Measuring employment series – the importance of FTE

Guest blog by Dr Peter Brain, Executive Director of National Economics. (National Institute of Economic and Industry Research)

National Economics is the organisation that provides the modelled economic data for the council-level economy.id online economic profiles.

Much of the information produced about our working population (and reported in the media) relates to employment and unemployment rates.

But as the way in which we work changes, these measures are becoming less relevant and in fact in many cases, “mask” the real underlying story…

The ABS defines persons who were employed in any selected week as those aged 15 and over who, during the selected week, worked for one hour or more for pay, profit or commission, or who worked without pay in a family business, or who were on holiday or otherwise away from their regular job. All others, whether or not they worked as volunteers in organised activities or worked in household production, are classified as either unemployed or not in the labour force.

The primary sociological difference is that employed people are current participants in the paid labour market and the rest are not.

The economic significance of employment is twofold:

• it is a major source of household income and
• it makes an important contribution to the process of production and hence  to business value added and gross regional product

From both points of view, there is a considerable difference between a person who works one hour in a week and one who works sixty hours. Sufficient data is now available to allow reasonably accurate estimation of hours worked at regional level. Hours worked is preferable to persons employed as an indicator both of the potential receipt of labour incomes in a region and of the contribution of labour to production.

In the post-war period employment was the preferred indicator, for two reasons.

• It was more readily available at local level and
• most employed persons worked standard hours

During these years employment was a good proxy for hours worked. This is no longer the case, due to the increase in employment involving non-standard hours of work, including casual employment, part-time employment, overtime employment, non-standard shifts and non-standard shift rotations.

The inadequacies of employment as an indicator of labour input to production affect both geographic distributions and trends over time.

• At the regional level, in 2013 average hours per employed person varied from 27.3 hours a week (persons with jobs in NSW Central Coast) to 41.2 hours a week (WA Pilbara Kimberley)
• Over Australia as a whole, average hours per employed per person fell from 1993 to 2013 mainly due to increased casual and part time work, but the range varied from an increase of 12 per cent (WA Wheatbelt Great Southern) to a decrease of 17 per cent (NSW Central Coast)

For more employment or economic data about Australia and your local government area, visit our website where you can find a range of demographic resources publicly available to you.