London Labour Market Update
October 2026
The latest ONS labour market data point to a mixed labour market in London, with some improvements.
Payrolled employment continues to decline compared with a year earlier across most age groups, although the pace of decline has eased. The concurrent increase in the employment rate on the quarter should be interpreted cautiously, as it may reflect sampling variability in the Labour Force Survey rather than an underlying improvement, particularly given the continued weakness in PAYE employment. Meanwhile, real pay continued to grow, although the rate of increase slowed in recent months.
Unemployment in London edged up slightly on the quarter, in contrast to a decline across the UK, while economic inactivity fell in both, with a more marked decrease in London.
Overall, potential improvements in employment and inactivity rates offer some encouragement, but LFS sampling variability warrants caution. Continued declines in payrolled employment and rising unemployment point to ongoing challenges in London’s labour market.
Due to recent data volatility, we adopt ONS’ prudent language when reporting quarterly changes in employment, unemployment and inactivity rates. The focus should be on the general movements rather than the exact figures. As data collection improvements feed into published results, there is a possibility of further revisions. 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) showed a decrease of 3,600 (-0.1 percentage points) in the number of payrolled employees in London between August 2026 and September 2026, and a decrease of 0.7% on the year.
The employment rate in London was estimated at 74.5% for the three months ending August 2026, a decrease of 0.1pp on the same period in the previous year, and an increase on the quarter. London’s employment rate was lower than the UK average (75.3%).
London’s unemployment rate was estimated at 6.6%, an increase on the quarter and an increase of 0.5pp from a year earlier. The UK average was 4.7%.
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 0.2pp on the previous year, and a decrease on the quarter. It is lower than the UK-wide estimate of 20.9%.
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 4.4 million payrolled employees living in London in September 2026, a decrease of 3,600 from August.
The latest London estimate represents a decrease of 31,300 (0.7%) on the previous year (September 2025) compared to a decrease of 0.2% UK-wide.
Compared to the pre-pandemic (February 2020) level, the number of payrolled employees in London was up by 198,000 or 4.8%. This compares to an increase of 4.2% across the UK.
The figures for September 2026 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.
The median pay is an average which measures the middle point in the range of recorded monthly employee salaries.
In September 2026:
Median monthly pay in London was £3,120, an increase of 3.9% on the year.
In the UK overall, median pay was £2,660, up by 4.4% on the year.
CPIH (consumer price inflation including owner-occupiers’ housing costs) is a national measure and does not account for region-specific price changes.
Pay by region
The change in median nominal salary on the year varies between the regions and countries of the UK.
From September 2025 to September 2026:
Northern Ireland was the region/country with the lowest growth in median monthly salary at 3.4%.
The region/country with the highest growth in median monthly salary was Wales at 5.1%.
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 August 2026, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.3%.
Nominal employee pay was up by 3.3% on the year in London, resulting in approximately no change 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 backward-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 June 2026 to August 2026, we estimate the annualised growth rate of real pay in London to be 1.7%.
This is lower than in the previous quarter (April 2026 to June 2026), when the annualised growth rate of real pay in London was 2.0%, suggesting that real pay growth has slowed in recent months, although it remains positive.
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 on a rolling basis, as new data is released by the ONS/HMRC. Previous releases are included for reference.
Change by age group
Recent changes in the number of payrolled employees vary by age group. Comparing September 2026 to levels the previous year:
The number of employees aged 18-24: The number fell by 0.6% in London, while it rose by 1.6% across the UK.
The number of employees aged 25-34: The number fell by 1.9% in both London and the UK.
The number of employees aged 35-49: The number fell slightly in London, by 0.7%, while it rose slightly across the UK, by 0.5%.
The number of employees aged 50+: The number rose in both London and the UK, by 2.9% and 2.3% respectively.
Source: HM Revenue and Customs – Pay As You Earn Real Time
Information.
Note: Estimates are based on where employees live.
Change by industry
Comparing July 2026 to the same time last year:
Administration saw the highest percentage growth in payrolled employees at 2.5%, followed by Finance & insurance (1.4%) and Arts & recreation (1.0%).
Hospitality saw its number of payrolled employees fall, with a decrease of 3.2%, followed by Information & communication (down by 2.7%) and Construction (down by 2.5%).
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.
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 (for example, because they were on holiday or off sick). The employment rate is the proportion of people aged between 16 and 64 years who are in employment.
For June to August 2026:
The 16–64 employment rate in London was estimated at 74.5%. This represents a decrease of 0.1pp from a year earlier and an increase of 0.8pp on the quarter.
The margin of error for the London employment rate is ±1.3 percentage points. This suggests that the oscillations over the last two years between around 74% to around 76% do not reflect a significant change in the underlying trend.
The overall UK employment rate was estimated at 75.3%. This represents an increase of 0.2pp from a year earlier and an increase of 0.2pp on the quarter.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±1.3% for London and ±0.4% for the UK. The LFS has been reweighted 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 ±1.1% to ± 2.4% 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 June to August 2026:
The unemployment rate for London was estimated at 6.6%. This represents an increase of 0.5pp from a year earlier, and an increase of 0.1pp on the quarter.
The UK unemployment rate was estimated at 4.7%, a decrease of 0.1pp on the year, and a decrease on the quarter.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±0.9% for London and ±0.3% for the UK. The LFS has been reweighted 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 ±0.6% to ±1.2% across regions.
Economic inactivity rate
The economic inactivity rate refers to the proportion of people aged 16 to 64 who are not in employment and are either not seeking work or are 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).
For June to August 2026:
The rate of economic inactivity in London was estimated at 20.1%. This represents a decrease of 0.2pp from a year earlier, and a decrease of 0.7pp compared to the previous quarter.
The UK rate of economic inactivity was 20.9%. This represents a decrease of 0.2pp on the year, and a decrease of 0.1pp 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
reweighted 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.
The latest job posting estimates point to a modest improvement in labour demand, albeit from a subdued level.
Latest job posting estimates suggest there were about 125,000 unique online postings for jobs in September 2026 (single-month estimate). This was an increase of around 8,500 compared with September 2025, and an increase of around 4,600 compared with June 2026.
The three-month average for September 2026 was about 112,000 postings. This was an increase of around 4,200 compared with June 2026, and an increase of around 2,300 compared with September 2025.
Postings for jobs in London
Source: Lightcast.
Note: April 2026 data adjusted for outliers.
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.
For September 2026:
There were 348,000 people claiming unemployment-related benefits in London, equal to a seasonally adjusted claimant rate (as a proportion of residents aged 16-64) of 5.5%. The number of claimants in London was a change of -2,230 on the year.
The age group with the biggest percentage rise in the number of claimants over the last year in London was those aged 16-24 (+5.0%). The claimant count for the same age group also rose across the UK (+10.6%).
The UK’s claimant rate was 3.9%. Up until the early months of the Covid-19 pandemic, London’s claimant rate was in line with the UK’s. A gap opened then and has not closed since.
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 Jun 2026-Aug 2026 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,914 | 58 | t | 11 | t | 74.5 | 0.8 | t | -0.1 | u |
England | 29,512 | 113 | t | 310 | t | 75.6 | 0.2 | t | 0.2 | t |
UK | 34,577 | 102 | t | 356 | t | 75.3 | 0.2 | t | 0.2 | t |
Unemployment | ||||||||||
London | 349 | 10 | t | 26 | t | 6.6 | 0.1 | t | 0.5 | t |
England | 1,520 | -23 | u | -22 | u | 4.9 | -0.1 | u | -0.1 | u |
UK | 1,712 | -47 | u | -26 | u | 4.7 | -0.1 | u | -0.1 | u |
Economic Inactivity | ||||||||||
London | 1,270 | -39 | u | -5 | u | 20.1 | -0.7 | u | -0.2 | u |
England | 7,545 | -44 | u | 10 | t | 20.4 | -0.2 | u | -0.1 | u |
UK | 9,091 | -16 | u | -22 | u | 20.9 | -0.1 | u | -0.2 | u |
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 August 2026 and real-time information (RTI) data up to September 2026. 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.