London Labour Market Update
Guillaume Paugam, December 2024
This month’s labour market update is affected by numerous
methodological issues that complicate comparisons to figures from prior
updates and undermine our ability to definitively establish labour
market trends. This should be considered carefully when interpreting
this month’s results, as many existing estimates have been revised by
ONS.
Nonetheless, the general message is that London’s labour
market continues to show signs of slowing down. The number of workforce
jobs fell between June and September 2024. The Office for National
Statistics also revised down previously published workforce jobs figure,
with 220,000 fewer jobs on average in London in 2024 than previously
thought. The slow-down is also visible in the rising number of
unemployment-related benefit claimants.
The number of London
residents with payrolled employee jobs has also been falling slowly
throughout 2024, particularly in Inner London. London is the only
region/country in the UK where the number of resident payrolled employee
jobs was lower in November 2024 than in November 2023 – however, growth
over the whole period since February 2020 remains faster in London than
the UK average.
ONS brought methodological changes to the
Labour Force Survey, with revisions to existing labour market estimates
(see explanatory box below). The broad picture for London remains
unchanged compared to recent months. Labour force participation remains
higher than UK average, both for the employment and unemployment rates.
Economic inactivity, on the other hand, is lower than UK average.
The Office for National Statistics revised its main labour market
survey data based on revised population estimates. This ‘reweighting’
increased estimates of the UK population of 16 to 64 year olds by
484,000 (1.1%) in April to June 2024.
These new revisions bring
the estimated number of people in employment using the Labour Force
Survey closer to other data sources — such as HMRC administrative data
and business survey data. The LFS was an outlier in showing employment
levels still barely above pre-pandemic levels in the UK. But, because
the new estimates revise upwards both the total population estimates and
the estimates of people in employment, there is little change in rates
of employment, unemployment and inactivity.
London data also
shows LFS-based employment estimates revised upwards when it comes to
levels, but little change when it comes to rates, especially in 2023 and
2024. While ONS has revised the national time series all the way back to
2011, data for the regions has only been revised back to the start of
2019, creating discontinuities in the London series.
Each year
in December ONS also publishes revisions to Workforce Jobs to take
account of more comprehensive data that has become available. This
year’s revisions show new, much lower estimates of jobs in London.
The chart below illustrates what different sources of data have been telling us about London’s labour market. Workforce Jobs is published by ONS principally from business survey data and includes employee and self-employed jobs based in London, including those held by people not living in London.
The LFS is a survey of individuals and households published by ONS, including all forms of employment and focusing here on people residing in London.
PAYE-RTI is not a survey data source, but an administrative data source, coming from HMRC records. It focuses only on payrolled employee jobs held by people residing in London.
Given the uncertainty surrounding official labour market data in recent months, any assessment of London’s labour market needs to rely on different sources to provide a comprehensive picture.
Source: HMRC PAYE-RTI, ONS. March 2020 indicated by dotted
line.
‘Revised’ describes the newest estimates published by ONS
following methodological revision. ‘Superseded’ refers to what these
estimates were prior to the revision, shown for illustrative purposes.
PAYE-RTI corresponds to administrative data from HMRC rather than survey
data from ONS.
Summary of key points
The most timely estimate of payrolled employees (subject to revision) shows a decrease of around 12,900, or 0.3%, in London between October and November 2024 and a decrease of 0.2% on the year.
The employment rate in London was estimated at 75.9% for the three months ending October 2024, an increase of 2.5pp on the same period in the previous year. London’s employment rate was higher than the UK average (74.9%).
London’s unemployment rate was estimated at 6.0%, an increase of 0.8pp from a year earlier. The UK average was 4.3%.
London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 19.3%. This was a decrease of 3.3pp on the previous year. It is much lower than the UK-wide estimate of 21.7%.
Workforce jobs
Number of workforce jobs in London
The Workforce Jobs series provides quarterly estimates of the number of jobs in the UK and is the ONS’ preferred source of jobs broken down by region of workplace and industry. The two main categories of employment are employee jobs and self-employed jobs.
Each year in December ONS publishes revisions to the current and three previous quarters to take account of more comprehensive data that has become available. This year’s revisions show new, much lower estimates of jobs in London.
The latest data for September 2024 show that:
The total number of workforce jobs in London was estimated at 6.37 million, down 40,000 jobs on the revised 6.41 million in June 2024.
The June 2024 figure itself was revised down to 6.41 million from 6.62 million by ONS.
The revisions pull down jobs estimates starting in 2023, with the new numbers showing an average across the quarters of 183,000 fewer jobs in London than previously thought. The 2024 numbers indicate 220,000 fewer jobs than previously thought.
The sector with the biggest revisions is Accommodation and food service – a proxy for the hospitality industry – which is estimated to have had 118,000 fewer jobs in June 2024 than previously thought. This is the same sector which, at this time last year, was revised up by around 100,000 jobs.
As well as the revisions over the last year, ONS has brought the self-employment component of the estimates going back to September 2022 into line with population estimates used in the Labour Force Survey. The number of self-employed jobs has risen in London from 598,000 in September 2023 to 660,000 in 2024.
Over the same period, the number of employee jobs went from 5,710,000 to 5,700,000.
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.6% for London and +/- 0.6% for the UK. March 2020
indicated by dotted line.
Number of workforce jobs in the UK
This graph shows the trend in the number of workforce jobs in the UK, as a comparison point for the London trend.
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.6% for London and +/- 0.6% for the UK. March 2020
indicated by dotted line.
Sector changes on year
The change in the number of workforce jobs varies by sector of London’s economy. Between September 2023 and September 2024*:
Real estate activities recorded the largest percentage decrease in jobs in London (-21,400 or -11.9%). This was followed by Construction (-20,800 or -7.1%) and Administration (-33,500 or -5.3%). There were also falls in Other services, Retail, and Professional services.
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London:
- Arts & recreation (44,200 or 22.0%)
- Manufacturing (21,400 or 17.8%)
- Health (43,200 or 6.6%)
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.6% for London and +/- 0.6% for the UK.
Sector changes on pre-pandemic
Between December 2019 and September 2024*:
Construction recorded the largest percentage decrease in jobs in London (-43,700 or -13.9%). This was followed by Retail (-57,300 or -8.7%) and Transport & storage (-11,400 or -3.6%).
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London:
- Arts & recreation (43,800 or 21.7%)
- Professional services (149,000 or 18.4%)
- Health (98,500 or 16.4%)
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.6% for London and +/- 0.6% for the UK.
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 4.4 million payrolled employees living in London in November 2024, a decrease of around 12,900 (0.3%) compared to October.
The latest London estimate represents a decrease of 9,710 (0.2%) on the previous year (November 2023), compared to a UK-wide increase of 0.3%.
London is the only region/country of the UK to have lost payrolled resident employment over the year.
Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 220,000, or 5.3%. This compares to an increase of 4.6% across the UK.
The figures for November 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, within London
Source: HM Revenue and Customs – Pay As You Earn Real Time
Information.
Note: Estimates are based on where employees live.
Change on previous year, UK 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 November 2024:
Median monthly pay in London was £2,900, an increase of 5.4% on the year.
In the UK overall, median pay was £2,470, up by 6.3% on the year.
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 November 2023 to November 2024:
London was the region/country with the lowest growth in median monthly salary at 5.4%.
The region/country with the highest growth in median monthly salary was Wales at 7.7%.
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 October 2024, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.2%.
Nominal employee pay was up by 7.2% on the year in London, resulting in an increase of 3.9% in real pay on the year (rounding explains why the figures mentioned here may not exactly add-up).
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 backward-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 August 2024 to October 2024, we estimate the annualised growth rate of real pay in London to be 5.4%.
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 October 2024 to the same time last year:
Health saw the highest percentage growth in payrolled employees at 4.6%, followed by Public admin & defence (3.6%) and Arts & recreation (3.0%).
Information & communication saw its number of payrolled employee jobs fall, with a decrease of 3.5%, followed by Hospitality (down by 3.2%) and Construction (down by 2.7%).
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 September 2024 to levels the previous year:
The number of employees “Aged: 18-24” was down by 3.3%. This fall is much larger than the UK’s.
There was a sharp rise in the number of employees aged 65+, although they represent a very small proportion of employees.
Growth across the age groups in between was weak.
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.
Note: because of the volatility and uncertainty in Labour Force Survey estimates highlighted by ONS, we do not report on quarterly changes in employment, unemployment and inactivity rates, only the direction.
For August to October 2024:
The 16-64 employment rate in London was estimated at 75.9%; this represents an increase of 2.5pp from a year earlier, and an increase on the quarter.
The overall UK employment rate was estimated at 74.9%, stable on the year, and very slightly up on the quarter.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±1.6% for London and ±0.5% 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 ±1.5% to ± 3% 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.
Note: because of the volatility and uncertainty in Labour Force Survey estimates highlighted by ONS, we do not report on quarterly changes in employment, unemployment and inactivity rates, only the direction.
For August to October 2024:
The unemployment rate for London was estimated at 6.0%. This represents an increase of 0.8pp from a year earlier, and a rise on the quarter.
The UK unemployment rate was estimated at 4.3%, an increase of 0.3pp on the year, also slightly up on the quarter.
The unemployment rate in London was the highest across all regions/countries of the UK.
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 ±0.7% to ±1.8% 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).
Note: because of the volatility and uncertainty in Labour Force Survey estimates highlighted by ONS, we do not report on quarterly changes in employment, unemployment and inactivity rates, only the direction.
For August to October 2024:
The rate of economic inactivity in London was estimated at 19.3%. This represents a decrease of 3.3pp from a year earlier, and a fall on the quarter.
The UK rate of economic inactivity was 21.7%. This represents a decrease of 0.2pp on the year, and a fall on the quarter.
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.
Online job postings
The number of online job postings is an indicator of the demand for labour in London. It is very timely and complements more traditional employment indicators.
We use online job postings data provided by Lightcast. Given the volatility associated with single-month estimates, the three-month average estimates provide a more reliable indication of short-term changes in the demand for labour.
Latest job posting estimates suggest there were 89,750 online postings for jobs in London in November 2024, (single-month estimate), a decrease of 23% on the year.
Following economic reopening from the COVID-19 pandemic, the three-month average number of online postings climbed rapidly from the low of June 2020 (56,700) to the high of June 2022 (185,800).
The number of online job postings then decreased sharply over the summer of 2022 before temporarily evening out around the beginning of 2023. Since then and throughout 2024, the level of recruitment activity has been steadily declining back towards pre-pandemic levels seen in late 2019.
Postings for jobs in London
Source: Lightcast.
Note: Data not seasonally adjusted. March 2020
indicated by dotted line.
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.
Note that Claimant Count numbers are affected by the rollout, starting in May, of a higher administrative earnings threshold for full work-search conditionality. This change is likely to affect around 180,000 claimants in the UK over six months, raising the Claimant Count figure over that time.
The latest data for November 2024 show that:
There were 360,000 people claiming unemployment-related benefits in London - equal to a seasonally adjusted claimant rate (as a proportion of residents aged 16 to 64) of 5.9%. This rate was 4.9% in November 2023. The age groups with the fastest-rising claimant rates are between 40 and 54 years old.
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. The UK’s claimant rate was 4.2% in November 2024.
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 Aug 2024-Oct 2024 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,929 | 48 | t | 253 | t | 75.9 | 0.5 | t | 2.5 | t |
England | 28,830 | 193 | t | 421 | t | 75.4 | 0.2 | t | 0.1 | t |
UK | 33,770 | 173 | t | 409 | t | 74.9 | 0.1 | t | 0.0 | v |
Unemployment | ||||||||||
London | 314 | 36 | t | 56 | t | 6.0 | 0.6 | t | 0.8 | t |
England | 1,313 | 30 | t | 101 | t | 4.4 | 0.1 | t | 0.3 | t |
UK | 1,508 | 31 | t | 110 | t | 4.3 | 0.1 | t | 0.3 | t |
Economic Inactivity | ||||||||||
London | 1,203 | -45 | u | -189 | u | 19.3 | -0.8 | u | -3.3 | u |
England | 7,719 | -72 | u | -21 | u | 21.1 | -0.2 | u | -0.3 | u |
UK | 9,337 | -67 | u | 2 | t | 21.7 | -0.2 | u | -0.2 | u |
Source: ONS Labour Force Survey. Quarter on quarter changes must be interpreted very cautiously, especially for London, given the recent volatility of estimates. | ||||||||||
Measuring the labour market
The ONS has published its latest labour market update covering Labour Force Survey (LFS) data for the three months ending October 2024 and real-time information (RTI) data up to November 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.