Nearly one million UK workers are missing from official jobs figures because of major failures by Britain’s statistics agency that have made it harder for the Bank of England to control inflation, according to a leading think-tank.
The Resolution Foundation blamed “poor quality” and unreliable data published by the Office for National Statistics (ONS) for “misrepresenting” the jobs market and overstating Britain’s worklessness crisis.
Economists at the think-tank calculated that statisticians had underestimated growth in employment by 930,000 workers since 2019.
A range of other jobs measures, including HMRC tax data, suggested that the current working age employment rate was closer to 76pc – rather than its official rate of 74.8pc in the three months to September, they added.
Adam Corlett, principal economist at the Resolution Foundation, noted that response rates to the ONS’s flagship jobs survey had collapsed to just 13pc from 39pc between 2019 and 2023, with people in work much less likely to respond.
He warned that this had left policymakers “in the dark” about interest rate decisions that affect the savings and mortgages of millions of British families.
“Official statistics have misrepresented what has happened in the UK labour market since the pandemic, and left policymakers in the dark by painting an overly pessimistic picture of our labour market,” he said.
“The ONS Labour Force Survey appears to have ‘lost’ almost a million workers over the past few years compared to better sources.
“This has led to official data underestimating people’s chances of having a job, overstating the scale of Britain’s economic inactivity challenge, and likely overestimating productivity growth.”
Andrew Bailey, the governor of the Bank of England, has branded the lack of accurate data on the UK’s workforce a “substantial problem”, while chief economist Huw Pill has criticised statisticians over their failure to make timely improvements.
Mr Corlett said higher employment would suggest “the overall rate of economic inactivity must also be lower, and possibly close to the pre-pandemic rate”.
But he added that the increase in the number of people not in work or too unwell to seek work was still likely to be “significant”.
“Rising levels of long-term sickness are supported by independent, although not at all straightforward, benefit caseload data,” he said.
Higher employment rates would suggest that Britain still has a dire productivity rate – pushing Sir Keir Starmer’s goal of hitting the highest growth per person in the G7 further out of reach.
A spokesman for the ONS said it had tried to improve its data gathering.
“In recent years we have introduced many new data sources, such as tax records from HMRC, to improve the quality, granularity and timeliness of our labour market statistics,” it said.
“We have been clear for some time that we believe the trends in employees produced from the HMRC tax information and our own separate survey of employers are likely to be painting a more accurate picture than that currently presented by the Labour Force Survey.”
The Foundation also announced that former Treasury director of policy, Ruth Curtice, daughter of psephologist Sir John, has been appointed as its new chief executive and will start on Jan 20.