Notes on the data: Labour force

Labour force participation, June 2023

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].

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].

More people are participating in paid work than ever before. The labour force participation rate remains near record highs. The increase in participation over the past 40 years has largely been driven by women entering the workforce. Employed people are, however, working fewer hours on average. This reflects an increase in part-time work, especially for women and older Australians. As the population ages, the participation rate is expected to gradually decline from 66.6 per cent in 2022−23 to 63.8 per cent by 2062−63. This is slightly higher than the 2021 IGR projection. Average hours worked per employed person is also expected to decline slightly from around 32 to around 31 hours per week as the share of part-time workers increases [3].

References

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.
Productivity Commission (PC). Enhancing labour force participation: issues and challenges, Annual report 2006-07. Canberra: Productivity Commission; 2008.
The Commonwealth of Australia, Intergenerational Report 2023: Australia’s future to 2063 .

Notes:

These estimates, from the Small Area Labour Markets - Australia data series [1], are based on the Structure Preserving Estimation (SPREE) methodology which enables the generation of small area estimates of unemployment and labour force participation. They differ from the figures for people in the labour force in the labour force statistics produced by the Australian Bureau of Statistics (ABS).

References

National Skills Commission. Small Area Labour Markets - June quarter 2021. Available from: https://labourmarketinsights.gov.au/our-research/small-area-labour-markets-methodology/; last accessed 4 February 2020.

Geography: Data available by Population Health Area, Local Government Area, Primary Health Network, Quintile of socioeconomic disadvantage of area and Quintiles within PHNs, and Remoteness Area

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

Denominator: People aged 15 years and over

Detail of analysis: Per cent

Source: Compiled by PHIDU based on data from the Labour Market Analysis and Advice Team, Jobs and Skills Australia, June Quarter 2023