The Office for National Statistics has conceded it may not be ready to replace its defective employment survey with a more accurate series until 2027, despite complaints from policymakers about the quality of the existing data.
The Labour Force Survey (LFS) is the official measure of employment and unemployment – but response rates to the monthly survey used to construct it have plunged in recent years, raising questions about its reliability.
Matching the survey against alternative data sources, the Resolution Foundation thinktank recently suggested the LFS may have “lost” up to 930,000 workers, and accused the ONS of “leaving policymakers in the dark”.
The ONS has been constructing a new survey – the Transformed Labour Force Survey (TLFS), to replace the faulty LFS, and has recently been trialling shorter questionnaires, in the hope of keeping more respondents engaged.
In an update published on Tuesday, the statistics body said it still had too many “quality concerns” to move across to the new survey in mid-2025, as had been hoped.
Instead, it suggested “aiming to complete this process in 2027”, would allow the two series to run in parallel for a longer period, to ensure the new approach works well.
“We are continuing to explore options to minimise the timeframe to transition. We will provide an update on timescales in spring 2025,” the ONS added.
The long transition period is likely to dismay policymakers, who have complained that the unreliability of the survey makes it harder to track developments in the labour market at a critical time.
The Bank of England governor, Andrew Bailey, told the Mansion House dinner last month that the shortcomings of the LFS were a “substantial problem”, adding, “I do struggle to explain when my fellow governors ask me why the British are particularly bad at this.”
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The Bank’s nine-member monetary policy committee is monitoring the labour market closely as it decides when to make the next cut to interest rates. The Bank cut rates by 0.25 points to 4.75% last month.
Policymakers are also keen to track how the £25bn increase in employer national insurance contributions coming into force next April will affect jobs, as companies in some industries have warned they will have to lay off staff.
In a separate announcement on Tuesday, the ONS also said it had been reweighting aspects of the LFS in line with recent higher population estimates. The new reweighted findings show employment 402,000 higher than previously thought.