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The Bank of England’s chief economist has warned that improving official statistics might prove to be a “formidable” challenge due a distinctively British characteristic.
For months policymakers have struggled with unreliable data from the Office for National Statistics (ONS), which has made it very difficult to get a clear picture of the UK’s labour market.
Response rates to the flagship labour force survey, which is conducted over the phone, have fallen from 39 to 13 per cent between 2019 and 2023, prompting the ONS to try and develop a revamped survey based on face-to-face interviews.
“People don’t answer phones in the way we used to,” Huw Pill said in the House of Lords economic affairs committee today. “There is perhaps something distinctive about the UK that people don’t answer their phone.”
“My teenage children never answer the phone when I call them up, and I complain to them. And then they point out to me that I never answer the phone when my parents call me up,” he said.
Pill warned that it would “take some time” to improve the labour force survey, suggesting it would be a “formidable” challenge.
Difficulties with data collection mean that there is a considerable degree of uncertainty over the rates of employment, unemployment and inactivity in the economy.
ONS data suggests that the UK employment rate has fallen compared to pre-pandemic, making it an international outlier. Their data suggests economic inactivity has increased, with an extra 900,000 out of the workforce compared to pre-pandemic, largely due to health reasons.
But alternative sources of data suggest the ONS might be exaggerating the fall in employment.
A report from the Resolution Foundation, published last week, suggested that as many as 900,000 more people were in employment than the official figures imply, meaning the employment rate would be in line with its pre-pandemic level.
Pill said the Bank’s own work on the employment rate was “consistent” with the findings of the Resolution Foundation, although the foundation’s work was at the “upper bound”.
He noted that administrative data from the Department from Work and Pensions implies a less significant increase in long-term sickness than the labour force survey.
“The direction of travel is one towards higher long-term sickness being a cause of lack of participation. That’s quite a robust conclusion and its a significant number” he said. “But there’s uncertainty about it and we don’t have a way of resolving it with the information that’s available to us.”
