While headline labour market indicators have improved from mid-pandemic, the recovery in London’s labour market appears to be slowing. The latest employment rate estimate has fallen on the quarter and inactivity is on the rise.

There are also early signs that the reduction in unemployment is stalling: the unemployment rate was virtually unchanged on the previous quarter and the claimant count rate for May did not fall on the previous month for the first time in 2022.

Adjusting for inflation, many employees are likely to see a decrease in their pay on the previous year as median pay growth fails to keep pace with rising prices.


Summary of key points


  • The most timely estimate of payrolled employees shows an increase of around 14,700, or 0.3%, in London between April and May 2022 and was 1.2% above pre-pandemic (February 2020) levels.

  • The employment rate in London was estimated at 75.1% for the three months ending April 2022, down 0.6 percentage points (pp) on the previous quarter and up 0.7pp on the same period in the previous year. London’s employment rate was slightly higher than the UK average (75.6%).

  • The unemployment rate continued to fall from its pandemic peak but was still higher than the UK average. London’s unemployment rate was estimated at 4.8%, down 0.1pp on the quarter and down 1.8pp from a year earlier. The UK average was 3.8%.

  • London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 20.9%. This was up 0.8pp on the previous year and up 0.6pp on the previous quarter but remains lower than the UK-wide estimate of 21.3%.

  • The total number of workforce jobs increased by 92,500, or 1.6%, between the fourth quarter of 2021 and first quarter of 2022, and was 17,600, or 0.3%, below pre-pandemic (December 2019) levels. While employee jobs have recovered, self-employed jobs remained 13% below pre-pandemic levels.

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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 April 2022 and real-time information (RTI) data up to May 2022. 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 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 May 2022, an increase of around 14,700, or 0.3%, on the previous month.

  • The latest London estimate represents an increase of 223,000, or 5.6%, on the previous year (May 2021) against a UK average increase of 3.9% (see charts).

  • Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 50,400, or 1.2%. This compares to an increase of 2.2% 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. March 2020 indicated by dotted line.


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.


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.


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 2022:

  • Median monthly pay in London was £2,530, an increase of 12.6% since February 2020 and an increase of 5.2% on the year.

  • In the UK overall, median pay was £2,080, up by 11.7% since February 2020 and up 5.4% on the year.

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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.


Annual real pay growth


Growth in real wages can be estimated by subtracting the rate of inflation, here the CPIH, from the growth in nominal pay.

In April 2022, the latest month for which CPIH inflation data is available:

  • The year-on-year CPIH rate in the UK was 7.8%.

  • Nominal employee pay was up by 6.5% on the year in London, resulting in a decrease of 1.2% in real pay on the year.

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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).


Additional payrolled employee statistics


The tabs below are each updated once per quarter, as new data is released by the ONS/HMRC.


Change by local authority


There is considerable variation in the change in payrolled employees by London authority. Comparing May 2022 to pre-pandemic (February 2020) levels:

  • The number of payrolled employees living in Tower Hamlets was up by 7.0%, while the number living in Haringey was down by 3.4%.

  • Overall, the number of payrolled employees were still below pre-pandemic levels in 9 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 rights [2015].

Note: Estimates are based on where employees live.


Change by industry


Some industries have yet to recover from the pandemic. Comparing April 2022 to pre-pandemic (February 2020) levels:

  • Public admin & defence saw the highest percentage growth in payrolled employees at 15.7%, followed by Health (7.7%) and Administration (4.1%).

  • On the other hand, Hospitality saw the lowest percentage growth with a decrease of 7.2%, followed by Transport & storage (down by 5.8%) and Arts & recreation (down by 5.3%).

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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 2022 to pre-pandemic (February 2020) levels:

  • The number of payrolled employees “Aged: 50-64” in London was up by 4.0%, while the number of employees “Aged: 25-34” was down by 1.5%.

  • For the UK overall, the number of payrolled employees in those two age groups saw an increase of 3.2% and an increase of 0.4%, respectively.

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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 2022:

  • The 16-64 employment rate in London was estimated at 75.1%; this represents a decrease of 0.6 percentage points (pp) on the previous quarter and an increase of 0.7pp from a year earlier.

  • The overall UK employment rate was estimated at 75.6%, an increase of 0.2pp on the quarter and an increase of 1.0pp 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. March 2020 indicated by dotted line.


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 2022:

  • The unemployment rate for London was estimated at 4.8%; this represents a decrease of 0.1pp on the previous quarter and a decrease of 1.8pp from a year earlier.

  • The UK unemployment rate was estimated at 3.8%, a decrease of 0.2pp from the previous quarter and a decrease of 1.1pp 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. March 2020 indicated by dotted line.


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 February to April 2022:

  • The rate of economic inactivity in London was estimated at 20.9%; this represents an increase of 0.6pp on the previous quarter and an increase of 0.8pp from a year earlier.

  • The UK rate of economic inactivity was 21.3%; this represents a decrease of 0.1pp on the previous quarter and a decrease of 0.1pp 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%. 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 2022 show that:

  • There were 302,000 people claiming unemployment-related benefits in London - equal to a claimant unemployment rate (as a proportion of residents aged 16 to 64) of 5.0%.

  • The number of claimants in London has decreased by 174,000, or 36.5%, on the year, compared to a decrease of 855,000, or 34.7%, 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. March 2020 indicated by dotted line.


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.


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 March 2022 show that:

  • The total number of workforce jobs in London was estimated at 6.1 million, an increase of approximately 1.6% from December 2021 against a UK average of 1.2%.

  • The latest estimate represents a decrease of approximately 17,600, or 0.3%, from December 2019 levels (the pre-pandemic peak in London) compared with a decrease of 0.2% 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 87,900 (1.7%) while the self-employment jobs estimate has decreased by 109,000 (13.3%).

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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. March 2020 indicated by dotted line.


Workforce jobs by sector

Between December 2019 and March 2022*:

  • Hospitality recorded the largest percentage decrease in jobs in London (-49,600 or -10.8%); this was followed by Administration (-54,300 or -9.0%) and Construction (-27,700 or -8.7%).

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

    • Public admin & defence (22,300 or 8.9%)
    • Professional services (59,300 or 7.3%)
    • Health (41,900 or 7.0%)

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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.


Summary of headline indicators


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