5 Indirect costs – method and results
This section outlines the methods used to calculate the indirect cost components associated with ill health. Initially some general information on the methods and definitions is presented which is relevant to all components of indirect costs. The methods and related results for estimating the cost of absenteeism, presenteeism, reduced hours and lack of participation in the labour force as a result of ill health are presented in turn. All estimates in this section are for working age (defined as those aged 17 to 64) non-students who are not working overseas.[18]
5.1 General methods
5.1.1 Defining labour force participation
Labour force participation throughout the reference period is not fixed; some people may not be working at the interview date but may have worked at some point in the reference period and thus have non-zero hours information for the annual period. Conversely a person may be working at the interview date but may not have worked throughout the reference period.
Labour market spell data is collected in SoFIE; that is, information on the labour market status throughout each person's annual reference period. This allows labour force participation to be defined in various ways. Table 4 compares two definitions; the number of people participating at the interview date compared with the number participating at any point in the reference period (defined to be one or more weeks of work undertaken). Around 1,866,000 people are estimated to be participating at the interview date; a participation rate of 83.8%. This is the more standard definition of labour force participation, with those who are unemployed being classed as participating in the labour force. As would be expected, a higher number are estimated to participate at any point in the reference period (1,937,100 people), giving a higher participation rate of 87%.[19] Under this definition those who are unemployed for the whole period will be classed as not participating. Despite the differences, 264,800 (11.9%) of people are defined as not participating using both definitions.
| Not participating in reference period | Participating in reference period | Total | ||||
|---|---|---|---|---|---|---|
| Count | % | Count | % | Count | % | |
| Not participating at interview date | 264,800 | 11.9 | 95,500 | 4.3 | 360,300 | 16.2 |
| Participating at interview date | 24,500 | 1.1 | 1,841,500 | 82.7 | 1,866,000 | 83.8 |
| Total | 289,300 | 13.0 | 1,937,100 | 87.0 | 2,226,300 | 100.0 |
Source: SoFIE/NZHIS Wave 3 Version 4, adjusted longitudinal weights, Statistics New Zealand
The definition of participation is important to prevent miscalculation of the number of hours lost. In this analysis lost hours are being estimated for the reference period, therefore participation is defined to be that throughout the reference period. The estimates of lost hours owing to absenteeism, presenteeism or working fewer hours as a result of ill health will therefore be based on all those who work for one week or more in the reference period, while the estimates of lost hours owing to not working owing to ill health will be based on those who do not work for any weeks in the reference period.[20] In the remainder of this analysis the term participating (and not participating) in the labour force refers to whether a person has undertaken one or more weeks of work in the reference period (or not); however, it should be noted that this definition is different from the more traditional definition of labour force participation. Testing different definitions of labour force participation is an area that could be developed further in future research.
Notes
- [18]Students were defined as those who studied full-time for more than nine months in the reference period; reported that they were still at school; or reported that they were economically inactive as a result of being a student.
- [19]The estimates for the proportion of people participating at the interview date differ from those estimated in Holt (2010) as only the restricted linked sample for Wave 3 is considered here, rather than the average participation rate for the whole sample over Waves 1-3.
- [20]Voluntary workers, the self-employed and casual workers are defined to be participating. While no income is lost if a voluntary worker is unwell, there would be lost output.
