Unemployment is low

The latest Labour Force Survey, released today, has national unemployment down 0.3 percentage points to 6.1%, the lowest monthly rate since December 1974. So low that the Daily adds the following note on comparability:

Comparing current Labour Force Survey estimates to those prior to 1976

In recent months, the Labour Force Survey (LFS) has been reporting very low unemployment rates. The rates have been so low that some LFS users want to understand the historical context in which these rates are presented. Caution must be stressed when comparing recent LFS employment and unemployment estimates to those prior to 1976 – when the questionnaire underwent significant changes.

The 1976 LFS questionnaire introduced direct questioning to determine labour market status. This replaced the “main activity” style of information previously recorded. In 1975, both the new and old questionnaires were run in parallel. An analysis of the impact on employment and unemployment estimates showed that the new questionnaire measured more employment, especially among youths and women. It also picked up more unemployment, most notably among women.

At the time of the conversion to the new questionnaire, a historical series was created by adjusting pre-1976 estimates of employment and unemployment using factors determined from the parallel run. Ratios were applied to the 1966 to 1975 data to make them more (but not strictly) comparable to the new estimates. Although these adjusted 1966 to 1975 data are available, users should still be cautious when comparing the two periods because of the different questionnaires used to measure employment and unemployment. Approaching 1966, further caution should be used.

Leave a Reply

Your email address will not be published. Required fields are marked *