Jobs market not as weak as official data suggests, says Huw Pill

The UK’s missing worker problem has been overstated by unreliable labour market statistics, the chief economist of the Bank of England has said.
Huw Pill, a member of the Bank’s monetary policy committee, said the central bank’s internal assessment of the labour market chimed with new research showing higher employment and a lower rate of economic inactivity than suggested by official data.
“We think [labour force participation] has now reached the point where participation is broadly in line with a natural level it should be,” Pill told the House of Lords economic affairs committee.
The Office for National Statistics has calculated a 1 per cent rise in labour force inactivity since the pandemic, a trend that has not been seen in other advanced economies and led policymakers to work out how to get more people back to work.
But the ONS’s labour market survey has been beset by inaccuracy for the past two years due to low response rates, throwing doubt over its estimates on employment, unemployment and inactivity. Last week the Resolution Foundation said that there was no rise in inactivity based on alternative data sources from HM Revenue & Customs and that overall employment had been underestimated by 930,000 since 2019.
Pill said the Bank’s internal assessments were in line with the think tank’s findings. “We would say that somewhere between the published data and the Resolution Foundation, lies the truth,” he said.
His comments come as the government launched its Get Britain Working white paper to revamp jobcentres and provide more mental health support for younger people to join the workforce. Labour has set an employment target of 80 per cent, below the current 74.8 per cent, and an aim that Pill said was achievable based on more women taking up jobs over the last decade.
The Bank is worried about low rates of labour force participation, which would create a tight jobs market and push up wages, feeding into higher inflation.
Senior Bank officials have raised their frustration at the ONS, which has suffered from falling response rates after its survey moved from in-person questions to being carried out over the phone during the pandemic.