The measures beyond the unemployment rate

The unemployment rate answers a narrow question precisely: of the people who are working or actively looking for work, what share have no work at all? Everyone the question steps over is counted somewhere else, in a suite of measures that gets far less attention than the headline and that exists specifically because the headline is narrow.

Key Takeaways

• Underemployed workers are employed, so they are outside the unemployment rate by construction.
• The underutilisation rate is unemployment plus underemployment, over the labour force.
• Discouraged job seekers fail the active-search test and are outside the labour force entirely.
• The extended underutilisation rate brings two marginally attached groups back in.
• Volume measures count hours sought rather than people, so the size of a shortfall matters.
• The hours-based measures are published quarterly rather than monthly.

Why one rate cannot carry it

To be counted as unemployed a person must clear three tests: not employed in the reference week, actively looking in the four weeks to the end of it, and available to start. The tests themselves, and the Bureau of Statistics' defence of the one-hour employment threshold, are set out on the unemployment page.

What matters here is which group each test removes, because each removed group is the subject of a measure below. The employment test removes the underemployed: an hour of paid work makes a person employed, so someone working a single shift and wanting five days is outside the rate entirely. The active-search test removes people who want work but have stopped looking - discouraged job seekers. The availability test removes people who are looking but could not start yet.

None of these are errors. They make the headline a clean measure of one thing, and the measures that follow exist to describe everybody it steps over.

Underemployment, and the rate built on top of it

The Bureau defines underemployed workers as employed people aged 15 and over "who want, and are available for, more hours of work than they currently have". Both halves of that matter: wanting more hours is not sufficient, since a person must also be available to take them.

The underemployment rate expresses that count as a percentage of the labour force. The underutilisation rate then combines the two: "the sum of the number of people unemployed and the number of people in underemployment, expressed as a proportion of the labour force".

Underutilisation is the measure to reach for when the question is about spare capacity in the labour market rather than about joblessness specifically. The two can move in different directions. A period in which full-time roles are replaced by part-time ones can leave the unemployment rate flat while underemployment climbs, because nobody has left work; they have simply been given less of it.

Long-term unemployment

The long-term unemployment rate counts people who have been unemployed for twelve months or more, as a share of the labour force. It is a duration measure rather than a level measure, and it answers a question the headline cannot: whether the same people are unemployed for a long time, or different people for short spells.

Two labour markets with an identical unemployment rate can differ completely on this. High turnover with short spells is a very different situation from a stable group of people who have been out of work for a year, and the policy response to each is different too.

The measures that count hours instead of people

Every measure above counts people, and counting people treats a person short by two hours a week as identical to a person short by twenty.

The volume measures do not. The Bureau describes them as "the hours of labour sought by the unemployed and underemployed, as a percentage of the total potential hours in the labour force". Expressed this way, the scale of a shortfall enters the figure, and an economy where underemployment is widespread but shallow looks different from one where it is concentrated and deep.

These are published quarterly rather than monthly, in the detailed labour force release, which is part of why they are cited less often than the headline. The publication arrangements around the detailed release are also changing as the Bureau's labour force modernisation program completes, so the location of these tables is less stable than the measures themselves.

The extended rate, and the people outside the labour force

The broadest measure brings back some of the people every other measure excludes. The extended labour force underutilisation rate is "the unemployed, plus the underemployed, plus two groups of persons marginally attached to the labour force, expressed as a proportion of the labour force augmented by the two groups of marginally attached persons".

The two groups are people who were actively looking but could not start within four weeks, and discouraged job seekers. The Bureau's definition of the second group is specific rather than impressionistic: people who want work and could start within four weeks, but whose main reason for not looking is that they are considered too young or too old by employers, that ill health or disability discourages employers, that they lack necessary schooling, training, skills or experience, that they face difficulties because of language or ethnic background, or that there are no jobs in their locality, their line of work, at suitable hours, or at all.

Note the denominator changes as well as the numerator. Because the marginally attached are outside the labour force, adding them to the top requires adding them to the bottom, which is why the extended rate is not simply the underutilisation rate with more people in it.

Which one to read

There is no single best measure, and the choice depends on the question.

For the share of active job seekers without work, the headline rate is the right instrument and the additional measures add nothing. For spare capacity, underutilisation is better, and the volume measures better still. For whether hardship is concentrated, long-term unemployment is the one that speaks. And where the concern is people who have withdrawn from looking, only the extended rate counts them at all.

The Bureau's own framing of discouraged job seekers is the fairest summary of why the suite exists: they are "a 'potential pool of labour'", and "until their circumstances or job search activities change" they sit outside the headline figure entirely. That is a definitional decision, made deliberately and disclosed openly, rather than something hidden in the number.

Where to look next

The current published rate and its history are on the unemployment page, the unemployment rate entry defines the headline measure, and the wage growth and GDP pages carry the two series most often read alongside it. The cash rate is set against a full employment objective as well as an inflation one.

Sources

• Australian Bureau of Statistics, Labour Force, Australia methodology - the definitions of unemployed, employed, underemployed workers, the underemployment rate and the underutilisation rate
• Australian Bureau of Statistics, How the ABS Measures Unemployment - the three criteria, the availability test and its childcare example, the definition of discouraged job seekers and their listed reasons, the long-term unemployment rate, the volume measures and the extended underutilisation rate
• Australian Bureau of Statistics, Labour Force, Australia, Detailed - the quarterly publication of the volume underutilisation tables, and the changing arrangements for that release
• Reserve Bank of Australia, Unemployment: Its Measurement and Types - the labour force and participation definitions, and hidden unemployment

Not financial advice, and not a recommendation of any product or institution. Reviewed by the Tradergy editorial team, September 2026.