London Labour Market Update
December 2022
Contact: Ammar Ljubijankić Kutasi
As they have for much of the post-pandemic recovery period, the headline labour market indicators for London offer a mixed bag.
The number of payrolled employees and workforce jobs continued to rise further above pre-pandemic levels. The employment rate reached its highest level since 2021, while the inactivity rate, which had been a cause of concern, fell in the latest data. In the wider UK, a lower number of inactive 50-64 year olds brought down the overall national inactivity rate.
Yet the unemployment rate appears to be on the rise again, while the claimant count rate remains elevated.
Cost-of-living also continues to be a concern as inflation remained very high, at 9.6% in October, with year-on-year real pay growth dipping further into negative territory. Where we have data at the UK level, annual regular pay growth was 6.9% in the private sector and 2.7% in the public sector, among the largest differences on record.
Summary of key points
The most timely estimate of payrolled employees shows an increase of around 18,000, or 0.4%, in London between October and November 2022 and was 3.1% above pre-pandemic (February 2020) levels.
The employment rate in London was estimated at 75.9% for the three months ending October 2022, up 1.0 percentage points (pp) on the previous quarter and up 0.4pp on the same period in the previous year. London’s employment rate was higher than the UK average (75.6%).
The unemployment rate was still higher than the UK average. London’s unemployment rate was estimated at 4.5%, up 0.2pp on the quarter and down 0.9pp from a year earlier. The UK average was 3.7%.
London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 20.7%. This was down 1.0pp on the previous quarter and up 0.4pp on the previous year, and is lower than the UK-wide estimate of 21.5%.
The total number of workforce jobs increased by 35,000, or 0.6%, between the second and third quarter of 2022, and was 210,000, or 3.4%, above pre-pandemic (December 2019) levels.
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 2022 and real-time information (RTI) data up to November 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.
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.
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 November 2022, an increase of around 18,000, or 0.4%, on the previous month.
The latest London estimate represents an increase of 173,000, or 4.2%, on the previous year (November 2021) against a UK average increase of 2.7% (see charts).
Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 131,000, or 3.1%. This compares to an increase of 3.2% across the UK on average.
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 since February 2020, 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, 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 November 2022:
Median monthly pay in London was £2,600, an increase of 15.9% since February 2020 and an increase of 6.6% on the year.
In the UK overall, median pay was £2,180, up by 17.3% since February 2020 and up 8.0% 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.
Annual real pay growth
Growth in real wages can be estimated by adjusting nominal pay for the rate of inflation, here CPIH.
In October 2022, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 9.6%.
Nominal employee pay was up by 6.1% on the year in London, resulting in a decrease of 3.2% 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).
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
Some industries have yet to recover from the pandemic. Comparing October 2022 to pre-pandemic (February 2020) levels:
Health saw the highest percentage growth in payrolled employees at 8.3%, followed by Professional services (8.3%) and Administration (6.8%).
On the other hand, Other services saw the lowest percentage growth with a decrease of 3.7%, followed by Transport & storage (down by 3.6%) and Retail (down by 3.3%).
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 September 2022 to pre-pandemic (February 2020) levels:
The number of payrolled employees “Aged: 50-64” in London was up by 4.6%, while the number of employees “Aged: 25-34” was down by 0.0%.
For the UK overall, the number of payrolled employees in those two age groups saw an increase of 3.8% and an increase of 1.2%, respectively.
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 August to October 2022:
The 16-64 employment rate in London was estimated at 75.9%; this represents an increase of 1.0 percentage points (pp) on the previous quarter and an increase of 0.4pp 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 0.2pp on the year.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is +/- 1.6% for London and +/- 0.4% for the UK. March 2020 indicated by dotted line.
Regional comparison
Source: ONS Labour Force Survey.
Note: The margin of error ranges from +/- 1.6% to +/- 2.6% 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.
For August to October 2022:
The unemployment rate for London was estimated at 4.5%; this represents an increase of 0.2pp on the previous quarter and a decrease of 0.9pp from a year earlier.
The UK unemployment rate was estimated at 3.7%, an increase of 0.1pp from the previous quarter and a decrease of 0.5pp on the year.
London and UK rates
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.
Regional comparison
Source: ONS Labour Force Survey.
Note: The margin of error ranges from +/- 0.6% to +/- 1.3% 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. 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 2022:
The rate of economic inactivity in London was estimated at 20.7%; this represents a decrease of 1.0pp on the previous quarter and an increase of 0.4pp from a year earlier.
The UK rate of economic inactivity was 21.5%; this represents a decrease of 0.2pp on the previous quarter and an increase of 0.2pp on the year.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is not published for London, the UK margin is +/- 0.5%. March 2020 indicated by dotted line.
Regional comparison
Source: ONS Labour Force Survey.
Note: The margin of error is not published for regions.
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 2022 show that:
There were 292,000 people claiming unemployment-related benefits in London - equal to a claimant unemployment rate (as a proportion of residents aged 16 to 64) of 4.8%.
The number of claimants in London has decreased by 71,600, or 19.7%, on the year, compared to a decrease of 369,000, or 19.2%, 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. March 2020 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.
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 2022 show that:
The total number of workforce jobs in London was estimated at 6.3 million, an increase of approximately 0.6% from June 2022 against a UK average of 0.3%.
The latest estimate represents an increase of approximately 210,000, or 3.4%, from December 2019 levels (the pre-pandemic peak in London) compared with an increase 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 325,000 (6.2%) while the self-employment jobs estimate has decreased by 121,000 (14.7%).
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 September 2022*:
Hospitality recorded the largest percentage decrease in jobs in London (-46,400 or -10.1%); this was followed by Transport & storage (-28,400 or -8.9%) 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:
- Arts & recreation (35,500 or 17.5%)
- Professional services (106,000 or 13.0%)
- Information & communication (64,000 or 12.3%)
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
Headline estimates for Aug 2022-Oct 2022 | Number* (thousands) | Rate** (%) | ||||||||
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,820 | 25 | t | 24 | t | 75.9 | 1.0 | t | 0.4 | t |
England | 27,740 | -1 | u | 128 | t | 75.9 | 0.1 | t | 0.1 | t |
UK | 32,773 | 27 | t | 191 | t | 75.6 | 0.2 | t | 0.2 | t |
Unemployment | ||||||||||
London | 225 | 13 | t | -46 | u | 4.5 | 0.2 | t | -0.9 | u |
England | 1,076 | 12 | t | -143 | u | 3.7 | 0.0 | v | -0.5 | u |
UK | 1,247 | 23 | t | -176 | u | 3.7 | 0.1 | t | -0.5 | u |
Economic Inactivity | ||||||||||
London | 1,277 | -58 | u | 31 | t | 20.7 | -1.0 | u | 0.4 | t |
England | 7,406 | -18 | u | 134 | t | 21.1 | -0.1 | u | 0.3 | t |
UK | 8,935 | -76 | u | 123 | t | 21.5 | -0.2 | u | 0.2 | t |
Source: ONS Labour Force Survey. | ||||||||||