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Labour market update for London – May 2018

London’s employment rate reaches a record high (again)

Labour market data for the three-month period January to March 2018 was released today. At 75.2%, London’s employment rate was the highest since the series began (in 1992) and the unemployment rate, 4.9%, was also close to a record low. The economic inactivity rate in London (the proportion of working age people not in work and not seeking work) has also fallen to a record low, falling by 0.7 percentage points to 20.8%. The London inactivity rate has recently dropped below the UK rate, which is unusual historically. Both London and the UK as a whole have seen falling inactivity rates since 2012.

As with last month, these data suggest a ‘tightening’ in the labour market. Nationally, real wages increased slightly for the second successive month (by 0.4% on the previous year, excluding bonuses), although productivity, measured as output per hour worked, decreased by 0.5% on the previous quarter[1].


  • London’s employment rate (i.e. the proportion of London’s residents aged 16-64 population in employment) in the three months to March 2018 was 75.2%, up 0.7 percentage points on the quarter, and 1.9 percentage points on the year. The UK’s employment rate was slightly higher than London’s at 75.6%, up on the quarter (by 0.4 percentage points) and year (by 0.8 percentage points). The employment rate is at a record high in both London (since 1992) and the UK (since 1971).
  • In the three months to March 2018 London’s ILO unemployment rate was 4.9%, down 0.1 percentage points on the quarter and 1.2 percentage points on the year.[2] The UK unemployment rate was slightly lower than London’s at 4.2%, down 0.2 percentage points on the quarter and 0.4 percentage points on the year. This is close to the record low seen in London last month.
  • In the three months to March 2018 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 20.8%, slightly below the 21.0% seen in the UK. That London currently has a lower economic activity rate than the UK as a whole is remarkable, since London had a higher rate for almost the whole of the last 25 years. For example, in Aug-Oct 2004 the rate in London was 3.4 percentage points above the UK.

Economic inactivity in both London and the UK was down on the quarter and the year, and indeed has been falling fairly consistently over the past five years. In the first quarter of 2012 the rate was 25.6% in London, 4.8 percentage points above the current rate. Most of the fall over this period has been driven by a fall in economic inactivity among women. See the third figure [3].

Workforce jobs data was last updated in March, with data for the fourth quarter of 2017. London jobs grew by 1.7% on the year, compared to 1.2% in the UK as a whole. See the charts on page 4 for more information. There will be an update next month (June) for Q1 2018.

Note on interpreting labour market data: the statistics presented here are estimates based on a survey (the Labour Force Survey), and as such have a margin of error. Changes in the headline indicators for London are typically within this margin of error, meaning they are not statistically significant and may not reflect real changes. Furthermore, the current gap between London and the UK in employment and unemployment rates are also not statistically significant. However, London has had higher unemployment and lower employment than the UK for many years, so we can be confident that these differences are real.

Employment and jobs data

*All figures are seasonally adjusted. Rates are based on working age (16 – 64 male and female), with the exception of unemployment rate which is age 16 and above. Note: 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 because of differences in definition and administrative processes between Jobseekers’ Allowance and Universal Credit. The ONS no longer publishes the claimant count as an official statistic. In September 2017 we provided a briefing .

Employment rate and unemployment rate charts

Note: charts show seasonally adjusted data.

Workforce jobs: annual growth in London, 1997 to 2017 (updated in March 2018)

Source: ONS workforce jobs

Workforce jobs: growth by industry in London, annual final quarter growth for the last two years (updated in March 2018)

Source: ONS workforce jobs

[1] National earnings and productivity data are available on the ONS website.

[2] The table on page 2 shows the number of unemployed increased on the quarter (note the red arrow), while the rate of unemployment fell. This is because the 72,000 increase in economic activity outweighed the 1000 increase in unemployment.

[3] For more on this topic, you may be interested in our recent paper on childcare demand in London.