London and UK labour markets remain steady

 The ONS today released labour market data for the three months to February 2019. London’s labour market remains stable, with employment showing little change on the previous quarter and unemployment slightly lower. At the UK level, the labour market maintained its record high employment rate and lowest unemployment rate since 1974/75; there are further signs that a tightening labour market is feeding into higher average pay growth.

• In the three months to February 2019 there were 4.7 million Londoners in work, up 36,000 on the previous year. At the same time, there were 218,000 unemployed residents and just over 1.3 million economically inactive working age residents. London’s 16-64 employment rate was 74.8%, down 0.1 percentage points on the quarter, 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) was estimated at 4.5%, a fall of 0.4 percentage points on the previous year. The UK unemployment rate remained at 3.9%, the lowest rate recorded since the three months to January 1975.
• Growth in real pay continues to be reasonably strong at the UK level, with regular weekly earnings (excluding bonuses) increasing by 1.5% in real terms (after adjusting for inflation). However, the data shows that in real terms, average weekly earnings are still lower than before the 2008 recession.
• Experimental research by the ONS has also looked into the earnings progression (defined as an individual moving up two deciles in the earnings distribution from the previous year) of people in England and Wales in recent years. Please note these research outputs are based on experimental statistics and readers are advised to consult the guidance notes to aid interpretation and avoid misunderstanding. Findings include:
  • Earnings progression tends to be higher for young people moving to London. The average annual rate of earnings growth for this group was 22% between the tax years ending 2012 and 2016, compared to 7% for those that did not move local authority or moved elsewhere. It’s worth noting that this data is based on annual earnings so could reflect increases in hours worked or movements from part-time to full-time work. Moreover, given higher living costs, higher earnings growth for London movers will not necessarily lead to the same improvement in living standards.
  • But most young people did not move in the years leading up to 2015. The vast majority (81%) of young people, aged 18 to 29 years in 2011, did not move local authority in the period from 2011 to 2015; of those who did, 75% moved somewhere other than a city region. City regions also tend to attract people from nearby local authorities. For example, of the young people moving to London during this time, 33% were from the South East. Other city regions showed a similar pattern, with 35% of young movers to Greater Manchester coming from the North West.

• 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 February 2019 was 74.8%, down 0.1 percentage points on the quarter and the year. The UK’s employment rate was 1.3 percentage points higher than London’s at 76.1%, up 0.4 percentage points on the quarter and 0.8 percentage points on the year.

In the three months to February 2019 London’s ILO unemployment rate was 4.5%, down 0.1 percentage points on the quarter and 0.4 percentage points on the year. The UK unemployment rate  stood at 3.9%, down 0.1 percentage points on the quarter and down 0.3 percentage points on the year.

In the three months to February 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%, up 0.2 percentage points on the quarter and 0.5 percentage points on the year. The UK’s rate of economic inactivity was stood at 20.7%, down 0.3 percentage points on the quarter and 0.6 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.  

Jobs charts

Year-on-year jobs growth (%), London and the UK, 1996 to 2018 Q4

Source: ONS workforce jobs

Jobs growth in London by sector, past 12 months (2017-18 Q4) and previous (2016-17 Q4)

Source: ONS workforce jobs