The Bank of England’s ability to set effective interest rates is being hindered by unreliable labour market statistics, according to governor Andrew Bailey, who has highlighted the shortage of accurate data on the UK’s workforce as a “substantial problem.”
Speaking at Mansion House to an audience of City financiers, Bailey voiced his concerns over the Office for National Statistics’ (ONS) failure to obtain sufficient responses for its Labour Force Survey, which has plagued data collection for the past 18 months. This lack of reliable information on employment status has forced the Bank to lean on alternative data measures as it navigates crucial monetary policy decisions.
“Labour Force Survey challenges are widely recognised,” Bailey commented. “It’s a substantial issue – not just for monetary policy – when we lack clear insight into workforce participation. We could certainly benefit from more engagement across the UK with ONS survey efforts.”
Bailey’s remarks underscore his growing frustration with the UK’s inability to maintain robust workforce data. He highlighted that, alongside the Treasury and other key stakeholders, the Bank continues to work closely with the ONS to improve the quality of UK labour data.
While other advanced economies have seen labour market re-entry post-pandemic, the UK has struggled with a decline in labour force participation, a trend Bailey warns could hamper economic performance. The ONS has attempted to address the issue by increasing its survey participants from 44,000 in 2022 to 59,000 this year, though it has cautioned users against relying too heavily on short-term Labour Force Survey data for decision-making.
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