The Bank of England governor Andrew Bailey expressed concerns over the reliability of UK labor data, impacting crucial policy decisions.
- Bailey highlighted challenges with the Labor Force Survey, affecting data accuracy for the past 18 months.
- The Bank of England is relying on alternative data due to issues with workforce participation insights.
- UK labor market difficulties post-pandemic could hurt economic performance, according to Bailey.
- The ONS is working to improve data accuracy by increasing survey participants and advising caution on short-term data use.
In a significant address at Mansion House, Bank of England Governor Andrew Bailey voiced his strong concerns about the current state of UK labor data collection. The reliability of this data, he warned, is crucial for making informed monetary policy decisions. Bailey pointed specifically to the problems with the Office for National Statistics’ (ONS) Labor Force Survey, which has struggled to gather adequate responses over the last year and a half. These difficulties have led the Bank to depend more on alternative data sources to understand the employment landscape.
Bailey’s frustration is clear, as he noted that the inability to gather robust data on workforce participation poses a serious problem, not only for monetary policy decisions. He called for more widespread participation in the ONS surveys across the UK, emphasizing the importance of having a clear insight into workforce dynamics. Bailey remarked that the Bank, along with the Treasury and other major stakeholders, is actively working with the ONS to enhance the quality of UK labor data.
The governor also compared the UK’s labor market situation to other advanced economies, which have seen more successful labor market re-entries post-pandemic. In contrast, the UK has faced a decline in labor force participation, a trend that Bailey warns could have negative effects on economic growth.
To tackle these issues, the ONS has increased the number of survey participants from 44,000 in 2022 to 59,000 in the current year. However, the ONS cautions against placing too much emphasis on short-term Labor Force Survey data for making critical decisions. Bailey underscored the necessity of understanding labor supply dynamics to assess the UK’s economic capacity, which is also challenged by factors like Brexit-related trade issues, energy price fluctuations, and sluggish investment.
Bailey’s insights emphasize the pressing need for accurate labor data to navigate economic challenges effectively.
