Summary of Local Skills Report, Spring 2022
The GLA published an update of its Local Skills Report (LSR) this February, following the first iteration published in March 2021. The updated LSR was published alongside extensive Data Annexes, providing insight into the key aspects of the local labour market and skills landscape at a London and sub-regional level.
This supplement summarises some of the key data and analysis which were highlighted in the report and annexes.
London’s labour market has been growing long-term
London’s labour market is fast-growing. London’s population grew by 12% from 2010 to 2020, faster than the England average of 7%. The number of Londoners in employment increased by a fifth, from 3.7 million in 2010 to 4.5 million in 2021.
Figure A1 further illustrates the key trends in London’s labour market over the past decade. The employment rate has risen from below 68% to around 76%, while the unemployment rate has dropped from 10% to below 5% during this time. Despite clear setbacks during the COVID-19 pandemic, the picture is one of longer-term improvements in these headline labour market indicators.
These trends are partially fuelled by higher migration by non-UK workers to London: while 28% of jobs in London were held by workers born outside the UK in 2004, this had increased to 41% in 2020.
Figure A1: London headline labour market rates
Londoners are relatively highly educated and productive
The proportion of Londoners with higher-level qualifications is significantly above the England average (see Figure A2). Around 59% of working age Londoners held a high-level qualification (NVQ4+) in 2020, a substantial increase from 31% in 2004. This is partly because the capital attracts highly qualified people, but also because more young Londoners are progressing to higher levels of education.
London is also one of the most productive regions in Europe, with many workers in higher-paying industries such as finance or the digital and creative industries. London’s level of labour productivity is one third higher than the England average and the highest of any UK region or country, supported by higher skill levels among the capital’s workforce (albeit this gap has narrowed over the last decade).
Demographic and geographic inequalities nevertheless persist
These headline labour market indicators conceal significant inequalities both by demographic characteristics and location, as shown in Figure A3 below. The employment rate for Londoners with degree-level qualifications was twice that for those without any formal qualifications, a bigger difference than in other parts of the country. Londoners from ‘mixed’, ‘other’, ‘black’, and ‘Pakistani / Bangladeshi’ ethnic groups also had below average employment rates, as did disabled Londoners. By local authority, the employment rate was 18 percentage points (pp) higher in the London borough of Wandsworth than in Westminster during the same period.
There are also very significant differences in qualification attainment at borough level. The share of Londoners with low or no qualifications was 11% on average in 2020. However, the boroughs of Havering and Hounslow saw shares of 18%, which was higher than the national average (16%). These differences are also reflected in salaries: the median gross weekly wage for resident employees in Kensington & Chelsea was more than 50% higher than for residents in Brent.
London’s labour market was significantly affected by the COVID-19 pandemic
The impact from the pandemic was often more severe in London than other UK regions. The total number of workforce jobs in London fell by 1.7% between December 2019 and 2021 compared to a decrease of 1.4% across the UK on average. Self-employment jobs were particularly affected, dropping by 15.5% in London during this period.
The impact also varied across industries. Between December 2019 and December 2021, the number of workforce jobs in London had increased by 7.8% in the Health sector but decreased by 12.9% in Construction (see the London Labour Market Update for March 2022).
The post-lockdown economy has also posed additional challenges as employers struggle to hire workers. A fifth of London businesses faced a lack of applicants in 2021 and almost two thirds of those looking to recruit faced difficulties in doing so. Employers in London experienced recruiting difficulties for reasons such as the decrease in the number of migrant workers; high employee turnover; and general skills shortages.
Most deprived areas saw similar impacts to worst-off boroughs
The London Claimant Count (a measure of people claiming benefits) rose by 81% between March 2020 and February 2022, highlighting the significant impact on individuals. The number of claimants was estimated at 337,000, though it had reached 509,000 at the peak of the pandemic. The claimant count rate (as a proportion of residents aged 16 to 64) increased by approximately 2.5pp in London on average during the same period, though some boroughs saw even higher increases at up to 4pp (see Figure A4 below). Out of the 20 local authorities with the highest change in the claimant count rate in the UK, 16 were in London.
The level of neighbourhood deprivation was also correlated with the intensity of the pandemic impact. The claimant count rate increased by 3.5pp in the most deprived quintile of London neighbourhoods compared to 1.1pp in the least deprived quintile. As a result of such differences in impact, there are concerns that the pandemic will exacerbate existing inequalities in the capital in the long run.
The Local Skills Report and Annexes can be found on the London Datastore. For the latest data on London’s labour market, GLA Economics releases monthly labour market updates which are also available on the London Datastore.
 The share of total London employments within professional, ICT and finance sectors is significantly higher than in England on average.
 Though the figures for gross value-added per hour worked were £46 in London and £35 in England on average, productivity growth averaged 1.9% per year on average in England but only 1.7% in London from 2010 to 2019.
 More timely data from HMRC suggests a 1.2% increase in payrolled employees from the pre-pandemic peak in March 2022, though this may reflect a net movement from self-employment.
 Some claimants will be unemployed and seeking work, others may be temporarily inactive or away from work, or employed but with low earning.