Small Area Labour Markets (SALM), September Quarter 2020
The National Skills Commission produces quarterly regional estimates of unemployment and the unemployment rate at the Statistical Area Level 2 (SA2) and Local Government Area (LGA) level. The latest available estimates are for the September quarter 2020.
SALM presents regional estimates of unemployment and the unemployment rate at two small area levels:
• Approximately 2,200 ABS SA2s, on a State/Territory and Metropolitan/Non-metropolitan basis. Estimates for the Capital City and the Rest of State are provided for the States and the Northern Territory.
• For approximately 540 Australian LGAs.
The SALM Estimates
have been smoothed using a four-quarter average to minimise the variability inherent in small area estimates. A description of the methodology used to prepare the estimates in this publication is available on the
Highly disaggregated estimates of unemployment and the unemployment rate at the SA2 and LGA level can display significant variability and should be viewed with caution, particularly in regions where the SA4 level unemployment data are showing considerable volatility. As a result, quarter-to-quarter comparisons may not indicate actual movements in the labour market so we recommend using year-on-year comparisons. Even then, large movements in the SA2 and LGA data should be viewed with caution.
Impact of COVID-19 on the September quarter 2020 estimates
The COVID-19 pandemic began to have a significant impact on the Australian labour market from March 2020, when Australia recorded its 100th COVID-19 case and the initial shutdown of non-essential services and trading restrictions took effect.
The September quarter 2020 Small Area Labour Markets (SALM) estimates reflect some of the impact that COVID-19 has had on the labour market since March 2020. That said, as the smoothed SALM series is created by applying a four-quarter average to unsmoothed SALM data, it will take a number of quarters for the impact of COVID-19 that is evident in the broader monthly, unsmoothed Statistical Area Level 4 (SA4) figures to be reflected fully in the SALM estimates.
It is also worth bearing in mind that the labour market’s adjustment to COVID-19, and associated government measures, has only been reflected partially in these estimates. To a large extent, particularly in the early months of the pandemic, record numbers of people left the labour force, leading to a much smaller increase in the unemployment rate than would have otherwise been expected, given the significant fall in employment that occurred immediately after March.
The large movements out of the labour force make assessing the magnitude of the impact of COVID 19 on the labour market extremely difficult, particularly at the small area level. Accordingly, particular care should be exercised when interpreting data for the June and September quarters in 2020.
Local Government Area estimates now on 2020 boundaries
In June 2020, the ABS released the 2020 Local Government Area (LGA) structures as part of the Australian Statistical Geography Standard (ASGS): Volume 3 – Non ABS Structures. Accordingly, the LGA estimates in the SALM publication from the September quarter 2020 onwards are based on the 2020 LGA boundaries. While changes to the LGA boundaries were relatively minor, SALM LGA estimates for the entire series have been backcast. Accordingly, there may be some minor revisions to the LGA estimates from the December quarter 2010 onwards.
Labour Market Developments
The September quarter 2020 SALM estimates show that almost three quarters (72.6 per cent) of the SA2s (for which smoothed estimates are available) recorded an increase in their unemployment rate over the year to the September quarter 2020.
In the September quarter 2020, 46.2 per cent of SA2s recorded an unemployment rate of less than 5.0 per cent while 12.1 per cent of SA2s recorded an unemployment rate of 10.0 per cent or more.
Interpreting SALM data during the COVID-19 pandemic
The National Skills Commission continues to recommend that SALM users analyse the
smoothed SALM data, given the high degree of volatility that is inherent in small area
estimates. That said, it understands that some users, seeking to better understand the
impact of COVID-19 on conditions at the small area level, will seek to analyse data in the
unsmoothed SALM series. While the unsmoothed data are likely to be more responsive to
changes in labour market conditions, the data are also subject to high levels of statistical
variability, which may be exacerbated during the COVID-19 pandemic. Accordingly, analysis conducted
on the unsmoothed SALM series should be undertaken with a high degree of caution, as any movements could reflect statistical variability rather than actual changes in
labour market conditions.
Regular revisions to reflect updated population data
he ABS rebenchmarks its Labour Force Survey estimates on a quarterly basis to ensure that they are based on the most up-to-date population information. As a result, there are small revisions to recent SALM estimates. SALM users are encouraged to always use the current SALM publication, as the SALM estimates published in previous quarters may not match those published in the latest edition.
Change in Unemployment Benefit Payments
On 20 March 2020, Newstart Allowance was discontinued and replaced by the JobSeeker payment. While there are some minor changes to the population covered by JobSeeker, compared with Newstart, analysis undertaken by the National Skills Commission indicates that this has not had a material impact on the viability of using this payment as part of the methodological process used to produce the SALM estimates.
Changes to the Geographic Structure
From the June quarter 2019 edition of SALM, the Statistical Area Level 2 (SA2) estimates have been based on the Australian Bureau of Statistics (ABS) 2016 Australian Statistical Geography Standard (ASGS)
. The geographical structure used in SALM is now aligned with the most recent ABS Census of Population and Housing.
Due to changes in the ASGS between the 2011 and 2016 editions, there were a number of breaks in series at the SA2 level. These were due, largely, to SA2s being split into multiple, smaller SA2s but there was also a small number of amalgamations and other breaks. For more information, please see the SALM 2016 Changeover User Guide, available on the
Smoothed Estimates Not Available for All SA2s and LGAs
Due to the breaks in series noted above, and because the production of smoothed estimates requires four consecutive quarters of unsmoothed data, smoothed estimates for SA2s or LGAs that experienced a break in the unsmoothed series between the March and June quarters 2019 are only available starting from the March quarter 2020. For the June quarter 2019 to the December quarter 2019, the only available estimates are from the unsmoothed series, available on the
page. Examining figures from unsmoothed data should be made with significant care as they exhibit far greater volatility than the smoothed series.
This report was prepared by the Labour Market Analysis and Advice Section within the National Skills Commission’s Labour Market Research and Analysis Branch. For further information, please contact Joel Meehan on (02) 6240 5358 or email: SALM@skillscommission.gov.au