UK jobs figures still not reliable, warns data watchdog

The UK’s official jobs data cannot be counted on to reflect real changes in the workforce, the statistical watchdog has warned, adding that the Office for National Statistics needed to invest more in fixing the issue.

A review published on Thursday by the Office for Statistics Regulation, which oversees the ONS, said there were big gaps in regional data as well as overarching concerns over quality and how the agency communicated.

“The results for some of the breakdowns have large sampling variability, so it is difficult to determine if changes reflect real changes in the labour market or appear because of sampling variability, which introduced volatility in the statistics,” the OSR said.

The ONS stopped releasing key estimates of employment and unemployment in October because of a low response rate to the survey underpinning them. It resumed publication last month and said the figures would become more reliable as responses to the survey picked up.

The lack of solid jobs data has been a source of frustration for policymakers at the Bank of England, who kept interest rates on hold at 5.25 per cent this week partly because they want clearer evidence that the labour market is cooling before they loosen monetary policy.

The OSR review made it clear there were still holes in the ONS data, with detailed breakdowns for past years missing and questions over its quality.

Although the ONS was now issuing clearer warnings of the uncertainty around the data, it was still not giving users enough guidance to know how much weight to place on them, the OSR said, pointing to particular problems with the breakdown of employment by age group.

“The non-specific use of words like ‘volatility’ and ONS advising ‘caution’ do not provide users with enough information to support appropriate use,” the OSR said, calling for “improved, clear and open communication”.

The watchdog added that the ONS should put more resource into work on the data’s quality.

Sam Beckett, chief economic adviser to the Treasury, told the House of Lords economic affairs committee this week that the current state of the data was “challenging at a time when you’d really want to know very accurately what was going on” in the UK workforce.

The latest figures put UK unemployment at 3.9 per cent in the three months to January, unchanged from the previous three months and 0.1 percentage points up on the year.

But the ONS said the true rate could be anywhere within 0.3 percentage points of this figure. It has not given similar guidance on the uncertainty around more volatile figures for particular age groups or regions.

The ONS has not yet set out further plans to improve the data in the period remaining before it switches to a state of the art, “transformed” survey intended to resolve the problems.

The new survey is set to be in full operation in September, six months later than expected.

While the ONS has made concerted efforts to improve the headline estimates of the national employment and unemployment rates, it has not given the same priority to regional breakdowns of the data that underpin decisions by the Scottish and Welsh governments and by local authorities.

The OSR noted that resource constraints had stopped the agency publishing the regional breakdowns needed to make comparisons over time.

Since the ONS had made it a priority for the next financial year to improve the jobs data, the regulator urged the body to “align resources” with its priorities and bolster resources for the teams concerned.

The ONS said in response that it welcomed the review and would answer its recommendations, with a fuller update on both the LFS and its replacement, on April 26.