London Labour Market Update
Guillaume Paugam, June 2024
London’s labour market is continuing to cool after the post-pandemic
boom. Growth in the number of workforce jobs in London has all but
ended, with March 2024 data showing growth of less than half of one
percent over the year. Resident payrolled employee numbers are also
flat-lining with the provisional May estimate showing a small decline
and the year-on-year growth rate also only just above 0%. Meanwhile, the
number of unemployment-related benefit claimants has risen in recent
months and over the last year.
The level of pay, on the other
hand, has kept rising. Real median pay (pay adjusted for inflation) was
2.7% higher in April 2024 than in April 2023. However, London has had
the slowest pay growth of any region or country of the UK over that
period.
Note that 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 of the employment rate, unemployment rate and
inactivity rate. 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.
Summary of key points
The most timely estimate of payrolled employees (subject to revision) shows a decrease of around 3,670, or 0.1%, in London between April and May 2024 and a slight increase of 0.2% on the year. This continues the downward trend observed since September 2023.
The employment rate in London was estimated at 73.7% for the three months ending April 2024, a decrease of 1.2pp on the same period in the previous year, and a decline compared to the previous quarter. London’s employment rate was lower than the UK average (74.3%).
London’s unemployment rate was estimated at 5.0%, up on the quarter and an increase of 0.4pp from a year earlier. The UK average was 4.4%.
London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 22.5%. This was an increase of 1.1pp on the previous year, and an increase on the quarter. It is very slightly higher than the UK-wide estimate of 22.3%.
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 making-up workforce jobs overall are employee jobs and self-employed jobs.
The latest data for March 2024 show that:
The total number of workforce jobs in London was estimated at 6.6 million, an increase of approximately 1.0% from December 2023 against a UK average of 0.8%.
The latest estimate represents an increase of approximately 24,400, or 0.4%, from levels the year before, compared with an increase of 1.2% across the UK on average.
The growth in workforce jobs has therefore been muted in London relatively to the rest of the UK. London experienced a sharp rise in workforce jobs from early 2021, as its economy recovered from the pandemic, but the trend started to plateau in March 2023.
The number of employee jobs in March 2024 in London stood at 5,910,000 and was higher than in March 2023 by 1.2%. But the number of self-employed jobs in March 2024 (694,000), was 6.1% lower than at the same time last year.
ONS warns that data for September 2022 onwards has been affected by the reweighting of the Labour Force Survey (LFS), causing a step discontinuity.
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.7% 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 +/- 1.7% 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 March 2023 and March 2024*:
Other services recorded the largest percentage decrease in jobs in London (-14,000 or -6.6%). This was driven by a sharp fall in self-employed jobs in the sector, despite a rise in employee jobs. This was followed by Administration (-38,100 or -5.7%) and Manufacturing (-6,420 or -5.0%). They are the only three industries with a decrease in workforce jobs in March 2024 compared to December 2019.
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London:
- Arts & recreation (34,400 or 18.7%)
- Construction (18,200 or 6.6%)
- Health (40,500 or 5.9%)
Workforce jobs in Arts & recreation and in Health also saw some of the biggest increases for the UK as whole.
The 6.6% increase in construction workforce jobs in London stands in contrast to recent data and to the trend in the UK. The UK overall lost construction workforce jobs between March 2023 and March 2024, while London was also losing jobs up to December 2023 with the latest quarter representing a large rebound.
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.7% for London and +/- 0.6% for the UK.
Sector changes on pre-pandemic
Between December 2019 and March 2024*:
Manufacturing recorded the largest percentage decrease in jobs in London (-13,700 or -10.0%). This was followed by Construction (-23,000 or -7.3%) and Education (-290 or -0.1%).
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London:
- Other services (39,000 or 24.3%)
- Health (131,000 or 21.8%)
- Hospitality (93,500 or 20.4%)
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.7% 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 May 2024, a decrease of around 3,670, or 0.1%, on the previous month.
The latest London estimate represents a modest increase of 9,680, or 0.2%, on the previous year (May 2023) against a UK average increase of 0.6%.
Over the year, Inner London boroughs lost residents with payrolled jobs (-1.6%), while Outer London boroughs gained (+2.3%).
Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 216,000, or 5.2%. This compares to an increase of 4.5% across the UK on average.
The figures for May 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 May 2024:
Median monthly pay in London was £2,800, an increase of 3.9% on the year.
In the UK overall, median pay was £2,380, up by 5.2% 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 May 2023 to May 2024:
London was the region/country with the lowest growth in median monthly salary at 3.9%.
The region/country with the highest growth in median monthly salary was Northern Ireland at 6.8%.
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 April 2024, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.0%.
Nominal employee pay was up by 5.8% on the year in London, resulting in an increase of 2.7% in real pay on the year (note that percentages in the text may not perfectly add-up due to rounding.)
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 February 2024 to April 2024, we estimate the annualised growth rate of real pay in London to be -1.4%.
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 employees “Aged: 18-24” was down by 3.0%. Otherwise, the number of payrolled employees rose across the other age groups. The biggest rise is for the 65+ group.
Changes by age groups in London are similar to what is happening in the UK as a whole.
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 February to April 2024:
The 16-64 employment rate in London was estimated at 73.7%; this represents a decrease of 1.2pp from a year earlier, and a fall on the quarter.
The overall UK employment rate was estimated at 74.3%, a decrease of 1.1pp on the year, and a decrease on the quarter.
The employment rate in London compares to a high of 78.3% in the South-East, and a low of 68.9% in Wales.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±2.0% 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 ± 3.1% 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 February to April 2024:
The unemployment rate for London was estimated at 5.0%. This represents an increase of 0.4pp from a year earlier, and an increase on the quarter.
The UK unemployment rate was estimated at 4.4%,an increase of 0.5pp on the year, and a rise on the quarter.
London’s unemployment rate is the fourth-highest in the country. It compares with a high of 5.6% in the East Midlands, and to a low of 2.2% in Northern Ireland.
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 ±1.5% 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 February to April 2024:
The rate of economic inactivity in London was estimated at 22.5%. This represents an increase of 1.1pp from a year earlier, and a rise on the quarter.
The UK rate of economic inactivity was 22.3%. This represents an increase of 0.8pp on the year, and an increase on the quarter.
London’s inactivity rates compares to rates above 27% found in Northern Ireland, the North-East or Wales (the highest rate, at 28.4%), and to rates below 20% in the South-West and the South-East (the lowest rate, at 18.7%).
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.
Following economic reopening from the COVID-19 pandemic, the three-month average number of online postings climbed rapidly from the low of June 2020 (56,800) to the high of June 2022 (182,500).
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 into the beginning of 2024, the level of recruitment activity has been steadily declining back towards 2019 pre-pandemic levels.
Latest job posting estimates suggest there were 96,130 online postings for jobs in London in May 2024 (single-month estimate), a decrease of 32% on the year.
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.
The latest data for May 2024 show that:
There were 318,000 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 5.3%. This rate is up from 4.7% in May 2023.
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 3.9% in May 2024.
Breakdowns by age group (which rely on non-seasonally adjusted data) show broad-based increases across ages.
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 Feb 2024-Apr 2024 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,694 | -113 | u | -83 | u | 73.7 | -2.2 | u | -1.2 | u |
England | 28,068 | -98 | u | -317 | u | 74.8 | -0.5 | u | -1.1 | u |
UK | 32,967 | -139 | u | -359 | u | 74.3 | -0.5 | u | -1.1 | u |
Unemployment | ||||||||||
London | 245 | 58 | t | 17 | t | 5.0 | 1.2 | t | 0.4 | t |
England | 1,310 | 136 | t | 140 | t | 4.5 | 0.5 | t | 0.5 | t |
UK | 1,510 | 138 | t | 157 | t | 4.4 | 0.4 | t | 0.5 | t |
Economic Inactivity | ||||||||||
London | 1,374 | 87 | t | 70 | t | 22.5 | 1.4 | t | 1.1 | t |
England | 7,776 | 67 | t | 319 | t | 21.7 | 0.2 | t | 0.8 | t |
UK | 9,434 | 132 | t | 385 | t | 22.3 | 0.3 | t | 0.8 | t |
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 April 2024 and real-time information (RTI) data up to May 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.