London Labour Market Update
Guillaume Paugam, September 2024
The London labour market data sent mixed messages in September’s
update, with the three available data sources for employment at odds
with each other while other measures were also inconsistent.
The number of jobs in the capital returned to a rising trend, the number
of resident employees on payrolls fell and there was another large
quarterly swing upwards in the resident employment rate.
Meanwhile, unemployment and the claimant count continued to rise, and
vacancies continued to fall — presenting a view of slowing economy. But
median pay rose faster than inflation and economic inactivity fell to
its lowest level outside of the pandemic period — suggesting some
residual strength. Allowing for caution when analysing ONS labour-force
data, rising employment, unemployment, and falling inactivity in the
latest data seem to suggest an increase in labour force participation
among Londoners. But overall, the strength of the labour market in
London is highly uncertain.
Note that the latest labour market
data for London remains volatile and ONS warns that estimates of changes
should be treated with caution. 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 11,200, or a decrease of 0.3 in percentage terms, in London between July and August 2024 and a decrease of 0.1% on the year.
The employment rate in London was estimated at 75.4% for the three months ending July 2024, an increase of 2.8pp on the same period in the previous year, and also up on the previous quarter. London’s employment rate was higher than the UK’s (74.8%).
London’s unemployment rate was estimated at 5.3%, up on the quarter and an increase of 0.4pp from a year earlier. The UK unemployment rate was 4.1%.
London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 20.1%. This was a decrease of 3.4pp on the previous year, and was also down on the quarter. It is lower than the UK-wide estimate of 21.9%.
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 June 2024 show that:
The total number of workforce jobs in London was estimated at 6.6 million, an increase of approximately 0.5% from March 2024 against a UK estimate of -0.1%.
The latest estimate represents an increase of approximately 115,000, or 1.8%, from levels the year before, compared with an increase of 1.4% across the UK.
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 June 2023 and June 2024*:
Construction recorded the largest percentage decrease in jobs in London (-20,300 or -7.3%). This was followed by Administration (-37,100 or -5.5%) and Retail (-9,940 or -1.5%). While Construction and Administration jobs are also down in the UK overall over the period, the fall in Retail jobs in the capital contrasts with a rise in the UK.
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London:
- Arts & recreation (44,900 or 25.8%)
- Transport & storage (38,300 or 12.9%)
- Real estate activities (14,500 or 9.3%)
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 June 2024*:
Construction recorded the largest percentage decrease in jobs in London (-58,600 or -18.5%). This was followed by Manufacturing (-4,530 or -3.3%) and Education (-4,590 or -1.1%).
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London:
- Health (146,000 or 24.2%)
- Hospitality (102,000 or 22.2%)
- Other services (33,500 or 20.9%)
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 4.3 million payrolled employees living in London in August 2024, a decrease of around 11,200 (0.3%) compared to July
The latest London estimate represents a decrease of 6,080 (0.1%), on the previous year (August 2023) compared to a UK-wide increase of 0.4%.
Over the year, resident payrolled employee jobs fell in Inner London, especially in the West, and increased in Outer London, in the South, East and North East. Note that the Additional payrolled employee statistics, below, show that year-on-year employee numbers are now falling in a majority of London local authorities.
London is the only UK region/country showing a decline in payrolled employee jobs over the year.
Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 210,000, or 5.1%. This compares to an increase of 4.4% across the UK.
The figures for August 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 August 2024:
Median monthly pay in London was £2,860, an increase of 5.2% on the year.
In the UK overall, median pay was £2,420, up by 6.2% 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 August 2023 to August 2024:
South East was the region/country with the lowest growth in median monthly salary at 5.1%.
The region/country with the highest growth in median monthly salary was Northern Ireland at 11.3%.
London is therefore amongst the regions/countries with the slowest pay growth on the year, although pay remains much higher in London than in the UK overall.
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 July 2024, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.1%.
Nominal employee pay was up by 4.7% on the year in London, resulting in an increase of 1.6% 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 May 2024 to July 2024, we estimate the annualised growth rate of real pay in London to be 3.9%.
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 July 2024 to levels the previous year:
Public admin & defence saw the highest percentage growth in payrolled employees at 6.1%, followed by Health (4.9%) and Education (4.1%).
Information & communication saw its number of payrolled employee jobs fall, with a decrease of 4.6%, followed by Hospitality (down by 2.7%) and Construction (down by 2.3%).
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 June 2024 to levels the previous year:
The number of employees “Aged: 18-24” was down by 2.7%. Otherwise, the number of payrolled employees rose across all the other age groups.
The 65+ age group experienced by far the biggest increase, but it only represents 3% of total payrolled employee jobs in London. The small headcount in that category means that it is more likely to exhibit bigger percentage variations than the other groups for a given headcount change.
For each age group, the direction of change is the same in London and the UK, although there can be differences between London and the UK in the magnitude of these changes.
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 May to July 2024:
The 16-64 employment rate in London was estimated at 75.4%; this represents an increase of 2.8pp from a year earlier, and is also up on the quarter.
The overall UK employment rate was estimated at 74.8%, a decrease of 0.1pp on the year, but up on the quarter.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±1.7% 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 ±1.6% 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 May to July 2024:
The unemployment rate for London was estimated at 5.3%. This represents an increase of 0.4pp from a year earlier, and a rise on the quarter.
The UK unemployment rate was estimated at 4.1%,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
±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 ±1.5% 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).
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 May to July 2024:
The rate of economic inactivity in London was estimated at 20.1%. This represents a decrease of 3.4pp from a year earlier, and a fall on the quarter.
The UK rate of economic inactivity was 21.9%. This represents an increase of 0.3pp on the year, but 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 91,170 onlime postings for jobs in London in August 2024, (single-month estimate), a decrease of 26% 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 (56,800) to the high of June 2022 (182,600).
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 first half of 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 August 2024 show that:
There were 357,000 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 is up from 4.8% in August 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 4.2% in August 2024.
Breakdowns by age group (which rely on non-seasonally adjusted data) show broad-based increases across age groups over the year in London. This rise is particularly pronounced for Londoners aged 35-54. Trends in London are similar to UK-wide trends, although for each age group, the increase in claimant count is higher in London than in the UK.
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 May 2024-Jul 2024 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,798 | 104 | t | 210 | t | 75.4 | 1.8 | t | 2.8 | t |
England | 28,273 | 205 | t | 153 | t | 75.2 | 0.4 | t | 0.0 | v |
UK | 33,232 | 265 | t | 150 | t | 74.8 | 0.5 | t | -0.1 | u |
Unemployment | ||||||||||
London | 270 | 25 | t | 34 | t | 5.3 | 0.4 | t | 0.4 | t |
England | 1,242 | -68 | u | -50 | u | 4.2 | -0.3 | u | -0.2 | u |
UK | 1,437 | -74 | u | -60 | u | 4.1 | -0.2 | u | -0.2 | u |
Economic Inactivity | ||||||||||
London | 1,230 | -144 | u | -203 | u | 20.1 | -2.4 | u | -3.4 | u |
England | 7,687 | -89 | u | 96 | t | 21.4 | -0.3 | u | 0.2 | t |
UK | 9,298 | -136 | u | 160 | t | 21.9 | -0.3 | u | 0.3 | 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 July 2024 and real-time information (RTI) data up to August 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.