Small Area Labour Markets

Released 2:30pm Monday, 20 March 2023

Jobs and Skills Australia produces quarterly Small Area Labour Markets (SALM) estimates of unemployment and the unemployment rate. The data are available for Statistical Area Level 2s (SA2s) and Local Government Areas (LGAs) - for more information on what SA2s and LGAs are, see the geography section of the SALM methodology page.

The March quarter 2023 issue of SALM is expected to be released in June.

SALM estimates are synthetic so particular care should be taken when interpreting the data. We recommend users read the SALM methodology, and the guidance on this page, before examining the data.

Around 9 in 10 SA2s (91.5%) recorded a decrease in their smoothed unemployment rate over the year to the December quarter 2022, well above the 81.7% recorded over the year to the December quarter 2021.

• When comparing SALM data over the year, it is important to note that the December quarter 2021 smoothed figures (an average of the 12 months to the last month of the quarter) include part of the period of softer labour market conditions that occurred after Australia’s initial lockdown during the first wave of COVID-19. In addition, the December quarter 2021 was affected by the COVID-19 outbreaks in south-eastern Australia in the second half of 2021, although the negative impact of these lockdowns on the labour market was neither as severe nor as widespread as that associated with the initial wave of COVID-19.

Small Area Labour Markets: Annual change in unemployment rate by state/territory (% of SA2s)

As shown in the Chart above, all SA2s in Tasmania recorded a fall in their unemployment rate over the year to the December quarter 2022. On the other hand, South Australia had the largest proportion of SA2s recording an increase in their unemployment rate (11.0%) over the period.

• SA2s in Capital Cities were more likely to record a decrease in their unemployment rate (98.9%) than those in Rest of State areas (81.2%).

In the December quarter 2022, more than three-quarters (77.4%) of SA2s recorded an unemployment rate of less than 5%, while just 3.5% of SA2s recorded an unemployment rate of 10% or more.

Small Area Labour Markets: Distribution of SA2s by unemployment rate

Reflecting the strong recovery in labour market conditions following the end of the COVID-19 lockdowns, there has been a significant increase in the number of SA2s with an unemployment rate of less than 5% over the past year (up from 1,300 to 1,685) – see chart above. On the other hand, the number of SA2s with an unemployment rate of 10% or higher has fallen considerably (from 163 to 77).

In the November 2022 Australian Bureau of Statistics (ABS) release of Labour Force, Australia, the labour force and unemployment estimates were rebenchmarked to preliminary rebased Estimated Resident Population (ERP) figures based on the 2021 Census. This process resulted in revisions to the ABS’ regional labour force and unemployment estimates from July 2016 onwards.

Due to the way in which the ABS figures are incorporated into the process used to create the Small Area Labour Markets (SALM) estimates, the Statistical Area Level 2 and Local Government Area figures have been revised from the September quarter 2016 onwards, both in this publication and the data tables available online.

Accordingly, it is not appropriate to compare data from the December quarter 2022 publication or data tables with figures from earlier releases. Users are instead advised to access the current December quarter 2022 data tables when undertaking any time series analysis relating to periods prior to those covered in this publication. The data tables are available online from the SALM website.

The COVID-19 pandemic began to have a significant negative impact on the Australian labour market from March 2020, when Australia recorded its 100^th COVID-19 case and the initial shutdown of non-essential services and trading restrictions took effect. Similarly, the Delta lockdowns that commenced in mid-2021 also restricted labour demand and supply.

Unlike during the initial COVID-19 lockdown and the Delta wave, however, the high rates of infection during the Omicron outbreak in the first months of 2022 did not result in any lockdowns or travel restrictions (with the exception of Western Australia), while trading restrictions were eased. Clearly, however, workplace absences due to illness during the Omicron wave also affected labour supply.

It is worth bearing in mind that the smoothed SALM series, which is created by averaging four quarters of unsmoothed SALM data, lags actual changes in labour market conditions. It is also important to note that if labour market conditions in a region have varied significantly over the four quarters, the smoothed estimate will be an average of those different prevailing labour market conditions, rather than reflecting conditions from any particular quarter.

It is also worth noting that the labour market’s adjustment to COVID-19 has not been fully reflected in changes to the level of unemployment and the unemployment rate. At various times since March 2020, lockdowns implemented to control the spread of COVID-19 have tended to result in a large number of people leaving the labour force. As these people were no longer participating in the labour force, they were not counted as unemployed by the ABS, leading to a much smaller increase in the unemployment rate than would have otherwise been expected, given the significant fall in employment that occurred during the lockdowns.

Given both the large number of people who left the labour force at different times during the pandemic, and the lag from the smoothing process, care should be exercised when interpreting SALM data from the June quarter 2020 onwards.

Mutual obligation requirements are tasks and activities that people agree to do while they are receiving certain types of income support, including the JobSeeker Payment and Youth Allowance (other) payment.

The suspension of mutual obligation requirements can have an impact on the SALM data. This is because the ABS only considers someone to be unemployed if they are actively looking for work. When mutual obligation requirements are suspended, it is possible that some job seekers may not have undertaken the job search that they normally would have, in which case they would be considered to be not in the labour force rather than unemployed.

Please see the below list of areas in which mutual obligation requirements have been suspended recently (note that the list is not necessarily exhaustive).

For more information on mutual obligation requirements, please see the Services Australia website.

Floods

Mutual obligation requirements have been paused in flood-affected areas on multiple occasions over the past year, including: 
•    In a number of LGAs in New South Wales and south-east Queensland in early 2022; and
•    In several LGAs across New South Wales, Victoria, South Australia and Tasmania, between October 2022 and January 2023.

Delta lockdowns

Mutual obligation requirements were suspended during the September quarter 2021 in areas affected by the Delta variant and associated lockdowns. These requirements were reinstated in October 2021.

When using and interpreting SALM data

• Be aware movements may reflect statistical volatility rather than underlying changes in the labour market 
• Always use the latest SALM publication
• Where possible, use year-on-year comparisons
• Where possible, use the smoothed estimates
• Be aware that SALM smoothed estimates lag changes in labour market conditions
• Do not derive employment estimates
• Use other data sources in addition to SALM

Small Area Labour Markets (SALM) data can be volatile

Unemployment and unemployment rate estimates at the Statistical Area Level 2 (SA2) and Local Government Area (LGA) level can be volatile. This is especially the case for SA2s and LGAs that are located within Statistical Area Level 4 (SA4) regions where the ABS Labour Force Survey data are also highly volatile. SALM users should take particular care where:

• There are large movements in SALM data
• SA2s and LGAs have a small labour force (less than 1000).

Always use the latest SALM publication, even for earlier periods

Always use the current SALM publication, as SALM data, even for earlier periods, can be revised.

The 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. These revisions are reflected in the latest SALM estimates.

When new Census benchmarks become available, SALM estimates are revised back a number of years to reflect these new benchmarks.

Where possible, use year-on-year comparisons

Quarterly movements in the SALM data may not reflect actual changes in the labour market. We recommend considering year-on-year comparisons in the data.

Where possible, use the smoothed estimates

We recommend that SALM users analyse the smoothed SALM data, given the high degree of volatility that is inherent in small area estimates.

SALM smoothed estimates lag changes in labour market conditions

The smoothed SALM series is created by applying an average to four quarters of unsmoothed data. This means that changes in the smoothed SALM series will lag actual changes in labour market conditions.

While the unsmoothed data are likely to be more responsive to changes in labour market conditions, they are also subject to high levels of statistical variability, which may be exacerbated during the COVID-19 pandemic.

Interpret the unsmoothed SALM series with caution. Even large movements could reflect statistical variability rather than actual changes in labour market conditions.

Do not derive employment estimates

It is not appropriate to derive employment from the figures in SALM. See the SALM Methodology for more details.

Use other data sources in addition to SALM

We recommend that users also consider other sources of small area labour market information. This is particularly the case for SA2s exhibiting high levels of volatility. Other useful sources of data include:

• The ABS Census of Population and Housing
• Income support payment data

Small Area Labour Markets (SALM) presents estimates based on the Structure Preserving Estimation (SPREE) methodology. SPREE enables the generation of small area unemployment, unemployment rate and labour force estimates.

Visit the Small Area Labour Markets methodology page to find out more about the methodology, source data, and geographical classification that underpin SALM.

PDF publication

The PDF version of SALM is a print-friendly document containing the key information for the current quarter, SA2 and LGA data tables as well as explanatory notes.

SA2 Data Tables

Smoothed SALM estimates at the SA2 level are available for download in Microsoft Excel or comma-separated values format.

LGA Data Tables

Smoothed SALM estimates at the LGA level are available for download in Microsoft Excel or comma-separated values format below.

Australian, State/Territory and Greater Capital City Statistical Area totals

Estimates for Greater Capital City Statistical Areas, States/Territories and Australia can be found in the ABS' Labour Force, Detailed publication. The data in Table 16b of this publication are in 12-month average terms and are comparable with the smoothed SALM estimates. Note that the Australian and state/territory figures will not match the headline seasonally adjusted data released by the ABS each month.

SALM Queries

The SALM estimates are prepared by Jobs and Skills Australia’s Labour Market and Migration Branch.

For more information about SALM, please email the SALM inbox at SALM@jobsandskills.gov.au.

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