Labour market update for London – April 2018

London’s employment rate reaches record high (again)

Labour market data for the three-month period December 2017 to February 2018 was released yesterday. At 75.1%, London’s employment rate was the highest since the series began, and the unemployment rate, 4.8%, was the lowest since this series began (in 1992). The UK’s employment rate (75.4%) was the highest since this series began (in 1971), and its unemployment rate the lowest since 1975. These data suggest a ‘tightening’ in the labour market. Perhaps linked to this, there are signs that real pay growth is improving (‘real’ pay growth is where earnings increase faster than prices). In February, UK earnings increased 0.2% in real terms on the previous year, having fallen for the previous 12 months.[1]


  • London’s employment rate (i.e. the proportion of London’s residents aged 16-64 population in employment) in the three months to February 2018 was 75.1%, up 0.8 percentage points on the quarter, and 1.8 percentage points on the year. The UK’s employment rate was 75.4% (higher than London’s) up on the quarter (by 0.1 percentage points) and year (by 0.8 percentage points). The employment rate is at a record high in both London (since 1992) and the UK (since 1971).
  • In the three months to February 2018 London’s ILO unemployment rate was 4.8%, down 0.4 percentage points on the quarter and down on the year (by 1.1 percentage points). The UK unemployment rate was 4.2% (lower than London’s), down 0.1 percentage points on the quarter and down 0.4 percentage points on the year. London’s unemployment rate is a ‘record’ low (since 1992) and the UK’s is the lowest since 1975.
  • In the three months to February 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%, similar to the 21.2% in the UK. Economic inactivity in London was down on the quarter and the year, and unchanged in the quarter in the UK.

As mentioned above, in the UK, real pay increased in February 2018 for the first time in a year, increasing 0.2% on the year. 0.2% is a small increase, but marks a change from the previous 12 months in which real pay fell. This might reflect a ‘tightening’ in the labour market suggested by the strong employment and unemployment data above. Monthly pay data is not available for London, with regional data only available on an annual basis. The latest data in this series is for April 2017, and showed a real pay increase in London workplaces of 0.5% on the previous year, compared to a 0.5% fall in the UK overall. In the longer term, however, London and the UK have followed similar trends in real earnings growth. For example, the five years from 2010 marked a prolonged period of pay decreases in real terms in both London and the UK. See the charts on page 4 for more information.

Workforce jobs data was updated in March, with data for the fourth quarter of 2017. London jobs grew by 1.7% on the year, compared to 1.2% in the UK as a whole. See the charts on page 5 for more information.

Note on interpreting labour market data: the statistics presented here are estimates based on a survey (the Labour Force Survey), and as such have a margin of error. Changes in the headline indicators for London, both on the quarter and the year, are within this margin of error. This means they are not statistically significant and may not reflect real changes. Furthermore, the current gap between London and the UK in employment and unemployment rates are also not statistically significant. However, London has had higher unemployment and lower employment than the UK for many years, so we can be confident that these differences are real.

Employment and jobs data

*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 and above. Note: 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 because of differences in definition and administrative processes between Jobseekers’ Allowance and Universal Credit. The ONS no longer publishes the claimant count as an official statistic. In September 2017 we provided a briefing.

Employment rate and unemployment rate charts

Note: both charts show seasonally adjusted data.

Working Age Employment Rate (aged 16 – 64), three years to quarter Dec 2017 – Feb 2018

ILO Unemployment Rate (aged 16 and over), three years to quarter Dec 2017 – Feb 2018

Pay charts

Note: regional pay data only available on an annual basis (see chart 1 for comparison of London and UK data). Monthly data available for the UK – see second chart below. ‘Real’ pay refers to nominal pay adjusted for inflation, with a ‘real’ increase occurring when pay increases faster than prices.

Real annual growth in median pay, London and the UK

Year on year growth in median gross weekly earnings of full time workers.
Source: Annual Survey of Hours and Earnings, ONS. Adjusted for inflation using CPI, as CPIH (the recommended series) only extends back to 2006.
Note: London residents series starts in 2002, workplace series in 1997.

Real annual earnings growth in the UK

Year on year growth in regular pay (excluding bonuses), seasonally adjusted, and adjusted for inflation (CPIH).
Source: ONS EARN01 dataset, series A2FA, based on Monthly Wages and Salaries Survey (MWSS).

Workforce jobs: annual growth in London, 1997 to 2017 (updated in March 2018)

Source: ONS workforce jobs

Workforce jobs: growth by industry in London, annual final quarter growth for the last two years (updated in March 2018)

Source: ONS workforce jobs

[1] This refers to a three month average. The un-averaged data showed an increase in January (0.1%) and February (0.5%).