ONS Publishes New Method for Measuring UK Labour Productivity

The Office for National Statistics has set out a component-based approach to estimating labour inputs, drawing on payroll data, survey figures and explicit adjustments for leave and sickness, as part of a broader plan to restore confidence in UK economic statistics.

The Office for National Statistics has published a research paper introducing a new component-based method for estimating labour inputs used in UK labour productivity calculations. The approach builds hours-worked figures from the ground up — starting from usual contractual hours and applying explicit adjustments for annual leave, sickness, maternity leave and other absences — drawing on HMRC Real Time Information payroll data, the Labour Force Survey and the Workforce Jobs survey combined.

The figures show the new method is intended to become the definitive basis for headline UK labour productivity statistics, replacing the current dual approach of a traditional LFS-based series and a separate experimental RTI-based series. But that transition isn’t complete yet. ONS has stated that, until the component-based data are fully implemented, users should treat the experimental RTI-based productivity series as the primary measure of changes in UK labour productivity.

The shift matters because labour productivity — output per hour worked — is a key indicator used to assess wage growth potential and long-term economic performance. Declining response rates to the Labour Force Survey have created discrepancies between survey-based hours estimates and administrative employment data, and the new approach is designed to minimise bias arising from those shortfalls. Independent researchers and Bank of England staff analysis have suggested the component method could raise measured UK productivity growth compared with previous methods over historical periods, though those estimates are not yet formally incorporated into official ONS headline statistics and should be treated as unverified for official purposes.

For Kent, the practical effects are indirect but real. Bodies such as Kent County Council, the South East Local Enterprise Partnership and the Kent Invicta Chamber of Commerce use ONS productivity and labour market statistics to shape economic development strategies, skills programmes and transport planning — including assessments of employment hubs along the M2 and M20 corridors and around the Port of Dover. More accurate hours-worked estimates could alter how productivity gaps or strengths in the county are measured compared with other regions, potentially influencing how central government and regional bodies target investment and skills funding.

ONS has said detailed methods will be published in dedicated articles, with development phased over multiple years to limit the scale of concurrent changes. The component method forms one workstream within a wider economic statistics recovery plan that also includes transforming the Labour Force Survey into a new Transformed LFS and modernising the Statistical Business Register.