London’s employment remains high, with strong wage growth in London and the UK

 Labour market data for the three-month period July to September 2018 was released today. The capital’s labour market remains healthy, with the employment rate near record highs and the unemployment rate equalling its record low. There is evidence that a ‘tightening’ labour market is feeding into higher pay increases at a both a regional and national level. According to the Annual Survey of Hours and Earnings, annual pay growth for full-time employees working in London rose to its highest rate since the financial crisis in the year to April 2018. However, adjusted for inflation, the level of pay is still below pre-recession levels in London and the UK.

• Estimates from the Labour Force Survey show that, between April to June 2018 and July to September 2018, the number of London residents in work rose slightly, the number of unemployed residents decreased and the number of people aged from 16 to 64 years who are economically inactive (i.e. not working and not seeking or available to work) decreased.

• In total, there were 4.78 million London residents aged 16+ in work between July to September 2018, up by 65,000 on the previous quarter. At the same time, there were 234,000 unemployed residents aged 16+ (those not in work but seeking and available to work), and 1.29 million aged from 16 to 64 years who were economically inactive.

• The number of EU nationals working in the UK fell to 2.25 million in July to September 2018. This marks a fall of 132,000 compared to July to September 2017, the largest fall since comparable records began in 1997. However, over the same period the number of non-EU nationals working in the UK rose by 34,000 to 1.24 million.

• At national level, nominal pay growth (both regular and total pay) increased in the latest data. In the three months to September 2018, regular pay increased 3.2% on the previous year – the annual growth rate for regular pay has not been higher since October to December 2008. However, it remains worth noting that in real terms (i.e. adjusting for inflation) annual pay growth in Great Britain was still only 0.9% in the latest data. On this basis, average weekly earnings are still below pre-recession levels.

• In October the ONS also released new data from its Annual Survey of Hours and Earnings – the main measure of regional earnings which is published on an annual basis. According to this data, median gross weekly earnings for full-time employees working in London rose to £721 in April 2018, up by 3.2% from 2017. This was the highest rate of growth in workplace earnings in London since 2008. Adjusted for inflation, though, weekly earnings increased by 0.9% from 2017 and were still 5.6% lower than in 2008.

Note on interpreting labour market data: many of the statistics presented here (for example, the employment rate and unemployment rate) are estimates based on a survey, and as such have a margin of error. Changes in the headline indicators for London, and the gap between London and the UK as a whole, are typically within this margin of error, meaning they are not statistically significant and may not reflect real changes / differences.

Headline labour market data – employment rate, unemployment rate, and economic inactivity rate

Note: charts show seasonally adjusted data.

London’s employment rate (i.e. the proportion of London’s residents aged 16-64 population in employment) in the three months to September 2018 was 75.2%, up 0.6 percentage points on the quarter, and up 0.9 percentage points on the year. The UK’s employment rate was 0.3 percentage points higher than London’s at 75.5%, up 0.5 percentage points on the year and unchanged since the previous quarter.

In the three months to September 2018 London’s ILO unemployment rate was 4.7%, down 0.2 percentage points on the quarter and 0.3 percentage points on the year, and matching record lows (4.7%). The UK unemployment rate remained lower than London’s at 4.1%, up 0.1 percentage points on the quarter but down 0.2 percentage points on the year.

In the three months to September 2018 the rate of economic inactivity in London (the proportion of 16 to 64 year olds not in work and not looking for or not able to work) was 21.0%, down 0.5 percentage points on the quarter and 0.7 percentage points on the year. The UK’s rate of economic inactivity was slightly higher than London’s at 21.2%, and was down 0.4 percentage points on the year, with no change on the quarter.

Headline labour market data for London and the UK

*All figures are seasonally adjusted. Rates are based on working age (16 – 64 male and female), with the exception of unemployment rate which is age 16+. We are no longer including a table with the claimant count (the number of people claiming unemployment benefits). The roll out of Universal Credit has caused problems with this statistic. In September 2017 we provided a briefing.  

Jobs charts

 Year-on-year jobs growth, London and the UK, 1997 to 2018 Q2

Source: ONS workforce jobs

Jobs growth in London by sector, past 12 months (2017-18 Q2) and previous (2016-17 Q2)

Source: ONS workforce jobs