18 September 2002

Family and social factors underlying the labour force status
of Indigenous Australians

New research by Boyd Hunter, Centre for Aboriginal Economic Policy Research, Australian National University and Matthew Gray, Australian Institute of Family Studies highlights the extent to which family and social factors influence indigenous labour force rates.

Published in the Winter 2002 edition (no.62) of Family Matters, the research reports the results of analysis of data from the 1994 National Aboriginal and Torres Strait Islander Survey (NATSIS) which provides a unique opportunity to examine the processes underlying Indigenous labour force status. It seeks to identify the extent to which family and social factors either enhance or detract from Indigenous economic participation.

Indigenous attachment to the labour force

According to the NATSIS data, in 1994, 45 per cent of Indigenous males aged 15 plus were employed, which is substantially lower than the 67 per cent of all Australian males. When Community Development Employment Projects (CDEP) employment is excluded, the employment rate of Indigenous males fell to 32.1 per cent. The employment rate of Indigenous females was 27.1 per cent compared with 49.0 per cent for all Australian females.

The relatively low employment rates of Indigenous Australians do not appear to reflect upon their desire to work. For example, only 16.2 per cent of Indigenous males indicated they did not want to work as compared with 21.4 per cent of non-Indigenous males.

Indigenous males are almost four times more likely than other males to want work but not be actively looking for work (15.8 compared with 4.2 per cent). Indigenous females are almost three times more likely than other females to be discouraged workers (29.3 compared with 10.0 per cent).

Reasons for not looking for work

The main reasons why female discouraged workers do not look for work are child care and other family responsibilities (46.8 per cent), followed by studying (21.7 per cent). Demand side factors, including that there were no jobs at all and that were no jobs in the local area or line of work, accounted for 13.4 per cent.

Male discouraged workers tend to emphasise study as the major reason (42.7 per cent) for not looking for work. Demand-side factors are the second most important reasons for males (19.2 per cent) not to seek work.

Family factors as determinants of labour market outcomes

The presence of one child under 12 years of age reduces female participation rates by 12.1 percentage points, while the presence of more children reduces participation rates by more than 22 percentage points compared to Indigenous women without children. For males, the presence of children in a family has a small positive effect, or no effect, on the probability of a male participating in the labour market.

Marriage is associated with an increase in labour market participation (non-CDEP employment, CDEP employment and unemployment combined) among males. In contrast, it is associated with a fall in labour market participation among females of over 10 percentage points.

For females, sole parenthood results in a substantially lower probability of participation in the labour force. Male sole parents are much less likely than female sole parents to be unemployed largely because of an increased probability of being in employment (either CDEP or non-CDEP).

Living in a family that includes non-Indigenous people is associated with substantially better employment prospects outside the CDEP scheme for Indigenous people. There is a small net increase (3.8 - 4.6 percentage points) in participation rates associated with living in such families.

Cultural factors and social environmental influences on labour supply

Indigenous-specific cultural and social environmental factors are particularly important in determining labour force status.

Engaging in hunting and gathering activities appears to be a substitute for market-based activities, especially for females.

Speaking an Indigenous language is associated with a small reduction in the labour market participation of males.

The presence of other employed adults in a household increases labour supply and reduces unemployment. The net effect on labour supply is to increase the participation rates for males and females by 5.9 and 13.0 percentage points, respectively. In contrast, unemployment among other adults in a household is associated with a lower probability of supplying labour, higher unemployment probabilities and lower employment probabilities, both in non-CDEP and CDEP employment.

Conclusions

The analysis of Indigenous discouraged workers points to a role for demand-side factors. Long-term policies that augment the demand for Indigenous workers, such as effective education and regional development policies, are likely to substantially improve Indigenous labour force status.

Of particular importance, from the perspective of family policy, is the high proportion of Indigenous female discouraged workers who report child care and other family responsibilities as the major reason they are not looking for work. While this result may be surprising given the extensive family networks and the high rates of informal care typical of Indigenous families, there is evidence that these networks are often not well suited to providing reliable and predictable child care which is required for participation in paid employment.

Contact
Dr Matthew Gray
Principal Research Fellow
Tel: 03 9214 7841; Mobile: 0410 484 357

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