Investing.com -- On Wednesday, the UK government acknowledged a crisis in obtaining reliable jobs data, which has become a significant issue for economic policy-making. The Office for National Statistics (ONS), the agency responsible for tracking the UK jobs market, has faced serious challenges with its Labor Force Survey, the primary tool for this analysis. The ONS has admitted to the survey's inadequacies, projecting a potential fix only by 2027.
Employment Minister Alison McGovern, in a statement to Bloomberg, highlighted the urgency of the matter, indicating that the government cannot afford to wait for the ONS to provide accurate data. The current Labour administration under Prime Minister Keir Starmer is actively seeking to entice British citizens back into the workforce. However, the flawed data from the ONS has shown that the UK's employment rate has not rebounded to pre-pandemic levels, a unique situation among the G7 nations.
To address the immediate needs, UK ministers are now turning to alternative sources, such as the country's benefits system, to obtain more reliable labor market insights. McGovern emphasized the use of data from the Universal Credit system and front-line services to identify and resolve deep-rooted issues in the labor market.
The reliability of the Labor Force Survey has been in question since its suspension in October 2023, following a significant decline in response rates. Even after resuming in February, doubts about its accuracy persist. This has led to increased scrutiny and criticism from Bank of England policymakers, as the flawed data complicates the assessment of labor market tightness and the setting of appropriate interest rates.
While the ONS is working on developing an alternative survey to rectify these issues, the agency has warned that due to the complexity of the task, it will take time for any improvements to fully take effect.
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