(May 7): Official statisticians are managing to lure more young Britons to take part in a key labour market survey, a major step forward in their efforts to overhaul figures critical for rate-setters at the Bank of England (BOE).
Liz McKeown, who oversees economic data production at the Office for National Statistics, said response rates had improved markedly after boosting monetary incentives and returning to face-to-face interviews.
“We have seen increases in responses from young people and indeed across age groups, and that is because of the recovery plan we put in place,” she said in an interview.
The results will be welcomed by the BOE, which still lacks trusted numbers seven months after the flagship Labour Force Survey was plunged into crisis over quality concerns. It matters because decisions on when to cut interest rates will in large part hinge on how quickly officials reckon inflation pressures in the job market are easing.
In October, the statistics office was forced to suspend the LFS, a sampling of households across the UK dating back half a century, and publish experimental figures instead after inadequate response rates rendered figures on unemployment, employment and economic inactivity unreliable.
Improved LFS data was reinstated in February but the ONS is still warning economists to treat the statistics with caution. It plans to move to a “transformed” version in September that asks more people, in different ways, about their labour market status.
The ONS has found it particularly hard to engage with the cohort of young people known as Generation Z — those born after 1997 — as its data collectors competed with smartphones and social media for their attention. People who did respond tended to be older Britons and those less likely to be in work, leaving big gaps in the overall picture.
Flying blind
“We returned to face-to-face interviewing,” said McKeown, who started her role as director of economic statistics in January. “We did various things about how often we were recontacting. We importantly increased monetary incentives and then in January we reintroduced the boost to the LFS sample.”
The problem of falling response rates is not unique to Britain — statistics agencies elsewhere including the US have experienced similar challenges since the pandemic, when restrictions stopped in-person contact. However, losing the LFS left the BOE flying blind to key data at a crucial moment.
Evidence pointed to the jobs market running hot despite a slowing economy, and the bank had warned interest rates may have to rise further. The BOE was also facing scrutiny of its own forecasting methods amid claims it was too slow to respond when inflation was taking off in 2021. Policymakers including Governor Andrew Bailey openly expressed their concerns about the quality of labour data.
While the ONS works to fix the issues, the BOE has relied on official average earnings figures, which were unaffected, along with its own “suite” of labour market indicators including surveys. These are now showing cost pressures subsiding, which may allow officials to start cutting rates later this year, economists and investors say.
The BOE itself is helping to oversee the revamp of the LFS as part of a peer review process that also includes academics. Efforts to boost response rates are bearing fruit, with a 44% increase in interviews in “wave one” of its March LFS survey compared to October.
McKeown also said the ONS has plans to ensure that the release of crucial data is not disrupted by industrial action, with around 1,000 workers set to go on strike over orders for them to spend at least 40% of their working time in the office.
“Protecting and publishing our core statistics is absolutely paramount to everything we do,” she said. “I think we’ve been pretty robust over time as we faced all sorts of different disruptions, Covid most obviously.”
