Overhaul of official workforce data may take another two years, ONS admits
It said it is now ‘unlikely’ it will be able to introduce a revamped version of its Labour Force Survey in mid-2025.
Britain’s official statisticians have admitted that efforts to overhaul unreliable data on Britain’s jobs market may not be ready until 2027, leaving policymakers in the dark over the true state of the UK workforce for up to another two years.
The Office for National Statistics (ONS) confirmed it is now “unlikely” it will be able to introduce a revamped version of its Labour Force Survey (LFS) – which is the official measures of employment and unemployment in the UK – mid-2025 and it may take up to 2027.
It comes after Bank of England boss Andrew Bailey recently said issues with the jobs survey are a “substantial problem”, with the level of unemployment in the UK watched closely by policymakers in setting interest rates.
The ONS has been warning over the accuracy of its main LFS data for some time, because of poor response rates to the survey since the start of the pandemic, with economists increasingly becoming reluctant to place any weight on the statistics.
Last month, economists at the Resolution Foundation think tank claimed nearly one million workers in Britain’s jobs market have been “lost” because of the poor and unreliable official data and that the rate of UK unemployment and inactivity may have been overstated.
It accused the ONS of misrepresenting trends in the jobs sector through the inaccurate LFS figures, which it said has underestimated growth in employment by 930,000 workers since 2019.
The ONS separately released data on Tuesday showing changes to the population estimate means Britain’s workforce was 402,000 higher than previously thought in the second quarter, at 33.5 million.
This saw it revise the employment rate up by 0.1 percentage points to 74.6% in April to June 2024.
While the number of those unemployed was also revised higher by 30,000, the jobless rate was left unchanged at 4.2%, but it said the number of those classed as economically inactive had been under-stated by 60,000 in the quarter, though the inactivity rate was downgraded by 0.1 percentage points to 22.1%.
The new data means the overall employment level is now 313,000 above levels seen before the pandemic, rather than being flat compared with pre-Covid.
The Resolution Foundation said efforts to overhaul the statistics are “a step in the right direction” but the updated figures still do not show the complete picture and are “not fit” for use by policymakers.
Updated figures on migration last week mean the new revised workforce data is already out of date, it added.
Adam Corlett, principal economist at the Resolution Foundation, said: “The Labour Force Survey currently presents a misleading picture of UK labour market trends, and is not fit to be used for critical decisions like setting interest rates or making fiscal projections.
“The updated survey data is likely still ‘missing’ well over half a million workers and overstating the country’s inactivity rise, while also over-estimating already dire estimates of labour productivity.
“It’s encouraging that the ONS is improving the quality of its labour market data, but more work is urgently needed to reconcile the survey data and tax records.”
The ONS said in its latest update on the overhaul of the data: “The recovery plan implemented into the LFS from late 2023 continues to improve response levels and the size of datasets, though the changes have led to some data instability, as the changes take time to progress through waves of data collection into outputs.”
It also said it is looking into ways to boost response rates to the survey, including making it mandatory for households to respond, as it is in Australia and France.
It will update on the timetable to the changes by the end of the first quarter of 2025.
