London Labour Market Update
Guillaume Paugam, May 2024
The latest labour market data for London remains volatile and ONS
warns that estimates of changes should be treated with caution. We adopt
ONS’ prudent language when reporting quarterly changes relying on LFS
data, for which the focus should be on the general movements rather than
the exact figures. As data collection improvements feed into published
results, there is a possibility of further revisions. This report uses
several data sources and indicators, which need to be taken together to
get a reliable picture of London’s labour market.
The broad
picture is one of a slow-down in jobs growth. After a historic high in
January 2024, the number of payrolled employee jobs in London has been
declining since, although it remains high by historical standards and
above pre-pandemic levels. The claimant count has been on the rise over
the last year, especially amongst younger age groups, and London’s
unemployment rate remains higher than the UK’s, while 22% of working-age
Londoners are economically inactive, in line with the national average.
The picture is more positive for wages than for jobs. Median
monthly nominal pay in London was £2,830 in April, an increase of 6.2%
on the year and 19% higher than the UK’s. Real pay (adjusted for
inflation) has also been rising in 2024. However, pay progression was
slower in London than in the rest of the country.
Summary of key points
The most timely estimate of payrolled employees (subject to revision) shows a decrease of around 18,700, or 0.4%, in London between March and April 2024 and a slight increase of 0.1% on the year. This continues the downward trend observed between February and March, and more generally, in 2024: the number of payrolled employee jobs has been decreasing continuously since January.
The employment rate in London was estimated at 74.4% for the three months ending March 2024, down 0.1pp on the same period in the previous year, and also down on the previous quarter. London’s employment rate was very slightly lower than the UK average (74.5%).
The unemployment rate was higher than the UK average. London’s unemployment rate was estimated at 4.6%, up on the quarter but down 0.3pp from a year earlier. The UK average was 4.3%. The quarterly evolution of London’s unemployment rate should be interpreted with caution, however, as the recent figures provided by ONS in that regard have been particularly volatile.
London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 22.1%, up on the previous quarter and up 0.5pp on the previous year. It was in line with the UK-wide estimate of 22.1%.
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 April 2024, a decrease of around 18,700, or 0.4%, on the previous month, continuing the decrease since the peak of January 2024.
The latest London estimate represents a modest increase of 3,060, or 0.1%, on the previous year (April 2023) against a UK average increase of 0.4% (see charts). London’s slight increase on the year is driven by Outer London boroughs, while Inner London boroughs lost payrolled employee jobs.
Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 188,000, or 4.5%. This compares to an increase of 4.2% across the UK on average.
The figures for April 2024 in the RTI dataset are provided to give an indication of the likely level of employees as well as median pay in the latest period. They are of lower quality and may be subject to significant revision in future releases.
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 April 2024:
Median monthly pay in London was £2,830, an increase of 6.2% on the year. The progression of nominal wages on the year is therefore much stronger than the rate at which jobs increase.
In the UK overall, median pay was £2,380, up by 6.9% on the year. London’s median nominal monthly pay is nearly 19% higher than the UK’s.
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 April 2023 to April 2024:
The region/country with the highest growth in median monthly salary was North West at 7.7%.
The region/country with the lowest growth in median monthly salary was Scotland at 4.8%.
London has been the second slowest region in terms of growth of the median monthly salary, although as seen, London’s median monthly salary remains significantly higher than the UK’s.
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, giving a better idea of how much wages progress in relation to the cost of living.
In March 2024, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.8%.
Nominal employee pay was up by 5.0% on the year in London, resulting in an increase of 1.2% in real pay on the year. This confirms the rising tendency for real pay observed since October 2023.
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). Inflation data is released after pay data and is
not available for the most recent month.
Annualised growth rates
Annual growth rates are a backwards-looking measure that indicate the cumulative impact of changes over the previous year. This is an important measure that shows how much wages, or prices have changed in total over the last year.
However, it is also important to understand how fast things are changing at the present time. To do this we show annualised growth rates that measure how fast prices and pay have changed over the last three months.
Using the three-month period January 2024 to March 2024, we estimate the annualised growth rate of real pay in London to be 0.4%.
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.
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 April 2024 to levels the previous year:
Health saw the highest percentage growth in payrolled employees at 5.3%, followed by Public admin & defence (3.2%) and Education (2.9%).
On the other hand, Information & communication saw its number of payrolled employee jobs fall, with a decrease of 4.3%, followed by Hospitality (down by 2.6%) and Construction (down by 2.2%).
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 March 2024 to levels the previous year:
The number of payrolled employees “Aged: 50-64” in London was up by 0.7%, while the number of employees “Aged: 18-24” was down by 3.0%.
For the UK overall, payrolled employee numbers in those two age groups increased by 0.3% and decreased by 1.1%, respectively.
Source: HM Revenue and Customs – Pay As You Earn Real Time
Information.
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 January to March 2024:
The 16-64 employment rate in London was estimated at 74.4%; this represents a decrease of 0.1pp from a year earlier, and a fall on the quarter.
The overall UK employment rate was estimated at 74.5%, a decrease of 0.8pp on the year, and a decrease on the quarter.
London’s employment rate of 74.4% is therefore roughly in line with the UK average, with regional ranges from 69.1% (North-East) to 78.6% (South-East).
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±1.9% for London and ±0.6% for the UK. The LFS has been reweigted from
July to September 2022 onwards. September 2022 indicated by dotted line.
Regional comparison
Source: ONS Labour Force Survey.
Note: The margin of error ranges
from ±1.6% to ± 3.2% 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 January to March 2024:
The unemployment rate for London was estimated at 4.6%; this represents a decrease of 0.3pp from a year earlier, but an increase on the quarter. This increase on the quarter should be interpreted cautiously, however: the unemployment rate figure provided for the previous quarter (end of 2023) was historically low (3.8%) and constituted a clear outlier in London’s recent unemployment trends, at a time of reliability issues regarding regional labour market figures. The London unemployment rate figures provided this month and last, seem more in line with London’s evolutions since early 2023.
The UK unemployment rate was estimated at 4.3%, an increase compared to the previous quarter, and a 0.3pp rise on the year.
London’s unemployment rate compares to a low of 2.1% in Northern Ireland and a high of 5.6% in the East Midlands.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±1.1% for London and ±0.3% for the UK. The LFS has been reweigted from
July to September 2022 onwards. September 2022 indicated by dotted line.
Regional comparison
Source: ONS Labour Force Survey.
Note: The margin of error ranges
from ±0.8% to ±1.7% 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. The main categories in this group are students, people who are looking after family/home full-time, and people who cannot work for health reasons (most of whom are long-term sick).
For January to March 2024:
The rate of economic inactivity in London was estimated at 22.1%, an increase of 0.5pp from a year earlier, and a rise on the quarter.
The UK rate of economic inactivity was 22.1%; this represents an increase of 0.2pp on the previous quarter and an increase of 0.6pp on the year.
London’s inactivity rate is therefore in line with UK average, and compares to a low of 18.2% in the South East, and a high of 28% in Wales.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is not
published for London, the UK margin is ±0.3%. The LFS has been reweigted
from July to September 2022 onwards. September 2022 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 April 2024 show that:
There were 308,000 people claiming unemployment-related benefits in London - equal to a seasonally adjusted claimant unemployment rate (as a proportion of residents aged 16 to 64) of 5.1%. These figures have been rising compared to the same time last year. London’s claimant rate is higher than the UK’s (3.7%), with the UK rate stable compared to the same time last year.
Up until the early months of the Covid-19 pandemic, London’s claimant rate was in line with the UK’s. The gap opened then, and has not closed since.
Breakdowns by age group (which rely on non-seasonally adjusted data) show that the biggest rise on the year was for the 16-24 age group. Generally, the increases in claims have been stronger for younger workers (aged 16-30), and for workers aged 40-49. While for the 40-49 group, London’s evolution is in line with the UK’s, when it comes to the sharp increase in young claimants, London clearly stands out from the rest of the country.
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. September 2022 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
Headline estimates for Jan 2024-Mar 2024 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,726 | -103 | u | -13 | u | 74.4 | -1.8 | u | -0.1 | u |
England | 28,081 | -133 | u | -183 | u | 74.9 | -0.5 | u | -0.8 | u |
UK | 32,997 | -178 | u | -204 | u | 74.5 | -0.6 | u | -0.8 | u |
Unemployment | ||||||||||
London | 228 | 37 | t | -17 | u | 4.6 | 0.8 | t | -0.3 | u |
England | 1,298 | 178 | t | 95 | t | 4.4 | 0.6 | t | 0.3 | t |
UK | 1,486 | 166 | t | 103 | t | 4.3 | 0.5 | t | 0.3 | t |
Economic Inactivity | ||||||||||
London | 1,350 | 82 | t | 35 | t | 22.1 | 1.3 | t | 0.5 | t |
England | 7,732 | 24 | t | 234 | t | 21.6 | 0.0 | v | 0.6 | t |
UK | 9,383 | 104 | t | 302 | t | 22.1 | 0.2 | t | 0.6 | t |
Source: ONS Labour Force Survey. | ||||||||||
Measuring the labour market
The ONS has published its latest labour market update covering Labour Force Survey (LFS) data for the three months ending March 2024 and real-time information (RTI) data up to April 2024. 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.