Section 2: Determining labour force status
The concepts of employment and unemployment are derived from the theory of the supply of labour as a factor of production. The production referred to is in turn defined as those goods and services included in the System of National Accounts. For this reason, unpaid housework and volunteer work are not counted as work by the survey, although these activities need not differ from paid work; either in purpose or in the nature of the tasks completed.
While the logical and precise unit of measure of total labour supply is person-hours, the conceptual terms of reference for the survey require that individual members of the population be classified as employed, unemployed or not in the labour force. Accordingly, persons who are supplying services in the reference period, regardless of the quantity supplied, are classified as employed; while those who provide evidence that they are offering their labour services to the market (again, regardless of quantity) are classified as unemployed. The remainder of the population, those neither currently supplying nor offering their labour services, are referred to as persons not in the labour force.
The concepts and definitions of employment and unemployment adopted by the survey are based on those endorsed by the International Labour Organisation (ILO).
Employment: Employed persons are those who, during the reference week:
- did any work at all at a job or business, that is, paid work in the context of an employer-employee relationship, or self-employment. It also includes persons who did unpaid family work, which is defined as unpaid work contributing directly to the operation of a farm, business or professional practice owned and operated by a related member of the same household; or
- had a job but were not at work due to factors such as their own illness or disability, personal or family responsibilities, vacation or a labour dispute. This category excludes persons not at work because they were on layoff or between casual jobs, and those who did not then have a job (even if they had a job to start at a future date).
Unemployment: Given the concept of unemployment as the unutilized supply of labour, the operational definition of unemployment is based primarily on the activity of job search and the availability to take a job. In addition to being conceptually appropriate, job search activities can, in a household survey, be objectively and consistently measured over time. The definition of unemployment is therefore the following:
Unemployed persons are those who, during the reference week:
- were without work but had looked for work in the past four weeks ending with the reference period and were available for work; or
- were on temporary layoff due to business conditions, with an expectation of recall, and were available for work; or
- were without work, had a job to start within four weeks from the reference period and were available for work.
Persons are regarded as available if they reported that they could have worked in the reference week if a suitable job had been offered (or recalled if on temporary layoff); or if the reason they could not take a job was of a temporary nature such as: own illness or disability, personal or family responsibilities, they already had a job to start in the near future, or they were on vacation (prior to 1997, those on vacation were not considered available). Full-time students currently attending school and looking for full-time work are not considered to be available for work during the reference week. They are assumed to be looking for a summer or co-op job, or permanent job to start sometime in the future, and are therefore not part of the current labour supply.
Note that in the above definition there are two groups for which job search is not required: persons on temporary layoff and persons with a job to start at a definite date in the future. Persons on temporary layoff are included among the unemployed on the grounds that their willingness to supply labour services is apparent in their expectation of returning to work. A similar argument is applied for persons who will be starting at a new job in four weeks or less.
Finally, for the purposes of measuring job search as part of the identification of the unemployed, the LFS uses a four-week search period although the reference period for identifying the employed is that of one week. The justification for the difference is that delays inherent in job search (for example, periods spent awaiting the results of earlier job applications) require that the active element of looking for work be measured over a period greater than one week if a comprehensive measure of job search is to be obtained.
Not in the labour force: Persons who were neither employed nor unemployed during the reference period. This includes persons who, during the reference period, were either unable to work or unavailable for work. It also includes persons who were without work and who had neither looked for work in the past four weeks nor had a job to start within four weeks of the reference period.
Note on international comparisons: Most industrialized countries, including Canada and the United States, subscribe to guidelines established by the International Labour Organization and the United Nations for defining and measuring labour market status, including unemployment. However the guidelines are, by design, rather imprecise so individual countries can interpret them within the context of their own labour markets. As a result, unemployment rates are not strictly comparable across all countries. LFS analysts have investigated in detail the measurement differences between the US and Canadian unemployment rates. Adjusting the Canadian unemployment rate to US measurement differences lowers it by approximately one percentage point. For more information on conceptual differences used by Canada and the US to measure employment and unemployment, see “Measuring employment and unemployment in Canada and the United States – a comparison.”
Labour force classification
A labour force status classification (including employed, unemployed and not in the labour force) is assigned to each respondent aged 15 and over, according to their responses to a number of questions during the interview. Figure 2.1 illustrates how the classification is derived.
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