It is still too early to say for certain that London’s labour market is loosening as the latest data showed the number of payrolled employees in the capital continuing to increase even as the unemployment rate ticked up.

Payrolled employees in London are up by 172,000 (4.2%) over the last year, with Hospitality (up 10.8%), Arts & recreation (7.2%) and Professional services (6.3%) leading the way. Construction payrolls, though, haven’t kept pace and have fallen by 1.3%.

The unemployment rate rose slightly on the quarter, to 4.5% and is now well above its May-August low of 4%, but the claimant count rate has held steady at 4.7% since June 2022.

While the ONS reported record net flows of people moving from inactivity into employment at the national level, this did not appear to impact the inactivity rate in London, which remained unchanged on the quarter.


Summary of key points


  • The most timely estimate of payrolled employees shows an increase of around 25,100, or 0.6%, in London between December and January 2023 and an increase of 4.2% on the year.

  • The employment rate in London was estimated at 75.1% for the three months ending December 2022, down 0.2 percentage points (pp) on the previous quarter and down 0.9pp on the same period in the previous year. London’s employment rate was lower than the UK average (75.6%).

  • The unemployment rate was still higher than the UK average. London’s unemployment rate was estimated at 4.5%, up 0.3pp on the quarter and down 0.6pp from a year earlier. The UK average was 3.7%.

  • London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 21.4%. This was unchanged on the previous quarter and up 1.5pp on the previous year, and is similar to the UK-wide estimate of 21.4%.

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Payrolled employees


The count of payrolled employees from HMRC’s Pay As You Earn (PAYE) RTI dataset offers a timely measure of labour market trends:

  • Early estimates indicate that there were around 4.3 million payrolled employees living in London in January 2023, an increase of around 25,100, or 0.6%, on the previous month.

  • The latest London estimate represents an increase of 172,000, or 4.2%, on the previous year (January 2022) against a UK average increase of 2.6% (see charts).

  • Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 166,000, or 4.0%. This compares to an increase of 3.5% across the UK on average.

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Number of payrolled employees

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live. March 2020 indicated by dotted line.


Change on previous year, regions

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.


Employee pay and inflation


The RTI dataset also provides information on the nominal monthly pay of payrolled employees living in London. This can be adjusted for inflation to estimate real pay over time.

CPIH (consumer price inflation including owner-occupiers’ housing costs) is a national measure and does not account for region-specific price changes.


Median monthly pay


The median pay is an average which measures the middle point in the range of recorded monthly employee salaries.

In January 2023:

  • Median monthly pay in London was £2,640, an increase of 6.6% on the year.

  • In the UK overall, median pay was £2,190, up by 6.8% on the year.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live. March 2020 indicated by dotted line.


Pay by region


The change in median nominal salary on the year varies between the regions and countries of the UK.

From January 2022 to January 2023:

  • The region/country with the highest growth in median monthly salary was North West at 7.6%.

  • The region/country with the lowest growth in median monthly salary was Northern Ireland at 3.9%.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.


Annual real pay growth


Growth in real wages can be estimated by adjusting nominal pay for the rate of inflation, here CPIH.

In December 2022, the latest month for which CPIH inflation data is available:

  • The year-on-year CPIH rate in the UK was 9.2%.

  • Nominal employee pay was up by 7.2% on the year in London, resulting in a decrease of 1.8% in real pay on the year.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information, ONS.

Note: March 2020 indicated by dotted line. Inflation measure does not account for region-specific price changes. Sign of inflation rates has been reversed (higher inflation rates are associated with lower real pay growth).


Additional payrolled employee statistics


The tabs below are each updated once per quarter, as new data is released by the ONS/HMRC.


Change by industry


Comparing January 2023 to levels the previous year:

  • Hospitality saw the highest percentage growth in payrolled employees at 10.8%, followed by Arts & recreation (7.2%) and Professional services (6.3%).

  • On the other hand, Construction saw the lowest percentage growth with a decrease of 1.3%, followed by Public admin & defence (down by 0.1%) and Retail (up by 0.8%).

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live. Excludes sectors with fewer than 25,000 payrolled employees in London.


Change by age group


Recent changes in the number of payrolled employees vary by age group. Comparing December 2022 to levels the previous year:

  • The number of payrolled employees “Aged: 50-64” in London was up by 3.0%, while the number of employees “Aged: 35-49” was up by 1.7%.

  • For the UK overall, the number of payrolled employees in those two age groups saw an increase of 2.0% and an increase of 2.1%, respectively.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.


Change by local authority


There is considerable variation in the change in payrolled employees by London local authority. Comparing November 2022 with levels the year before:

  • The number of payrolled employees living in Newham, the borough with the highest growth (excl. the City), was up by 8.0% on the year.

  • The borough with the lowest growth, Bromley, recorded an increase of 1.9%.

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Source: HM Revenue and Customs - Pay As You Earn Real Time Information. Contains Ordnance Survey data Crown copyright and database rights [2015].

Note: Estimates are based on where employees live.


Employment rate


Employment measures the number of people aged 16 and over in paid work and those who had a job that they were temporarily away from. The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

For October to December 2022:

  • The 16-64 employment rate in London was estimated at 75.1%; this represents a decrease of 0.2 percentage points (pp) on the previous quarter and a decrease of 0.9pp from a year earlier.

  • The overall UK employment rate was estimated at 75.6%, an increase of 0.2pp on the quarter and an increase of 0.2pp on the year.

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London and UK rates

Source: ONS Labour Force Survey.

Note: The margin of error is +/- 1.6% for London and +/- 0.4% for the UK. March 2020 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error ranges from +/- 1.6% to +/- 2.6% across regions.


Unemployment rate


Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks. The unemployment rate is the proportion of the economically active population who are unemployed.

For October to December 2022:

  • The unemployment rate for London was estimated at 4.5%; this represents an increase of 0.3pp on the previous quarter and a decrease of 0.6pp from a year earlier.

  • The UK unemployment rate was estimated at 3.7%, an increase of 0.1pp from the previous quarter and a decrease of 0.3pp on the year.

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London and UK rates

Source: ONS Labour Force Survey.

Note: The margin of error is +/- 0.8% for London and +/- 0.2% for the UK. March 2020 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error ranges from +/- 0.6% to +/- 1.3% across regions


Economic inactivity rate


The economic inactivity rate is the proportion of 16 to 64 year olds not in work and either not looking for or unable to work. This group includes some students, people who are looking after family/home, and people who are too ill to work (most of whom are long-term sick).

For October to December 2022:

  • The rate of economic inactivity in London was estimated at 21.4%; this represents no change on the previous quarter and an increase of 1.5pp from a year earlier.

  • The UK rate of economic inactivity was 21.4%; this represents a decrease of 0.3pp on the previous quarter and an increase of 0.1pp on the year.

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London and UK rates

Source: ONS Labour Force Survey.

Note: The margin of error is not published for London, the UK margin is +/- 0.5%. March 2020 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error is not published for regions.


Claimant count


The claimant count is a measure of the number of people claiming benefits principally for the reason of being unemployed. It includes people claiming Jobseeker’s Allowance and those claiming Universal Credit who are required to seek work.

The latest data for January 2023 show that:

  • There were 284,000 people claiming unemployment-related benefits in London - equal to a claimant unemployment rate (as a proportion of residents aged 16 to 64) of 4.7%.

  • The number of claimants in London has decreased by 53,200, or 15.8%, on the year, compared to a decrease of 282,000, or 15.6%, in the UK overall.

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Rate of residents aged 16-64

Source: ONS Claimant Count by sex and age (seasonally adjusted).

Note: may include some employed claimants on low hours or earnings. March 2020 indicated by dotted line.


Year-on-year percentage change

Source: ONS Claimant Count by sex and age (not seasonally adjusted).

Note: may include some employed claimants on low hours or earnings.

Summary of headline indicators


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Measuring the labour market


The ONS has published its latest labour market update covering Labour Force Survey (LFS) data for the three months ending December 2022 and real-time information (RTI) data up to January 2023. This bulletin presents the latest headline labour market estimates for London.

Please note:

  • Many of the statistics presented here are estimates based on surveys, and as such have a margin of error – known as sampling variability.

  • They also cover different reference periods or count dates.

More information and previous GLA Economics analyses can be found on our labour market analysis page.

More information on the data used and a glossary of terms can be found on the ONS website.

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