Almost a million workers in the UK labor market have been “missed” due to poor and unreliable official data, and the UK’s unemployment rate and inactivity may have been overstated, a think tank has claimed.

Economists at the Resolution Foundation have accused the Office for National Statistics (ONS) of misrepresenting trends in the jobs sector through inaccurate figures from the Labor Force Survey (LFS), which they say underestimated employment growth by 930,000 workers in 2019.

The ONS has for some time warned about the accuracy of its main LFS data due to poor survey response rates since the start of the pandemic, with economists becoming increasingly reluctant to put any weight on the statistics.

The Resolution Foundation said it created its own alternative estimate of UK employment using data from HM Revenue and Customs payroll and self-employment data, as well as the latest ONS population data.

It believes its new employment index suggests the employment rate could be around 76%, rather than the official rate of around 75% as reported by the ONS.

This could also have implications for the unemployment rate, currently estimated at 4.3% in the third quarter, as well as the level of labor force inactivity, which has risen in recent years, according to ONS data.

Adam Corlett, chief economist at the Resolution Foundation, said: “Official statistics have misrepresented what has happened in the UK labor market since the pandemic and left policymakers in the dark, painting an overly pessimistic picture of our market of work.

“The ONS Labor Force Survey appears to have ‘missed’ nearly a million workers in recent years compared to better sources.

“This has led to official data underestimating people’s chances of getting a job, overestimating the scale of the UK’s economic inactivity challenge and likely overestimating productivity growth.”

The foundation added that the Government’s target of achieving an 80% employment rate would be “tainted by poor quality data”, making policy-making difficult.

It claims the response rate to the ONS jobs survey fell to just 13% from 39% between 2019 and 2023, making workers disproportionately less likely to respond, while it struggled to reflect the importance increasing number of workers from outside the European Union.

The ONS said it was aware of problems with LFS data and placed more weight on other statistics, such as more timely pay data from HMRC.

It also pointed out that recent improvements to increase response rates had increased the number of interviews conducted from 44,238 to 59,139.

An ONS spokesman said: “We have been clear for some time that we believe that employee trends produced from HMRC tax information and our own separate survey of employers are likely to paint a more accurate picture than that currently presented by the LFS.

“Our continued work to improve LFS estimates by increasing the sample, reintroducing face-to-face interviews, increasing incentives for those who participate, and reweighting the data using the latest population information will help improve the quality of the survey.”

It said it was “working with external experts to assess whether further action may be necessary”.

It comes after the Resolution Foundation also announced on Tuesday that former Treasury director Ruth Curtice has been appointed as its new chief executive and will start on January 20.