Bank of England official slams ONS for labor market data failure

In the UK, significant concerns have arisen regarding the accuracy of labor market data collected by the Office for National Statistics (ONS). This situation gained attention following a statement by Dr Swati Dhingra, a member of the Bank of England's Monetary Policy Committee, during a conference held in London. Dr Dhingra expressed disapproval of the ONS's handling of the Labor Force Survey (LFS), which was suspended in October 2023 due to data accuracy concerns. She highlighted the stark contrast between the challenges faced by the UK in its data collection efforts and those experienced in her native India, where the labor force survey was successfully conducted with a population of one billion people. This comparison underscored her belief that the UK's problems could be resolved more effectively. The ONS has struggled with low response rates to the Labor Force Survey, which dropped from 39% in 2019 to just 13% in 2023. The decline in response rates has raised questions about the reliability of the data, with economists becoming increasingly hesitant to rely on these statistics. The Resolution Foundation think tank pointed out that nearly one million workers have effectively 'vanished' from the labor market due to inaccuracies in ONS data. They claim that the figure underestimated employment growth by 930,000 workers since 2019. In light of these issues, the UK Statistics Authority, which oversees the ONS, indicated that a revised and reliable LFS might not become available until mid-2027. As the nation seeks to revive its workforce, it appears they may not fully understand the scope of the inactivity crisis. In response to mounting pressure, the ONS has acknowledged the problems stemming from the Labor Force Survey and has started to consider more immediate data sources, such as HMRC payroll statistics, to provide a clearer picture of employment trends. The situation has drawn attention from other officials as well. Bank of England Governor Andrew Bailey admitted in a recent annual report that assessing the true state of labor market activity has become increasingly challenging due to the unreliable data. The resulting uncertainty forced the Monetary Policy Committee to lean more heavily on alternative sources of information, including business surveys. Meanwhile, ONS staff have indicated a willingness to engage in strike action if they are compelled to return to the office full-time, reflecting ongoing tensions regarding work-from-home policies. The ONS is taking steps to improve the quality of the Labor Force Survey by increasing sample sizes, reintroducing face-to-face interviews, and adjusting weights based on the latest population information, but substantive changes may take time to materialize.