London Labour Market Update

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Summary of key points

• Payrolled employees rose by around 55,400, or 1.4%, between October and November 2021 and is 0.1% above pre-pandemic (February 2020) levels. This was both the largest monthly percentage increase and the highest level of employees on record (since July 2014).
• Unemployment rate estimated at 5.4% for the three months ending October 2021, down 0.6 percentage points (pp) on the quarter and down 1.2pp on the same period in the previous year (while the UK average was 4.2%).
• Employment rate estimated at 75.4% for the three months ending October 2021, up 0.5pp on the previous quarter and up 0.6pp from a year earlier.
• Workforce jobs increased by 39,500 or 0.7% between the second and third quarter of 2021, and is 127,000, or 2.1%, below pre-pandemic (December 2019) levels. While employee jobs have recovered, self-employed jobs remain 16.7% below pre-pandemic levels.

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Note on end of furlough

According to official HMRC statistics, there were still around 231,000 London staff on furlough at the end of September 2021, with a higher furlough take-up rate in the capital when the scheme closed.

The latest payrolled employee and claimant count estimates for November 2021 provide an early indication of the impact of the end of the scheme on the labour market in London.*

Both measures show relatively steady trends in the latest month, with a significant increase in the number of employees paid through payroll and a small decline in the number of people claiming unemployment related benefits.

These latest estimates may not yet reflect post-furlough redundancies. For example, according to the ONS:

‘It is possible those made redundant at the end of the furlough scheme will be included in the RTI data for a few further months, while they work out their notice period.’

However, responses to a recent ONS business survey suggest that only a small share of furloughed employees were made redundant recently. Early indications suggest this may also be true for London.

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*Note: the latest payrolled employees estimate is based on incomplete information and may be subject to revision.

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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 2021. 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, and have therefore been impacted differently by the spread of COVID-19.

More information and previous GLA Economics analyses can be found on our COVID-19 labour market analysis page.

More information on the data used and a glossary of terms can be found on the ONS website.

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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 4.2 million payrolled employees living in London in November 2021, an increase of around 55,400 or 1.4% on the previous month.

• The latest London estimate represents an increase of 241,000 or 6.2% on the previous year (November 2020) against a UK average increase of 4.8% (see charts).

• Relative to pre-pandemic levels (February 2020), the number of payrolled employees in London is up by 2,390 or 0.1%. This compares to an increase of 1.5% across the UK on average.

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Change on previous year

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.

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Change since February 2020, NUTS2 regions

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.

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Change on previous year, NUTS2 regions

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.

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Change in payrolled employees by local authority

There is also considerable variation in the change in payrolled employees by London authority.

• Compared to February 2020, the number of payrolled employees living in Tower Hamlets is up by 3.8% in November 2021, while the number living in City of London is down by 7.7%.

• Overall, the number of payrolled employees are still below pre-pandemic levels in 16 out of 33 London authorities (including City of London, see map).

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information. Contains Ordnance Survey data Crown copyright and database right [2015]

Note: Estimates are based on where employees live.

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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 August to October 2021:

• The 16-64 employment rate in London was estimated at 75.4%; this represents an increase of 0.5 percentage points (pp) on the previous quarter and an increase of 0.6pp from a year earlier.

• The overall UK employment rate was estimated at 75.5%, an increase of 0.2pp on the quarter and an increase of 0.5pp on the year.

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Source: ONS Labour Force Survey.

Note: The margin of error is +/- 1.4% for London and +/- 0.4% for the UK.

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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 August to October 2021:

• The unemployment rate for London was estimated at 5.4%; this represents a decrease of 0.6pp on the previous quarter and a decrease of 1.2pp from a year earlier.

• The UK unemployment rate was estimated at 4.2%, a decrease of 0.4pp from the previous quarter and a decrease of 0.9pp on the year.

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Source: ONS Labour Force Survey.

Note: The margin of error is +/- 0.8% for London and +/- 0.2% for the UK.

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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. This group includes some students, people who are looking after family/home, and people who are too ill to work (most of whom are long-term sick).

For August to October 2021:

• The rate of economic inactivity in London was estimated at 20.3%; this is unchanged from the previous quarter and an increase of 0.4pp from a year earlier.

• The UK rate of economic inactivity was 21.2%. This represents an increase of 0.1pp on the previous quarter and an increase of 0.2pp on the year.

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Source: ONS Labour Force Survey.

Note: The margin of error is not published for London, the UK margin is +/- 0.4%.

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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 November 2021 show that:

• There were 365,000 people claiming unemployment related benefits in London - equal to a claimant unemployment rate (as a proportion of residents aged 16 to 64) of 6.0%.

• The number of claimants in London has decreased by 120,000, or 24.7%, on the year, compared to a decrease of 686,000, or 26.3%, in the UK overall.

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Rate of residents aged 16-64

Source: ONS Claimant Count by sex and age (NSA).

Note: may include some employed claimants on low hours or earnings.

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Year-on-year percentage change

Source: ONS Claimant Count by sex and age (NSA).

Note: may include some employed claimants on low hours or earnings.

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Workforce Jobs

Number of workforce jobs

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 latest data for September 2021 show that:

• The total number of workforce jobs in London was estimated at 5.9 million, an increase of approximately 0.7% from June 2021 against a UK average of 0.4%.

• The latest estimate represents a decrease of approximately 127,000 or 2.1% from December 2019 levels (the pre-pandemic peak in London) compared with a decrease of 1.5% across the UK on average.

• Total jobs includes both employee and self-employment jobs alongside other types of employment; since December 2019, the latest employee jobs estimate has increased by 6,680 (0.1%) while the self-employment jobs estimate has decreased by 137,000 (16.7%).

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Source: ONS Workforce Jobs.

Note: The margin of error for all jobs is +/- 0.9% for London and +/- 0.3% for the UK.

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Workforce jobs by sector

Between December 2019 and September 2021*:

• Construction recorded the largest percentage decrease in jobs in London (-54,100 or -17.0%); this was followed by Real estate activities (-17,700 or -11.4%) and Arts & recreation (-21,200 or -10.5%).

• The following industry groups shown in the chart saw the largest positive percentage change in jobs in London:

  • Health (63,800 or 10.6%)
  • Public admin & defence (22,900 or 9.1%)
  • Retail (23,300 or 3.6%)

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*Note: excluding sectors with less than 25,000 jobs in London.

Source: ONS Workforce Jobs.

Note: The margin of error for all jobs is +/- 0.9% for London and +/- 0.3% for the UK.

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Summary of headline indicators

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