In a startling admission, the Office for National Statistics (ONS) has revealed that the much-anticipated replacement for its beleaguered Labour Force Survey (LFS) may not be operational until 2027. The delay comes as a blow to policymakers who have long criticized the quality and reliability of the existing employment data, which serves as a critical input for economic decision-making.
Grappling with Unreliable Data
The LFS, which provides the official measures of employment and unemployment in the UK, has seen response rates plummet in recent years. This has raised serious questions about the accuracy of the data it generates. A recent analysis by the Resolution Foundation thinktank suggested that the survey may have “lost” nearly a million workers, leading to accusations that the ONS is “leaving policymakers in the dark”.
The unreliability of the LFS data has become a major headache for institutions like the Bank of England, which relies on accurate labour market information to guide monetary policy decisions. Governor Andrew Bailey recently lamented the shortcomings of the survey, calling it a “substantial problem” and expressing frustration at the UK’s apparent inability to collect robust employment statistics compared to other nations.
Transition Challenges
The ONS has been working on a new survey, the Transformed Labour Force Survey (TLFS), to address the deficiencies of the LFS. However, the transition process has been fraught with challenges. Despite trialling shorter questionnaires to improve respondent engagement, the statistics body says it still has too many “quality concerns” to proceed with the planned mid-2025 switchover.
Instead, the ONS is now proposing to extend the parallel run of the two surveys until 2027. This would allow more time to iron out any issues and ensure the new approach delivers the desired improvements in data quality. However, the prospect of several more years of unreliable employment figures is likely to frustrate policymakers who are keen to base decisions on sound evidence.
Reweighting Revelations
Alongside the transition delay, the ONS has also announced that it has reweighted aspects of the LFS to align with recent population estimates. The revised figures show employment levels 402,000 higher than previously thought, highlighting the scale of potential inaccuracies in the current data.
While the reweighting provides a more accurate picture of the labour market, it also underscores the challenges the ONS faces in producing reliable statistics amidst shifting demographics and survey participation rates. The discrepancy is likely to fuel further scrutiny of the LFS and increase pressure on the agency to expedite improvements.
Policy Implications
The extended timeline for replacing the LFS comes at a sensitive juncture for UK economic policy. The Bank of England is closely monitoring the labour market as it weighs the timing of future interest rate cuts. Inaccurate employment data could lead to suboptimal decisions that fail to address the true state of the economy.
Moreover, with significant changes to employer national insurance contributions set to take effect next year, policymakers are keen to understand how businesses may respond in terms of hiring and layoffs. Unreliable LFS data makes it harder to anticipate and mitigate any adverse impacts on employment levels.
Charting a Path Forward
As the ONS grapples with the complexities of modernizing its labour force survey, the stakes could hardly be higher. Accurate, timely employment data is essential for effective policymaking, particularly in an era of economic uncertainty and structural change.
While the decision to extend the transition period may disappoint those hoping for a quicker resolution, it is arguably a necessary step to ensure the new survey is fit for purpose. The ONS will need to work closely with stakeholders to build confidence in the revised methodology and demonstrate the robustness of the resulting statistics.
Ultimately, the success of the Transformed Labour Force Survey will be judged not just on the reliability of its data, but on its ability to provide policymakers with the insights they need to navigate an ever-evolving labour market. As the 2027 target looms, the pressure is on the ONS to deliver a survey that meets the demands of a data-driven age.
