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The Mayor of London The London Assembly

Labour market update for London – June 2020

Many of the estimates presented in these slides cover up to April 2020 and account only for the first full month of the social distance measures (more details on Slide 4). Many of the statistics presented here are estimates based on a survey, and as such have a margin of error – known as sampling variability.

Summary of latest labour market data (1)

  • The Office for National Statistics (ONS) have released their latest labour market estimates. Headline figures do not yet show the impact of Covid-19.
  • For London, in the three months to April 2020:
    • The employment rate rose to 76.4% (+0.4 percentage points (pp) on the quarter);
    • The unemployment rose slightly to 4.6% (+0.2pp on the quarter);
    • The economic inactivity rate fell to 19.9% (-1.9pp on the year and -0.6pp on the quarter).
  • Experimental Claimant Count data covers claims for Jobseeker’s allowance and those claimants in the UC “searching for work”. Following the Government response to Covid-19, people on low income but still in work became eligible for unemployment related benefits and they are included in these statistics. This data shows that in London:
    • The number of claims in the capital has gone up by 167% (around 310,000) since March, this was higher than the UK increase (126%). London alone accounted for a fifth of the increase in UK claims over this period.
    • Workers aged 25-29 saw the largest year on year increase in claims (+238%); all age groups in the capital experienced a larger increase than their UK counterparts.
    • Newham is the borough that experienced the largest year on year change in claims (+16,505);
    • West Ham is the parliamentary constituency that saw the largest increase in claims on the same period last year, followed by Tottenham and East Ham.

Summary of latest labour market data (2)

  • Workforce jobs data shows that in the first quarter of 2020 in London: 
    • There were 6.1 million jobs, the highest number since the record began in 1996. This marks an increase of 93,000 or 1.5% on the previous year.
    • Some sectors saw declines in job numbers – Construction saw workforce jobs fall on the previous year (-36,000), along with Transport & storage (-28,000) and Administrative & support service activities (-9,000).
  • The ONS has also published UK data on actual hours worked, number of PAYE employees, median pay and vacancies. These statistics show that:
    • Between February to April 2019 and February to April 2020, total actual weekly hours worked in the UK decreased by 94.2 million. The largest fall on record since the time series began in 1992;
    • The number of paid employees in the UK fell by 612,000 between March 2020 and May 2020;
    • In the UK median monthly pay fell by 0.8% in April 2020, compared with April 2019. Early estimates for May 2020 indicate that median monthly pay fell by 1.8% on the previous year;
    • For March to May 2020, in the UK there were 342,000 fewer job vacancies than in the previous quarter.

ONS headline indicators do not yet capture the full impact of CV-19

  • The Labour Force Survey (LFS) is the main source of employment data. This is the largest household survey that the ONS publishes – aside from the census – and interviews almost 80,000 adults every quarter to ask, among many questions, how much they have worked, how much they earn and whether those out of work are actively seeking a job. This is an extremely rich dataset but unfortunately it is not as timely as we would like it to be (see chart).
  • In addition, the Coronavirus Job Retention Scheme (CJRS) and other measures may be masking some of the impacts on the labour market. For example, the International Labour Organization (ILO) definition of employment includes those who worked in a job for at least one hour and those temporarily absent from a job. Workers furloughed under the CJRS or who are self-employed but temporarily not in work and have a reasonable expectation of returning to their jobs after a temporary period of absence. Therefore they are classified as employed under the ILO definition and ONS estimates.

Employment rate in London continues to increase

  • In the three months to April 2020, London’s 16-64 employment rate was estimated at 76.4%. This was up by 0.4 percentage points on the previous quarter and by 1.5 percentage points on the year.
  • For the UKthe employment rate rose by 0.3 percentage points on the previous year, reaching 76.4%
  • ONS has also published estimates of employment rate by age and sex. For London this shows that:
    • Those aged 18 to 24 saw the largest increase on the year (+5.6pp), followed by those aged 25 to 34 (+3.8pp). In contrast, the 35-49 age group experienced the lowest increase (+0.2pp);
    • Males in the 18-24 age group saw the largest increase on the year (+8.6pp) across all groups; males aged 35 to 49 experienced the largest decline (-0.7pp) over the same period.

Source: ONS Labour Force Survey 2020

Unemployment rate in the capital was slightly up

  • The unemployment rate in the capital was 4.6% in the three months to April 2020, 0.2 percentage points up on the previous quarter and 0.4 percentage points on the year.
  • The UK unemployment rate was estimated at 3.9%, virtually unchanged.
  • ONS has also published estimates of unemployment rate by age and sex. For London this shows that:
    • Workers aged 18 to 24 were the only age group to see a fall on the year (-2.7pp). The 50-64 age group experienced the largest increase (+1.7pp).
    • Males in the 18-24 age group saw the largest fall on the year (-6.3pp) across all groups; males aged 50 to 64 experienced the largest increase (+1.9pp) over the same period.

Source: ONS Labour Force Survey 2020

Inactivity rate in London continued falling

  • In the three months to April 2020 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 19.9%, down 0.6 percentage points on the previous quarter and 1.9 percentage points down on the year.
  • The UK’s rate of economic inactivity was slightly higher at 20.5%, up 0.1 percentage points on the previous quarter and down 0.3 percentage points on the year.
  • ONS has also published estimates of economic inactivity rate by age and sex. For London this shows that:
    • Those aged 18 to 24 saw the largest fall on the year (-4.6pp), followed by those aged 25 to 34 (-4.1pp). In contrast, the 35-49 age group experienced the smallest fall (-0.3pp).
    • Females in the 25-34 age group saw the largest fall on the year (-6.0pp) across all groups; males aged 35 to 49 were the only group to experience an increase (+0.5pp) over the same period.

Source: ONS Labour Force Survey 2020

The overall claimant count in London is up 310k on March

  • Since March 2020, the number of claims by residents aged 16+ in the capital has gone up by 167% (309,710) , reaching a total of 494,760 claims. This was the third highest regional proportional increase. In the UK, claimant count went up by 126% (1,561,610) since March. The capital accounted for a fifth of this increase.
  • Looking at the change between April and May, the number of claims in London increased by 165,320 – 20,934 more than the rise seen between March and April (144,390). London was the only UK region in which the increase between April and May was greater than the rise seen in the March-April period.
  • The number of claims by men in the capital went up by 185% (187,480) since March – 54% of that was seen between April to May. Female claims rose 146% (122,230) since March – 52% of that occurring between April and May.
  • Looking at age groups, between May 2019 and May 2020, workers aged 25 to 29 saw the largest increase in the number of claims in the capital (+254%) followed by those in the 30-34 (238%) age group. All age groups in London experienced a larger proportional increase than their UK counterparts (see chart).

Note that an increasing number of people became eligible for unemployment-related benefit support, although still employed. Consequently changes in the Claimant Count will not be due wholly to changes in the number of people who are unemployed.

Source: ONS Labour Market Statistics

Newham saw the largest increase in the number of claims

  • Data on claimant count by local authority shows that within London, Newham has experienced the largest year on year change (+16,505). In contrast, if we excluded the City of London, Kensington & Chelsea had the smallest increase (+3,535) over the same period.
  • West Ham (+8,905) was the parliamentary constituency that saw the largest on year increase, followed by Tottenham (+8,190), East Ham (+7,600). In contrast, Orpington was the parliamentary constituency that saw the smallest increase (+1,890). More details on the following slide.
  • Tottenham saw the largest on year increase in the share of working age residents claiming benefits (+8.2pp), followed by Brent Central and Walthamstow. Richmond Park saw the smallest increase (+2.7pp) over the same period – this is after excluding City of London & Westminster.
  • Breaking down the number of claims by parliamentary constituency and age shows that:
    • West Ham saw the largest increase in the number of claims by 18-24 year old residents, followed by East Ham and Tottenham;
    • The same three parliamentary constituencies also saw the largest increases in claims by 25-49 year old residents;
    • Brent Central experienced the largest increase in claims by residents aged 50+, followed by West Ham and Tottenham.

Note that an increasing number of people became eligible for unemployment-related benefit support, although still employed. Consequently changes in the Claimant Count will not be due wholly to changes in the number of people who are unemployed.

Source: ONS Labour Market Statistics

Top 5 Parliamentary constituencies with largest increase in claims

Change in number of claims and % of 16-64 residents claiming unemployment benefits, May 19 – May 20, by parliamentary constituency and age, Top 5/Bottom 5

Note that an increasing number of people became eligible for unemployment-related benefit support, although still employed. Consequently changes in the Claimant Count will not be due wholly to changes in the number of people who are unemployed

Source: ONS Labour Market Statistics.

There were 6.1 million jobs in the capital in Q1, the highest number on record

  • Provisional data on workforce jobs shows that in the first quarter of 2020 there were 6.1 million jobs in London, the highest number since the series began in 1996. This marks an increase 93,000 or 1.5% on the previous year; this was the largest increase across all UK regions, above the growth rate for the UK over the same period (0.8%).
  • In terms of sectors, Information & Communication saw the highest annual growth in jobs (+47,000), followed by Real Estate activities (+37,000) and Professional scientific & Technical activities (+22,000).
  • However, Construction saw the largest fall on the previous year (-36,000), followed by Transport & storage (-28,000) and Administrative & support service activities (-9,000).

Source: ONS Workforce Jobs

Workforce Jobs growth

Year-on-year jobs growth (%), London and the UK, 1996 to 2020 Q1

The UK saw the largest decrease in actual hours worked on record

  • ONS has published data on actual hours worked, number of employees on payroll, pay and vacancies. This shows that:
    • Between February to April 2019 and February to April 2020, total actual weekly hours worked in the UK decreased by 94.2 million, or 8.9%, to 959.9 million hours. This was the largest fall on record since the beginning of the series in 1992. Accommodation & Food Services saw the biggest fall in average actual hours; down 6.9 hours to 21.2 hours per week.
    • Experimental monthly estimates of paid employees and their pay using HMRC PAYE data shows that the number of payroll employees in the UK fell by 612,000 between March 2020 and May 2020 (-449,000 between March and April;-163,000 between April and May.
    • Median monthly pay in the UK fell by 0.8% in April 2020, compared with the same period of the previous year. Early estimates for May 2020 indicate that median monthly pay fell further, by 1.8% compared with the same period of the previous year
    • For March to May 2020, there were an estimated 476,000 vacancies in the UK; this is 342,000 fewer than in the previous quarter and the largest quarterly fall since the start of the time data series in 2001. Wholesale & Retail and Accommodation & Food Services saw the largest falls.

Source: ONS Labour Force Survey

Summary of headline indicators for London and the UK

*All figures are seasonally adjusted. Rates are based on working age (16 – 64 male and female), except for the unemployment rate which is age 16+.

Source: ONS Labour Force Survey 2020