UK Seeks Alternative Employment Data Due to ONS Survey Flaws

Investing.com -- On Wednesday, the UK government acknowledged a crisis in obtaining reliable employment data, which has become a significant issue for economic policy formulation. The Office for National Statistics (ONS), responsible for monitoring the UK labor market, has faced serious challenges with its primary tool, the Labor Force Survey. The ONS admitted the inadequacies of the survey and projected that any potential solution could only materialize by 2027.

Employment Minister Alison McGovern emphasized the urgency of the issue in a statement to Bloomberg, noting that the government cannot expect the ONS to provide accurate data. The current Labour Party administration, led by Prime Minister Keir Starmer, is actively working to reintegrate British citizens into the workforce. However, erroneous data from the ONS indicates that the employment rate in the UK has not returned to pre-pandemic levels, a unique situation among G7 countries.

To address urgent needs, UK ministers are now turning to alternative sources, such as the country's social welfare system, to obtain more reliable labor market information. McGovern highlighted the use of data from the Universal Credit system and frontline services to identify and solve the deep-rooted issues in the labor market.

The reliability of the Labor Force Survey has been questioned since it was suspended in October 2023 following a significant drop in response rates. Although it resumed in February, doubts about its accuracy persist. This situation has led to increased scrutiny and criticism from Bank of England policymakers, as inaccurate data complicates the assessment of labor market tightness and the determination of appropriate interest rates.

While the ONS is attempting to develop an alternative survey to rectify these issues, the agency warned that any improvements would take time to be fully effective due to the complexity of the task.