Small Area Labour Markets
March Quarter 2022
Released 2:30pm Thursday, 30 June 2022
The National Skills Commission 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 June quarter 2022 issue of SALM is expected to be released in September 2022.
Labour market developments at the SA2 level
The latest available smoothed SALM estimates show that 90.7 per cent of SA2s recorded a decrease in their unemployment rate over the year to the March quarter 2022.
In the March quarter 2022, 65.9 per cent of SA2s recorded an unemployment rate of less than 5 per cent while 6.2 per cent of SA2s recorded an unemployment rate of 10 per cent or more.
Small Area Labour Markets: Distribution of SA2s by unemployment rate
As shown in the chart above, there has been a significant increase in the number of SA2s with an unemployment rate of less than 5% (up from 807 to 1,433 over the past year). On the other hand, the number of SA2s with an unemployment rate of 10% or higher has fallen considerably (from 294 to 135). This reflects the strong recovery in labour market conditions that has occurred since the initial wave of COVID-19 in 2020.
- While the March quarter 2022 figures cover the lockdowns associated with the Delta outbreaks in south-eastern Australia in the second half of 2021, 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.
The COVID-19 pandemic began to have a significant negative 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. Similarly, the Delta lockdowns that commenced in mid-2021 also restricted labour demand and supply.
Unlike during the initial Covid lockdown and the Delta wave, however, the high rates of infection during the Omicron outbreak in the March quarter 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 Omicron also affected labour supply.
That said, 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.
- For example, the March quarter 2022 smoothed estimates reflect one quarter of generally robust labour market activity (with only occasional and limited lockdowns), one quarter where there was a sharp downturn in the labour market (due to the Delta outbreak) and two quarters of strong improvement in labour market conditions (as lockdowns ended and travel and trading restrictions eased).
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 Australian Bureau of Statistics (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.
Recent changes to mutual obligation requirements in some areas
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.
For more information on mutual obligation requirements, please see the Services Australia website.
Mutual obligation requirements were temporarily suspended for a number of flood-affected Local Government Areas (LGAs) in New South Wales and south-east Queensland during the March quarter 2022.
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.
- 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:
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.
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.
Smoothed SALM estimates at the SA2 level are available for download in Microsoft Excel or comma-separated values format.
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.