including Labour Force Survey statistics (cat. no. 6291.0.55.003) and also the relatively new Jobs in Australia (cat. no. 6160.0), which provide insights into the characteristics and distribution of people and their jobs in the labour market.

For more information on the various sources of labour statistics refer to the Navigating ABS Labour Statistics spotlight.