Notes on the data: Labour force

Labour force participation, June 2016


Policy context:  There is a strong correlation between skill level and labour force participation, with labour force participation rates increasing with education level [1]. Some of the benefits to society of higher participation include reduced poverty and inequality, greater social harmony and reduced crime, as well as lesser burdens on the charitable sector and social welfare budgets, and higher tax receipts to support the provision of government services like education and health [2].

As the Australian population ages, it is projected that overall workforce participation will reduce and economic growth will slow, with increasing demands on our health and aged care services. There are three broad groups of strategies where policy change can contribute to improved labour force participation outcomes: those aimed at improving the capacity of people to work through policy measures that improve health, education and training; those enhancing incentives to work, including measures directed at tax and income support arrangements; and those creating more flexible institutional arrangements, including work arrangements and childcare [2].


  1. Treasury. House of Representatives Standing Committee on Employment and Workplace Relations, Inquiry into employment: increasing participation in paid work. (Submission no. 73.) Canberra: Standing Committee on Employment, Workplace Relations and Workforce Participation; 2003.
  2. Productivity Commission (PC). Enhancing labour force participation: issues and challenges, Annual report 2006-07. Canberra: Productivity Commission; 2008.

Notes:  These estimates, from the Small Area Labour Markets - Australia data series, are based on the Structure Preserving Estimation (SPREE) methodology which enables the generation of small area unemployment, unemployment rate and labour force estimates. They differ from the figures for people receiving an unemployment benefit as different rules are applied to eligibility for a welfare payment and being considered as unemployed. The estimates presented are derived from three primary data sources:

  1. Centrelink data for people in receipt of Newstart Allowance or Youth Allowance (other) [1] by Statistical Area Level 2 (SA2);
  2. Australian Bureau of Statistics (ABS) Labour Force Survey data by Statistical Area Level 4; and
  3. 2011 Census of Population and Housing participation rate data at the SA2 level.

The purpose of SPREE is to produce small area labour market estimates that reflect the regional disparities of the Centrelink data, while being consistent with the ABS Labour Force Survey estimates [2].

The labour force estimates presented are based on the 'smoothed' data series, where the data have been averaged over four quarters to minimise the variability inherent in small area estimates.

Additional note/ Reference

  1. Youth Allowance (other) is largely comprised of unemployed people aged 16 to 21 looking for full-time work or undertaking approved activities, such as part-time study or training. This excludes Youth Allowance recipients who are full-time students or undertaking an apprenticeship/ traineeship.
  2. Labour Market Research and Analysis Branch/ Labour Market Strategy Group. Small area labour markets. Australia - September Quarter 2014. Canberra: Australian Government Department of Employment; 2014 [cited 2015 Mar 11]. Available from:

Numerator:  People participating in the labour force aged 15 years and over


Denominator:  People aged 15 years and over


Detail of analysis:  Per cent


Source:  Compiled by PHIDU based on Small Area Labour Markets - Australia, Department of Employment, June Quarter 2016; and the ABS Estimated Resident Population, 30 June 2015.


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