Small Area Labour Markets (SALM), June 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 June quarter 2020.
Introduction
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
Explanatory Notes
page.
Caution:
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 June quarter 2020 estimates
The COVID-19 pandemic began to have a significant impact on the Australian labour market
from March, when Australia recorded its 100th COVID-19 case and the shutdown of nonessential
services and trading restrictions took effect.
The June quarter 2020 SALM estimates have begun to reflect the significant negative impact
that COVID-19 has had, and continues to have, on labour market conditions throughout
Australia. 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 at the broader SA4 level 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 partly been reflected 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
otherwise would have been expected, with such a significant fall in employment that
occurred immediately after March.
The large movements out of the labour force have influenced the reliability of the June
quarter 2020 SALM estimates and make assessing the magnitude of the impact of
COVID-19 on the labour market extremely difficult to discern. Accordingly, particular care
should be exercised when interpreting data for the June quarter 2020.
Data backcast to reflect updated population data
In August 2020, the ABS released its annual Regional Population by Age and Sex publication. The publication included revised Estimated Residential Population (ERP) estimates for June 2018 and new estimates for June 2019.
As a result of including these new ERP estimates, there have been revisions to SALM labour force and unemployment rate estimates from the March quarter 2018 onwards.
For information on how ERP data are incorporated into SALM, please see the Explanatory Notes
page.
In addition to the above, there are some small revisions to recent SALM unemployment estimates, reflecting the ABS’ regular, quarterly rebenchmarking of its Labour Force Survey estimates. Accordingly, SALM users are encouraged to always use the current SALM publication.
Labour Market Developments
The latest 2020 SALM estimates show that almost two thirds (64.4 per cent) of SA2s recorded an increase in their unemployment rate over the year to the June quarter 2020.
In the June quarter 2020, 53.6 per cent of SA2s recorded an unemployment rate of less than
5.0 per cent while 11.2 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. Analysis conducted
on the unsmoothed SALM series should, accordingly, be undertaken with a high degree of caution, as any movements could reflect statistical variability rather than actual changes in
labour market conditions.
Changes to SA2s included in the publication
In previous quarters, SALM estimates were published for those SA2s with a labour force of
100 or more as at the June quarter 2019. This minimum threshold is examined each year
when new ERP data become available.
As a result of including 2019 ERP data in this SALM publication, smoothed estimates will be
now published for the SA2 of Taylor in the Australian Capital Territory, going forward.
Smoothed data for this SA2 will be available from the March quarter 2020 onwards.
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
Further Information
page.
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
Explanatory Notes
page. Examining figures from unsmoothed data should be made with significant care as they exhibit far greater volatility than the smoothed series.