The number of workforce jobs in London (up 4.4% year-on-year) continued to rise in the latest data at a faster pace than the rest of the UK, while unemployment and claimant count rates held steady this month. Employment and inactivity rates, which have been volatile recently, provided a cautionary note.

The employment rate fell by 1.3 percentage points and the inactivity rate rose by 1.2pp on the quarter, even as the number of jobs reached record highs. The number of professional services jobs in London has grown particularly fast with 124,000 new jobs recorded compared to pre-pandemic.

Pay growth appears to have stalled both in London and the UK overall, as median employee pay remained at the same level as in November in cash terms. The change in real pay on the year continued to be negative as a result, despite recent slowing inflation.

The ONS reported vacancies continued to fall for the eighth consecutive month in the UK, suggesting a loosening labour market. However, the trend in online job postings in London has been stable in recent months.


Summary of key points


  • The most timely estimate of payrolled employees shows an increase of around 19,100, or 0.4%, in London between January and February 2023 and an increase of 3.8% on the year.

  • The employment rate in London was estimated at 74.6% for the three months ending January 2023, down 1.3 percentage points (pp) on the previous quarter and down 1.1pp on the same period in the previous year. London’s employment rate was lower than the UK average (75.7%).

  • The unemployment rate was still higher than the UK average. London’s unemployment rate was estimated at 4.5%, up 0.1pp on the quarter and down 0.4pp 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 21.9%. This was up 1.2pp on the previous quarter and up 1.6pp on the previous year, and is above the UK-wide estimate of 21.3%.

  • The total number of workforce jobs increased by 41,500, or 0.7%, between the third and fourth quarter of 2022, and was 269,000, or 4.4%, above levels the previous year.

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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 4.3 million payrolled employees living in London in February 2023, an increase of around 19,100, or 0.4%, on the previous month.

  • The latest London estimate represents an increase of 157,000, or 3.8%, on the previous year (February 2022) against a UK average increase of 2.3% (see charts).

  • Relative to pre-pandemic (February 2020) levels, the number of payrolled employees in London was up by 169,000, or 4.1%. This compares to an increase of 3.6% across the UK on average.

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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, 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 February 2023:

  • Median monthly pay in London was £2,630, an increase of 5.5% on the year.

  • In the UK overall, median pay was £2,190, up by 6.7% 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.


Pay by region


The change in median nominal salary on the year varies between the regions and countries of the UK.

From February 2022 to February 2023:

  • The region/country with the highest growth in median monthly salary was Scotland at 8.7%.

  • The region/country with the lowest growth in median monthly salary was London at 5.5%.

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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.

In January 2023, the latest month for which CPIH inflation data is available:

  • The year-on-year CPIH rate in the UK was 8.8%.

  • Nominal employee pay was up by 6.8% on the year in London, resulting in a decrease of 2.0% 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 local authority. Comparing February 2023 with levels the year before:

  • The number of payrolled employees living in Newham, the borough with the highest growth (excl. the City), was up by 7.3% on the year.

  • The borough with the lowest growth, Havering, recorded an increase of 0.7%.

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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


Comparing January 2023 to levels the previous year:

  • Hospitality saw the highest percentage growth in payrolled employees at 10.8%, followed by Arts & recreation (7.2%) and Professional services (6.3%).

  • On the other hand, Construction saw the lowest percentage growth with a decrease of 1.3%, followed by Public admin & defence (down by 0.1%) and Retail (up by 0.8%).

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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 December 2022 to levels the previous year:

  • The number of payrolled employees “Aged: 50-64” in London was up by 3.0%, while the number of employees “Aged: 35-49” was up by 1.7%.

  • For the UK overall, the number of payrolled employees in those two age groups saw an increase of 2.0% and an increase of 2.1%, 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 November to January 2023:

  • The 16-64 employment rate in London was estimated at 74.6%; this represents a decrease of 1.3 percentage points (pp) on the previous quarter and a decrease of 1.1pp from a year earlier.

  • The overall UK employment rate was estimated at 75.7%, an increase of 0.1pp on the quarter and an increase of 0.3pp on the year.

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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. March 2020 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error ranges from +/- 1.4% to +/- 2.8% 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 November to January 2023:

  • The unemployment rate for London was estimated at 4.5%; this represents an increase of 0.1pp on the previous quarter and a decrease of 0.4pp from a year earlier.

  • The UK unemployment rate was estimated at 3.7%, no change from the previous quarter and a decrease of 0.3pp on the year.

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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. March 2020 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error ranges from +/- 0.7% to +/- 1.4% 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 November to January 2023:

  • The rate of economic inactivity in London was estimated at 21.9%; this represents an increase of 1.2pp on the previous quarter and an increase of 1.6pp from a year earlier.

  • The UK rate of economic inactivity was 21.3%; this represents a decrease of 0.2pp on the previous quarter and a decrease of 0.1pp on the year.

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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 February 2023 show that:

  • There were 280,000 people claiming unemployment-related benefits in London - equal to a claimant unemployment rate (as a proportion of residents aged 16 to 64) of 4.6%.

  • The number of claimants in London has decreased by 46,800, or 14.3%, on the year, compared to a decrease of 253,000, or 14.5%, in the UK overall.

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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 December 2022 show that:

  • The total number of workforce jobs in London was estimated at 6.3 million, an increase of approximately 0.7% from September 2022 against a UK average of 0.6%.

  • The latest estimate represents an increase of approximately 269,000, or 4.4%, from levels the year before, compared with an increase of 2.8% 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 393,000 (7.5%) while the self-employment jobs estimate has decreased by 136,000 (16.5%).

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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.


Sector changes on year

Between December 2021 and December 2022*:

  • Education recorded the largest percentage decrease in jobs in London (-21,400 or -4.9%); this was followed by Transport & storage (-7,400 or -2.4%) and Public admin & defence (-6,370 or -2.3%).

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

    • Real estate activities (29,900 or 20.9%)
    • Information & communication (72,800 or 14.0%)
    • Other services (14,500 or 9.4%)

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*Note: excluding sectors with less than 50,000 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.


Sector changes on pre-pandemic

Between December 2019 and December 2022*:

  • Transport & storage recorded the largest percentage decrease in jobs in London (-23,500 or -7.4%); this was followed by Hospitality (-32,000 or -7.0%) and Construction (-20,600 or -6.5%).

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

    • Arts & recreation (31,200 or 15.4%)
    • Professional services (124,000 or 15.2%)
    • Finance & insurance (58,600 or 14.4%)

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*Note: excluding sectors with less than 50,000 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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Measuring the labour market


The ONS has published its latest labour market update covering Labour Force Survey (LFS) data for the three months ending January 2023 and real-time information (RTI) data up to February 2023. 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.

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