Labour market update for London – May 2019
London and UK labour markets remain stable
The ONS today released labour market data for the three months to March 2019. London’s labour market was stable over this period, with employment and unemployed showing little change on the previous quarter. The UK maintained its record high employment rate, while unemployment fell slightly to the lowest level since 1974.
- In the three months to March 2019 there were 4.7 million Londoners in work. This was up 29,000 on the previous year – largely driven by an increase amongst men aged 35-64. At the same time, there were 214,000 unemployed residents and just over 1.3 million economically inactive working age residents.
- London’s 16-64 employment rate was 75.0%, down 0.1 percentage points on the year, while the UK maintained its record high employment rate of 76.1%.
- London’s unemployment rate (the number of unemployed people as a percentage of the labour force) continued on its declining trend seen since the latter part of 2011 to stand at 4.4%. The UK unemployment rate was 3.8%, the lowest rate recorded since the three months to December 1974.
- Between 2017 and 2018, the number of temporary employees in London fell by 16,000 to 237,000. Half of this decline was amongst people who could not find a permanent job.
- Data on employment by country of birth shows that in the three months to March 2019, an estimated 2.4 million EU nationals were working in the UK (up by 98,000 on the previous year), along with 1.3 million non-EU nationals (an increase of 80,000 on the previous year).
- Recent work by the ONS examines overeducation in the UK labour market and how it affects pay. Overeducation is a form of mismatch where a person has more education than required for their job. The analysis assumes that education is a measure of workers’ ability and so does not distinguish between the effects of overeducation and over-skilling.
- London had the highest proportion of overeducated workers in any UK region. In 2017, 25% of Londoners aged 16-64 and in employment were overeducated, compared to 16% of people in the UK. This may reflect the high proportion of migrants in the workforce, who are more likely to be overeducated. Non-UK born overeducated workers accounted for 15% of all workers living in London in 2017, in comparison to an average of 3% in other regions.
- Overeducation is associated with a wage penalty. For each year of surplus education, overeducated workers earn around 1.3% more than workers with less education in the same occupation. However, compared to similarly educated workers who are in occupations matched to their education level, overeducated workers experience a wage penalty of between 3% and 8%.
- Please see the charts and tables on the following pages for more detail on headline labour market data.
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- known as sampling variability. For example, a sampling variability of 0.1 and an estimated value of 2% would mean that if the survey was carried out 100 times, then in 95 of these the value would be between 1.9% and 2.1%. Changes in the headline indicators for London, and the gap between London and the UK are typically within the survey’s 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 March 2019 was 75.0%, up 0.1 percentage points on the quarter and down 0.1 percentage points on the year. The UK’s employment rate was 1.1 percentage points higher than London’s at 76.1%, up 0.2 percentage points on the quarter and 0.5 percentage points on the year.
In the three months to March 2019 London’s ILO unemployment rate was 4.4%, down 0.1 percentage points on the quarter and 0.6 percentage points on the year. The UK unemployment rate stood at 3.8%, down 0.2 percentage points on the quarter and 0.4 percentage points on the year.
In the three months to March 2019 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 21.6%, unchanged on the quarter and up 0.7 percentage points on the year. The UK’s rate of economic inactivity stood at 20.8%, down 0.1 percentage points on the quarter and 0.2 percentage points on the year.
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 the 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.
Year-on-year jobs growth (%), London and the UK, 1997 to 2018 Q4
Source: ONS workforce jobs
Jobs growth in London by sector, last 12 months (2017-18 Q4) and previous (2016-17 Q4)
Source: ONS workforce jobs