London Labour Market Update
Yiqiao Chen, March 2024
The ONS cancelled publication of this month’s regional labour market
statistics, which means that we do not have data on the latest
employment, unemployment and inactivity rates for London residents.
Neither do we have the latest quarterly estimates for workforce jobs,
which will now not be updated until June.
This is because an
issue was detected in the weighting of the Northern Ireland portion of
the Labour Force Survey for November 2023 to January 2024, see ONS
announcement here.
For the latest view of London’s labour
market this month, we rely on the latest HMRC Pay-As-You-Earn tallies of
UK and regional payrolls, and Claimant Count statistics.
These
sources indicate that the number of payrolled employees was the same in
February as in January and wage growth slowed on an annual basis. The
non-seasonally adjusted claimant count increased by 15,100 people in
February, pushing up the London claimant rate to 5.1%.
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 4.4 million payrolled employees living in London in February 2024, an increase of around 1,090 on the previous month.
The latest London estimate represents an increase of 43,400, or 1.0%, on the previous year (February 2023) against a UK average increase of 1.2% (see charts).
Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 211,000, or 5.1%. This compares to an increase of 4.6% across the UK on average.
The figures for February 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 February 2024:
Median monthly pay in London was £2,770, an increase of 4.4% on the year.
In the UK overall, median pay was £2,330, up by 5.5% 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 February 2023 to February 2024:
The region/country with the highest growth in median monthly salary was North East at 6.6%.
The region/country with the lowest growth in median monthly salary was Scotland at 3.6%.
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 January 2024, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 4.2%.
Nominal employee pay was up by 5.1% on the year in London, resulting in an increase of 0.9% in real pay on the year.
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 November 2023 to January 2024, we estimate the annualised growth rate of real pay in London to be 8.5%.
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 January 2024 to levels the previous year:
Health saw the highest percentage growth in payrolled employees at 6.1%, followed by Education (3.8%) and Arts & recreation (3.7%).
On the other hand, Information & communication saw the lowest percentage growth with a decrease of 3.6%, followed by Construction (down by 0.3%) and Retail (down by 0.3%).
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 2023 to levels the previous year:
The number of payrolled employees “Aged: 50-64” in London was up by 0.8%, while the number of employees “Aged: 18-24” was down by 0.8%.
For the UK overall, payrolled employee numbers in those two age groups increased by 0.6% and decreased by 0.4%, respectively.
Source: HM Revenue and Customs – Pay As You Earn Real Time
Information.
Note: Estimates are based on where employees live.
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 February 2024 show that:
There were 311,000 people claiming unemployment-related benefits in London - equal to a claimant unemployment rate (as a proportion of residents aged 16 to 64) of 5.1%.
The number of claimants in London has increased by 33,300, or 12.0%, on the year, compared to an increase of 85,800, or 5.7%, in the UK overall.
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.
Measuring the labour market
The ONS has published its latest labour market update for the UK covering Labour Force Survey (LFS) data for the three months ending January 2024 and real-time information (RTI) data for the UK and the regions up to February 2024. We expect to be able to report LFS data for London again in April.
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.