Get Britain’s Stats Working

The Government is soon to release its ‘Get Britain Working’ White Paper, which is expected to repeat the Government’s ambition to reach an 80 per cent employment rate. But this goal only highlights the fact that we currently do not know what the UK’s employment rate actually is, due to problems with the Labour Force Survey (LFS). This issue has been ongoing for some time, with broad implications for UK economic policy making. 

Using other data sources, we present an alternative time series for the employment rate which suggests that the true rate is likely materially higher than that recorded in the current LFS data.  

If the LFS is underestimating the employment rate, then it must be overestimating either or both of unemployment or inactivity. The true rate of unemployment may be lower than the LFS’ latest estimate of 4.3 per cent, but it seems unlikely that it could be radically lower. A higher employment rate would therefore require that the true inactivity rate is now significantly lower than thought and it could potentially be no higher than in 2019, with a rise in inactivity due to long-term sickness offset, among other things, by fewer people out of work because they are looking after their children or home.