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Quality of jobs for London workers

The Office for National Statistics (ONS) recently published an analysis of Job quality in the UK with a range of indicators showing different aspects of job quality at UK and subnational level.[1]  

London stood out in the data in a number of dimensions. Suggesting a good quality of jobs, workers living in London reported the highest likelihood of progressing in their career across all UK regions and they were least likely to receive low pay relative to the national measure.[2] However, relative to local pay, Londoners were instead the most likely to be low paid. Other indicators of low job quality, such as being unpaid for overtime and working unsatisfactory numbers of hours, were also more common in London. Overall, this suggested that the relative quality of jobs of people living in London may be low.

The ONS analysis is based on employee responses (so excludes those who are self-employed) and assesses job quality through seven indicators.[3] The data is available at national, regional, and local authority level and covers several professional and personal characteristics, such as occupation, industry, and ethnicity. However, the survey sample sizes limit the precision of estimates, especially for smaller groupings and geographies. In this note, we focus on selected key findings for workers living in London.

Londoners are not low paid relative to UK average, but wage inequality exists locally

The average wage in London is much higher than in the UK overall: the median weekly earnings of a full-time employee in London was £767 in 2021, compared to the UK-wide median of £611, a difference of 26%.[4] As a result, the share of Londoners with low pay on the national measure was smaller than in any other region of the UK, at 8%, as shown in Figure 1A.

Figure 1A:

However, using the median pay in the worker’s local authority as a benchmark, London was instead the region with the largest share of low paid workers at 16%. This is due to big differences between the highest and lowest earnings in London, which are larger than in the rest of the UK. As London also has the highest house prices and rental rates, workers with low relative wages are even more exposed to cost-of-living pressures.[5] Illustrating the wage inequality, the ratio between household incomes at the 90th and 10th percentiles (a measure of income inequality) was 10.6 in London in 2019, but only 5.2 in the rest of the UK.[6]

Several job quality outcomes are occupation-specific

Across UK regions, London had the largest share of workers who reported that their jobs afforded them good opportunities for advancing in their career (60% in London, 55% UK-wide).[7] A key factor in career opportunities is occupational group.

The most positive responses on career opportunities in London were found in Professional, Managerial and Associate Professional occupations, in which more than 60% of workers believed they had opportunities to progress (Figure 2A). These are typically occupations requiring higher levels of training and which pay higher wages. Workers in Elementary occupations were instead the least likely to report good progression opportunities at around 32%, just over half the London average.

Figure 2A:

These figures may reflect the level of qualifications required within the occupations, as workers with degrees in London were almost twice as likely to report good career opportunities (66%) as those without any formal qualifications (35%).

Elementary occupations were most likely to involve zero-hours contracts (13%) alongside Caring, Leisure & Other (nearly 10%). These are contracts that do not guarantee a minimum number of hours. Unpaid overtime, while most common amongst the professional and managerial occupations, was also relatively common in administrative and secretarial roles.

Differences in job quality indicators between demographic groups are uncertain

There is some variation in low job quality indicators by the demographic characteristics of workers, though the differences are not always statistically significant.[8] For instance, there were no significant differences in the prevalence of zero-hour contracts between men and women in London. Among other indicators, women were more likely to report satisfaction with job hours than men (82% vs. 75%), but they were also more likely to have low pay relative to local wages (19% vs. 14%) and less likely to say they have good opportunities for career progression (56% vs. 64%).

There are also few significant differences when comparing job quality indicators between workers in different ethnicity groups, largely due to low sample sizes resulting in large uncertainties. Londoners from the White ethnicity group were less likely to have zero-hours contracts (2%) than those from Black (7%) or Bangladeshi (10%) ethnicity groups but there is insufficient data to draw conclusions when comparing to other ethnicity groups.

Londoners who are UK nationals were significantly less likely to have low pay relative to local wages compared to those who are neither UK nor EU nationals (15% vs. 20%), and they were also more likely to work overtime unpaid (23% vs. 16%). These differences may reflect the different occupational mix between the two groups, as non-UK nationals were more likely to work in industries with lower pay, such as Hospitality.[9]

Do Londoners generally experience low job quality?

Though there are more indicators for which London workers were worse off than better off, when compared to other regions or the UK overall, it is likely that these outcomes are a result of the occupational mix in London.

When considering unpaid overtime among workers in Professional occupations across regions, for instance, most report rates as high as those in London. Since the capital has a higher share of its workforce in such occupations, this outcome is more prominent in the overall London average.[10]

For more analyses on London’s labour market, see GLA Economics’ Datastore.

[1] ONS analysis on Annual Population Survey data for the year 2021. Location based on respondent residence.

[2] Low pay is defined as receiving less than two-thirds of UK median hourly pay.

[3] The included indicators are: satisfactory hours; overtime work; desired contract; low-pay; career progression; employee involvement; and zero-hour contracts.

[4] Based on ASHE 2021 data, ONS.

[5] ONS, house prices and rents

[6] GLA Economic Fairness, income inequality measure.

[7] Workers responding positively to the statement “My job offers good opportunities for career progression”.

[8] The ONS provide lower and upper bounds for their estimates for particular groups, based on 95% confidence intervals. Although we do not have the raw data to calculate statistical significance for the differences between groups, as a rule of thumb, when these bounds overlap, we say the differences are not statistically significant.

[9] GLA Economics, PAYE Employments by nationality.

[10] 34% of workers resident London were in Professional occupations, ahead of the South East on 27%. APS Jan-Dec 2021.