Britain’s labour market statistics are facing unprecedented scrutiny as the Office for National Statistics (ONS) grapples with significant data collection challenges, potentially masking the true state of employment in the UK economy.
Bank of England Governor Andrew Bailey expressed frustration last week over the inability to obtain accurate employment figures, casting doubt on the official 4.3 per cent unemployment rate. The crisis stems from the Labour Force Survey (LFS), which has seen response rates plummet from 39 per cent to a mere 13 per cent between 2019 and 2023.
The Resolution Foundation’s recent analysis suggests nearly one million workers may be missing from official counts. Their alternative methodology, incorporating payroll, tax, and population data, indicates an employment rate of 76 per cent, rather than the ONS’s reported 75 per cent—a discrepancy representing approximately 500,000 workers.
The ONS has implemented several measures to address these challenges, including increased household participation incentives from £10 to £150 and the development of a transformed Labour Force Survey. The new system features QR code access and shortened questionnaires, though its full implementation has faced delays.
Post-Brexit immigration patterns have further complicated data collection, with significant influxes from Ukraine, Hong Kong, and various non-EU nations in healthcare sectors. These demographic shifts have created additional complexity in accurately measuring employment figures.
The data crisis arrives at a crucial time as the government prepares to launch its “Get Britain Working” white paper, targeting an ambitious 80 per cent employment rate. The uncertainty surrounding current employment statistics poses significant challenges for both policy makers and the Bank of England in their efforts to manage inflation and interest rates effectively.
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