A Guide to Unemployment Statistics

A Guide to Unemployment Statistics

Acknowledgement Statistics New Zealand would like to thank the Ministry of Social Development and the Department of Labour for all their input into this guide. Liability statement Statistics New Zealand gives no warranty that the information or data supplied in this paper is error free. All care and diligence has been used, however, in processing, analysing, and extracting information. Statistics New Zealand will not be liable for any loss or damage suffered by customers consequent upon the use directly, or indirectly, of the information in this paper. Reproduction of material Any table or other material in this paper may be reproduced and published, provided that it does not purport to be published under government authority and that acknowledgement is made of this source. Citation Statistics New Zealand (2010). A guide to unemployment statistics. Wellington: Statistics New Zealand Published in May 2010 by Statistics New Zealand Tatauranga Aotearoa PO Box 2922 Wellington, New Zealand info@stats.govt.nz

hlfs@stats.govt.nz www.stats.govt.nz

ISBN 978-478-35340-2 (online)

A Guide to Unemployment Statistics

Contents

Overview ........................................................................................................................................... 4 Introducing measures of unemployment ............................................................................... 5 Differences in purpose of measures......................................................................................... 6 Timing and definitional differences .......................................................................................... 7 Timing differences .................................................................................................................................. 7 Definitional differences ......................................................................................................................... 7 Quality differences.......................................................................................................................... 9 The jobless ...................................................................................................................................... 10 Differences between measures ............................................................................................... 11 What each indicator is suitable for.......................................................................................... 12 Conclusion and further reading ............................................................................................... 13 Conclusion ............................................................................................................................................. 13 Further reading ..................................................................................................................................... 13

Tables
1 2 Measures of unemployment, by various definitional characteristics ........................... 11 Breakdown of information available from each measure or indicator, by topic...... 12

Figures
1 2 Official unemployment and unemployment benefit recipients ....................................... 7 Unemployment mesures over time........................................................................................... 8

A Guide to Unemployment Statistics

Overview
Zealand: the unemployment benefit, the job-seekers register, and the Household Labour Force Survey (HLFS). Each of these indicators has a different purpose, as well as different definitions, timings, and qualities. This guide gives an overview of each indicator, what they measure, how they are different from each other, and how they can best be used (by the media, stakeholders, policy makers, etc).

A Guide to Unemployment Statistics explores three measures of unemployment in New

A Guide to Unemployment Statistics

Introducing measures of unemployment

Statistics New Zealands Household Labour Force Survey (HLFS) provides the official unemployment statistics for New Zealand. This survey has been specifically designed to measure employment and unemployment according to the internationally agreed standards of the International Labour Organisation (ILO). Occasionally, commentators suggest looking to other indicators, such as the unemployment benefit numbers, or the job-seekers register, both produced by the Ministry of Social Development (MSD), as alternative indicators of the health of the labour market. Each of these three measures has a different purpose, as well as different definitions, timings, and qualities. A Guide to Unemployment Statistics gives an overview of each indicator, what they measure, and how they can best be used (by the media, stakeholders, policy makers, etc). It is not always clear what people mean when they talk about unemployment. The following examples illustrate how a person may fit into the different measures of unemployment: Mr Brown works part-time. He earns very little and is looking for full-time employment. This qualifies him for the unemployment benefit and the jobseekers register, but he is considered employed in the HLFS. Ms Grey does not work, but is actively seeking work. Her spouse is employed and receives income above a specified amount, so Ms Grey is not eligible for the unemployment benefit. She is considered unemployed in the HLFS. John Smith is a 17-year-old school student He is supported by his parents so is not eligible for an unemployment benefit, but he is actively looking for a parttime job, so he counts as unemployed in the HLFS. The HLFS unemployment statistics, produced by Statistics NZ, provide a comprehensive understanding of labour market trends across time. Benefit numbers, produced by the Ministry of Social Development (MSD), can provide insight into the labour market across time, but their use should be limited to annual comparisons. It is also important to note any structural changes to policy and practice that may have affected the numbers over time. The number of registered job-seekers, produced by MSD and Statistics NZ, has very limited uses as a labour market indicator. The number of jobless people, produced by Statistics NZ, is useful as a broad labour market indicator.

A Guide to Unemployment Statistics

Differences in purpose of measures

The Household Labour Force Survey (HLFS), unemployment benefit numbers, and the job-seekers register each have a different purpose. Before 1985, the only quarterly measure of unemployment in New Zealand was derived from the register of unemployment, maintained by the Department of Labour. However, this measure had various shortcomings which led to the development of the HLFS. The HLFS was specifically designed to provide more consistent and accurate measurement of employment and unemployment trends in the labour market. Unemployment benefits are designed to provide financial assistance to people who are looking for work or who are training for work. There are specific eligibility criteria for benefits, some of which are outlined in table 1 (page 11). These eligibility criteria can change over time, causing inconsistencies in the time series. The eligibility for the unemployment benefit is affected by the economic activity of other household members, the persons health status (sickness and invalids benefit) and sole parent status (DPB). The HLFS unemployment rate, however, measures the economic activity of the respondent only. The job-seekers register is no longer used for reporting on unemployment because policy changes over the last 10 years mean than numbers are not comparable over time.

A Guide to Unemployment Statistics

Timing and definitional differences

Timing differences
The official unemployment statistics are quarterly averages, whereas unemployment benefit recipient figures refer to counts of people receiving an unemployment benefit at the end of the month. This timing difference is particularly important when there are substantial seasonal rises in unemployment, for example towards the end of December.

Definitional differences
Figure 1 shows a simplified comparison and contrast of official unemployment and the unemployment benefit. Table 1 (page 11) provides more comprehensive summaries of the differences between the officially unemployed series and unemployment benefit recipients. Figure 1 Official unemployment (left) and unemployment benefit recipients (right)

1517-year-olds, 65-year-olds and over People who are not employed and are available for and seeking part-time work or have a new job to start within four weeks People available for and seeking work who are ineligible for a benefit People with family or personal income sufficient to support them while looking for work Benefit recipients aged 1864 years available for and seeking full-time work

Benefit recipients working part-time

A small number of married 1617-year-olds with dependants receiving benefits

People in the left section only may be represented in the official unemployment statistics, people in the right section only may be counted in the unemployment benefits numbers, people in the middle section may be counted in both. Because of these differences, the official unemployment measures from the HLFS and numbers receiving unemployment benefits do not always closely parallel one another.

A Guide to Unemployment Statistics

Figure 2 shows a time series of each of the unemployment measures. Note how the measures move in similar directions, but have different levels.

Figure 2
Unemployment measures over time
180 160 140 120 100 80 60 40 20 0
1998 1999 2000 2001 2002 2003 2004

Official unemployed Unemployment benefit

Level (000)

2005

2006

2007

2008

2009

Year Source: Statistics New Zealand and Ministry of Social Development

A Guide to Unemployment Statistics

Quality differences
The official unemployment statistics are estimated based on a sample survey. A typical margin of sampling error around these estimates is plus-or-minus five percent. The number of people unemployed is then seasonally adjusted to minimise the seasonal effects in the data. Seasonally adjusting the data reveals the underlying trend and allows for quarter-to-quarter comparisons. While the headline number is seasonally adjusted, it is not feasible to do so for every breakdown of unemployed people that the HLFS can provide. As a result, only the number of unemployed males, females, and total for both sexes is seasonally adjusted. Breakdowns by age, ethnicity, and regional council area are not seasonally adjusted, so are only suitable for annual comparisons. The official labour force estimates provide a measure of the economically active population. It is based on the principle that a person's labour force status should be determined on the basis of their activities during a specified reference period. In the HLFS, this reference period is short (one week) to ensure that the measure reflects the labour supply situation at a specified moment in time. As stated above, the official unemployment statistics are seasonally adjusted to remove seasonal effects, giving a truer picture of the underlying labour market than unadjusted figures. Any estimate produced by Statistics NZ that is less than 1,000 people is subject to suppression for quality reasons. The sampling errors of these estimates are too great for most practical purposes, so they are not released. This limits the level of detail that can be released on some breakdowns, such as by certain ethnicities and regions. Changes in social welfare policy can also change beneficiary numbers. These changes can introduce variability into the count that also affects the time-series. Series based on unemployment benefit numbers are not seasonally adjusted. This means that the series are more suited for annual comparisons, rather than quarter-toquarter comparisons. As unemployment benefit numbers are administrative records, they are not subject to sampling errors like official unemployment statistics. However, where the number of people in any breakdown below national level is less than five, the data may be suppressed for confidentiality reasons. MSD may be able to provide detailed breakdowns of these numbers. 1

Statistics NZ produces a high level registered unemployed/job-seekers series from MSD. Contact MSD for more detailed information on the registered job-seekers.

A Guide to Unemployment Statistics

The jobless
A broader measure of unemployment is the jobless indicator. To count as officially unemployed, a person must be both actively seeking and available for paid work. This excludes people who are available, but not seeking and people who are actively seeking, but not available. To account for this, the HLFS also produces a broader series called the jobless. This series incorporates the official unemployed, those who are available for, but not actively seeking work and those who are actively seeking, but not available for work. The jobless series is not seasonally adjusted, which means that it is more suitable for annual comparisons than quarter-on-quarter comparisons. The jobless can be further broken down into the discouraged and others available but not actively seeking work. The latter may include students or parents with young children.

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A Guide to Unemployment Statistics

Differences between measures

Table 1 shows the differences between the officially unemployed series and unemployment benefit recipients. Table 1 Measures of unemployment By various definitional characteristics
Characteristic Age Residency Officially unemployed (from Household Labour Force Survey) 15 years or over Usually resident Unemployment benefit recipients 1864 years (generally) Continuously lived in New Zealand for two years since becoming a citizen or permanent resident Seeking full-time employment May work part-time subject to relevant income tests Ineligible if income is in greater than a threshold Makes some ineligible (through excess income) Generally ineligible for unemployment benefit Complies with Job-seeker Agreement, work test, and any other administrative requirements of Work and Income May be unavailable for work for short periods Must apply for an unemployment benefit, and meet eligibility criteria Administrative count at month end

Full-time or part-time work sought Current work status

Seeking to work for one hour or more per week Less than one hour per week for pay or profit in the previous week, and have had no unpaid work in a relative's business Not relevant Not relevant Can count as unemployed Must have actively sought work (done more than checking newspaper advertisements) within the last four weeks Must be available for work within the next four weeks Not relevant

Income Partner's employment status In tertiary study Efforts to find work

Availability for work Wanting income assistance from Work and Income Timing

Quarterly average

Source: Modified version of a table on the MSD website, www.msd.govt.nz/about-msd-and-ourwork/publications-resources/statistics/statistical-report/statistical-report-2008/multiple-sections/unemployeddefinition.html#differences

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A Guide to Unemployment Statistics

What each indicator is suitable for

Table 2 outlines the breakdown of information, by topic, available from the measures discussed in this guide. Data from these measures is readily accessible on the Internet. The official unemployment series has been separated into seasonally adjusted and unadjusted to illustrate which breakdowns are available from the HLFS. The unadjusted series tend to be more detailed, but are only suitable for annual comparisons. Table 2 Breakdown of information available from each measure or indicator By topic
Topic Officially unemployed (from Household Labour Force Survey) Seasonally adjusted Total all ages only (15+ years) Unadjusted Five-year age groups and total all ages Unemployment benefit recipients The jobless

Age

Covers ages 1864 (with some 16 and 17 year olds) Male, female, and total

Covers all ages from 15 years old

Sex

Male, female, and total Total all ethnicities only

Male, female, and total European, Mori, Pacific peoples, Asian, MELAA(1), and total 14 regional council areas

Male, female, and total European, Mori, Pacific peoples, Asian, MELAA(1), and total 14 regional council areas

Ethnicity

Mori, Pacific peoples, Asian, European, other and total

New Zealand Region

73 territorial local authorities, 13 Work and Income regions, service centres Suitable comparisons available from 1996

Time series

Suitable for quarterto-quarter and yearto-year comparisons Comparable to other ILO and OECD subscribing countries

Suitable for year-toyear comparisons from 1986 Comparable to other ILO and OECD subscribing countries

Suitable for year-toyear comparisons

International

Not comparable internationally

Not comparable internationally

1.

MELAA stands for Middle Eastern, Latin American and African

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A Guide to Unemployment Statistics

Conclusion and further reading

Conclusion
Four labour market indicators have been discussed in this guide. The official unemployment statistics provide a comprehensive understanding of labour market trends across time. Unemployment benefit numbers measure the number of people whose employment situation is such that they meet the criteria for government assistance, but their use should be limited to annual comparisons. It is also important to note any structural changes to social welfare that may have affected the numbers over time. The number of registered job-seekers is of very limited use as a labour market indicator. The number of jobless people is useful as a broad labour market indicator. Like the benefit numbers, its use should be limited to annual comparisons, as it is not seasonally adjusted.

Further reading
Ministry of Social Development (2005). Definition of the officially unemployed, and differences from registered job-seekers. Available from www.msd.govt.nz/about-msdand-our-work/publications-resources/statistics/index.html. Ministry of Social Development (2008). 10 year trends in benefit numbers: December 2008. Available from www.msd.govt.nz/about-msd-and-our-work/publicationsresources/statistics/index.html. Ministry of Social Development (2009). 10 year trends in benefit numbers: June 2009. Available from www.msd.govt.nz/about-msd-and-our-work/publicationsresources/statistics/index.html. Ministry of Social Development (2009). 10 year trends in benefit numbers: March 2009. Available from www.msd.govt.nz/about-msd-and-our-work/publicationsresources/statistics/index.html. Ministry of Social Development (2009). 10 year trends in benefit numbers: September 2009. Available from www.msd.govt.nz/about-msd-and-our-work/publicationsresources/statistics/index.html. Statistics New Zealand. Household Labour Force Survey releases are available from www.stats.govt.nz/methods_and_services/information-releases/ household-labour-force-survey.aspx. Work and Income (2009). Unemployment Benefit: For people who are out of work. Available from www.workandincome.govt.nz/individuals/a-z-benefits/unemploymentbenefit.html.

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