An article recently published on the Free Market Foundation's website incorrectly reported that Statistics SA was in the process of phasing out its Labour Force Survey (LFS) and replacing it with a Quarterly Employment Survey (QES).
The article was inaccurate in most respects. The two surveys have coexisted for a number of years, and neither is replacing the other. And rather than being phased out, the frequency of the LFS is actually being increased from semiannually to quarterly.
The article was, however, accurate in at least one respect: the importance of accurate statistics on employment and unemployment, which are central to measuring the progress and welfare of a country.
Stats SA's employment data receive widespread scrutiny by policy makers, researchers and the general public. Not surprisingly, estimates of employment levels are often contested by contending interests, and calculations by individual researchers sometimes differ from the official data provided.
Stats SA produces two measures of employment, a practice that is fairly common among statistical agencies. The basic difference between these measures lies in the underlying objectives of the surveys from which they are produced, the concepts and definitions used, and the methods of data collection.
The QES is based on information derived from payroll records in employer businesses and is primarily a series aimed at tracking the demand for labour in the different industrial sectors. The LFS, on the other hand, is derived from household surveys and is a series about the supply of labour.
Generally, users of statistics regard the QES as the best indicator of the level of aggregate employment for the formal sector, while the LFS provides the only source of estimates of informal employment.
The QES is, however, released quarterly while the LFS is currently only released biannually. Both are undergoing various changes. For the QES, the changes are mainly aimed at improving the quality of the estimates of employment both overall and by industry. Changes in the LFS will improve methodology, boost quality, increase frequency (to quarterly from 2008) and advance timeliness (to four weeks after the end of the quarter surveyed).
The main rationale for introducing a quarterly LFS is to track more regularly changes in employment patterns in the economy and other aspects of the labour market. Accelerating the frequency and timeliness of the LFS will enable policy makers to respond more rapidly to employment turning points because they can be identified earlier.
There has been some debate, both within Stats SA and the user community, over whether it makes sense to maintain two collections of employment data. Their co-existence cannot be justified on differences in method and approach alone. Two series are required only if they serve different or complementary roles.
The LFS provides the best overall measure of employment and unemployment in the economy, while the value of the QES lies in its industrial dissection of formal sector trends.
At core, the LFS measures labour supply trends, the contribution of work earnings to household income, and unemployment rates. The QES is designed to gauge labour costs and changes in the demand for labour.
Contrary to some ill-informed speculation, both surveys are being maintained, and improved. The QES will increasingly develop better dissections of employment growth by industry, which should become the survey's primary role and strength.
The redeveloped LFS will continue to provide the most reliable measure of the levels of formal and informal sector employment. With its greater frequency, it will provide very current data on these levels.