The ONS team has been working on a transformed labour force survey (TLFS) to replace the current LFS, which has been criticised for being unreliable.
The statistics institute has been trialling shorter questionnaires to try and keep more respondents engaged. In October 2023 the Financial Times reported that the response rate to the current LFS stood at 14.6%, down from about 40% in 2019.
“Labour market data is a central tool for workforce planning," explained Charlotte Roberts, chief people officer for recruitment business The IN Group, speaking to HR magazine. “Employers use it to track trends such as skills gaps, wage benchmarks and talent availability.
"Delaying the replacement of the labour force survey until 2027 will complicate decision making and reduce the available data that employers typically use to inform hiring."
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According to Michael Stull, managing director of staffing firm ManpowerGroup UK, though, employers have not taken the ONS labour market data seriously for a while.
He told HR magazine: “Due to the lack of confidence in the numbers, many organisations have been taking the ONS labour market data with a pinch of salt.
“It is the official national data, so its lack of reliability has serious consequences for businesses in the UK, and also to those who invest and employ British workers.”
Not having reliable figures causes uncertainty for employers, the Bank of England, and the government, Stull added.
He continued: “We’re seeing reluctance from employers to make firm decisions at a time when we need more labour market confidence to encourage investment and growth.
“Without reliable data we don’t know how the Bank of England will act, and the government doesn’t get a true sense of the state of the labour market.
“We’re concerned that another two years of unreliable data will further slow down decision making when it comes to hiring.”
Employers will need to find another source of data to help them with recruitment decisions, suggested Ben Keighley, co-founder of AI recruitment platform Gaia.
He told HR magazine: "The admission that ONS data is no longer as reliable as it should be casts doubt over its worthiness as a national recruitment barometer.
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"This gap will likely push employers to seek alternative tools and data sources, such as AI-driven platforms, which offer real-time, actionable insights to track trends and identify hiring opportunities.
“For businesses already contending with hiring uncertainty amid tax changes and new employment legislation, this delay adds unnecessary complexity. Employers need to embrace innovative methods to benchmark their hiring strategies and navigate a labour market in flux.”
HR leaders should ensure that they focus on upskilling current staff amid hiring uncertainty brought about by a lack of accurate data, according to Sheila Flavell, chief operating officer of the business and technology consultancy the FDM Group.
Speaking to HR magazine, she said: "Employers must prioritise proactive strategies to ensure there aren’t any skills shortages. This news should switch the emphasis to reskilling and upskilling existing staff, particularly in areas like data and analytics.
"Turning to training as part of workforce planning will enable organisations to build the skills they need without reliance on the ONS labour market data.”
Offering competitive pay could help employers retain staff, Jack Kennedy, senior economist at hiring platform Indeed, added.
"Businesses must prioritise retention and adaptability to drive growth and remain competitive amidst these current uncertainties," he told HR magazine.
"Remaining competitive on pay and flexibility will be important for attracting talent regardless of wider market challenges."
