London Labour Market Update
Guillaume Paugam, February 2025
There has been little change in the London labour market over the
last quarter, according to the latest Office for National Statistics
data.
The number of employee jobs held by London residents was
stable compared to December 2024, but lower than in January last year,
the employment rate was slightly below UK average, and the unemployment
rate remained high. New sectoral data showed a fall in employee jobs in
several key sectors of London’s economy, such as construction,
professional services, hospitality, and information & communication.
The UK as a whole has seen weak employee job growth. London’s
unemployment rate remained much higher than the UK average, but London’s
inactivity rate was still lower than the UK average. Nominal employee
pay growth remained strong in London, and was above inflation throughout
2024, but lower than UK average pay growth.
Note that, due to
recent data volatility, 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 no change in the number of payrolled employees in London between December and January 2025, and a decrease of 0.1% on the year.
The employment rate in London was estimated at 74.3% for the three months ending December 2024, a decrease of 1.5pp on the same period in the previous year, and a fall on the quarter. London’s employment rate was lower than the UK average (74.9%).
London’s unemployment rate was estimated at 6.1%, up on the quarter and an increase of 2.1pp 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 20.8%. This was a decrease of 0.1pp on the previous year, but was an increase on the quarter. It is lower than the UK-wide estimate of 21.5%.
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 January 2025, unchanged compared to December 2024.
The latest London estimate represents a decrease of 2,620 (0.1%), on the previous year (January 2024) compared to an increase of 0.2% UK-wide.
Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 242,000, or 5.9%. This compares to an increase of 4.7% across the UK.
The figures for January 2025 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 January 2025:
Median monthly pay in London was £2,920, an increase of 5.0% on the year.
In the UK overall, median pay was £2,470, up by 5.7% 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 January 2024 to January 2025:
South East was the region/country with the lowest growth in median monthly salary at 4.7%.
The region/country with the highest growth in median monthly salary was Northern Ireland at 7.0%.
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 December 2024, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.5%.
Nominal employee pay was up by 4.8% on the year in London, resulting in an increase of 1.2% 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 October 2024 to December 2024, we estimate the annualised growth rate of real pay in London to be 1.6%.
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 2025 to the same time last year:
Transport & storage saw the highest percentage growth in payrolled employees at 2.9%, followed by Health (2.8%) and Public admin & defence (2.6%).
Information & communication saw its number of payrolled employee jobs fall, with a decrease of 3.0%, followed by Hospitality (down by 2.6%) and Professional services (down by 1.5%).
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 2024 to levels the previous year:
The number of employees “Aged: 18-24” was down by 3.7%. This fall is much larger than the UK’s.
The number of employees aged 25-49 did not change in London. The only working-age (16-64) group which saw a rise in the capital was 50-64.
In London and the UK, we see a rise in the number of payrolled employee jobs held by people aged 65+, though they still represent only a small share of the total.
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. In addition, ONS revised its main labour market survey data based on revised population estimates in December 2024, bringing its employment estimates closer to other data sources, as explained in details in our December 2024 release, meaning that recent employment fluctuations need to be taken particularly cautiously.
For October to December 2024:
The 16-64 employment rate in London was estimated at 74.3%; this represents a decrease of about 1.5pp from a year earlier, and a fall on the quarter.
The overall UK employment rate was estimated at 74.9%, an increase of 0.1pp on the year, and a small rise 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 ±1.4% to ± 2.9% 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 October to December 2024:
The unemployment rate for London was estimated at 6.1%. This represents an increase of 2pp from a year earlier, and a rise on the quarter.
The UK unemployment rate was estimated at 4.4%,an increase of 0.5pp on the year, and also up on the quarter.
The unemployment rate in London remained the highest across all regions/countries of the UK.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±1.0% 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 ±1.6% 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 October to December 2024:
The rate of economic inactivity in London was estimated at 20.8%. This represents a decrease of 0.1pp from a year earlier, but an increase compared to the previous quarter.
The UK rate of economic inactivity was 21.5%. This represents a decrease of 0.5pp on the year, and a small 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 about 94,000 online postings for jobs in January 2025 (single-month estimate). This was a fall of 15% compared to the levels observed in January 2024, but an increase of 26% compared to December 2024.
This rebound compared to December 2024 is partly indicative of the seasonality of recruitment activity in London, which typically declines in the run-up to the December holiday season before bouncing back in the early months of the new 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 declined. The three-month averaged measure, in January 2025, was below the pre-pandemic levels of December 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 for the period May 2024 to November 2024 were affected by the rollout of a higher administrative earnings threshold for full work-search conditionality. This change would have raised the number of claimants and raised year-on-year increases in the claimant rate.
The latest data for January 2025 show that:
There were 359,000 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%. The number and rate of claimants was stable compared to December 2024. The rate was 5% back in January 2024.
The age groups with the biggest percentage rises in the number of claimants were those between 40 and 54.
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 4.1% in January 2025.
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 Oct 2024-Dec 2024 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,819 | -95 | u | -46 | u | 74.3 | -1.5 | u | -1.5 | u |
England | 28,909 | 96 | t | 474 | t | 75.4 | 0.0 | v | 0.1 | t |
UK | 33,856 | 107 | t | 479 | t | 74.9 | 0.1 | t | 0.1 | t |
Unemployment | ||||||||||
London | 315 | 4 | t | 109 | t | 6.1 | 0.2 | t | 2.1 | t |
England | 1,355 | 33 | t | 205 | t | 4.5 | 0.1 | t | 0.6 | t |
UK | 1,557 | 48 | t | 213 | t | 4.4 | 0.1 | t | 0.5 | t |
Economic Inactivity | ||||||||||
London | 1,298 | 90 | t | 10 | t | 20.8 | 1.4 | t | -0.1 | u |
England | 7,694 | 1 | t | -131 | u | 21.0 | 0.0 | v | -0.6 | u |
UK | 9,285 | -42 | u | -126 | u | 21.5 | -0.1 | u | -0.5 | 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 December 2024 and real-time information (RTI) data up to January 2025. 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.