Work, Worklessness & Benefits

The nature of work in London

Date 31 August 2017
Date updated 20 April 2020
Overview

London's Poverty Profile is divided into five themes: 

  • People; 
  • Living standards;
  • Housing;
  • Work, worklessness and benefits; and 
  • Shared opportunities. 

Each one provides insights into a range of different indicators of poverty and inequality across London, drawing comparisons over time, between different boroughs and with the rest of the country.

The Work, Worklessness and Benefits theme highlights the nature of work in London and the inequality of work outcomes, including overall employment and unemployment rates, the types of contracts people are on, and their earnings and benefits.

Work, Worklessness & Benefits: Indicators

Proportion of Londoners aged 16-64 on out-of-work benefits by benefit type (2014-2020 (Q2))

The proportion of working-age Londoners on out-of-work benefits has fallen since 2014, but has risen slightly since a recent low in 2017. The types of benefits claimed by those out of work has also changed in recent years, as Universal Credit has rolled out across the capital. 

For example, 0.3% of working-age Londoners were out of work and claiming Universal Credit in 2016. By May 2020, this proportion had risen to 7.4% of the working-age population. 

Compared to London, the proportion of the working-age population on out-of-work benefits was higher in the rest of England between 2014 and 2020.

Number of London households affected by benefit cap (2016 and 2019)

The benefit cap limits the amount of benefit that most working-age people can receive. In London, the limit is £23,000 per year or £15,410 for single adults with no children; this was reduced in 2015. The benefit cap is applied by either reducing Universal Credit or Housing Benefit (for those not claiming Universal Credit).

The benefit cap reduced the benefits of nearly 20,000 families in London in November 2019 (11,062 had Universal Credit reduced and another 8,899 had Housing Benefit reduced). The number of families with their benefits capped in London has risen by 76% over the last five years and 87,665 London families have been affected by the cap since its introduction in 2013.

The majority of London households affected by the benefit cap in 2019 had their benefits reduced by up to £50 per month.

Work status of London households by net income quintile (2018/19)

This indicator shows that household work status is closely related to household net incomes. Overall, households with lower net incomes are more likely to include inactive, retired or unemployed adults. 

For example, just 8% of those in the bottom 20% of the net income distribution live in households where all adults work. In contrast, 55% of those in the top 20% of the net income distribution live in households where all adults work. One in five of those in the bottom net income quintile live in workless households, compared to just 2% of those in the top net income quintile.

Work status of London households (2004 - 2019)

The proportion of working-age households where none of the adults are in employment (“workless households”) has been consistently low at 8% since 2016, having almost halved since 2004 when 15% of households contained nobody in employment. This means that in 2019, at least one adult does some work in 92% of working-age households in London.

In 2019 there were 3 million households in London (50%) where all adults were in work. Another 2.6 million households in London (43%) contained some working adults and some who were not in work.

Unemployment counts in London by sex (1992 - 2020)

The number of unemployed people in London has just under halved since its post-financial crisis peak in 2011 (from 448,000 in 2011 to 267,000 in 2020). 

Over the past three decades, the gender split of unemployment has become more even. In 1993 there were almost two unemployed men for every unemployed woman, but by 2015 the numbers were broadly similar with just under 140,000 of both genders unemployed.  Since then, unemployment has fallen consistently for women (113,000 in 2020) while it has increased in the last three years for men (154,000 in 2020). 

Although the unemployment count is up to June-August of 2020, the full impact of the coronavirus on employment is only partly captured by this indicator. Other factors, such as those put on furlough and the change in inactivity within the labour market, should also be considered. 

Unemployment rate over time (2004/05 - 2019/20(Q2))

Unemployment has more than halved in Inner London since 2010/11 (from 10.5% of the economically active population to 4.6% in 2019/20). In Outer London the unemployment rate has fallen from a peak of 9.3% in 2011/12 to 4.6% in 2019/20. Unemployment is consistently higher in London than in England as a whole, where the rate stood at 3.9% in 2019/20.

Unemployment rose after 2007/08 as a result of the financial crisis but had recovered by 2013/14 in Inner London, 2015/16 in England as a whole and 2016/17 in Outer London. Since then, unemployment rates have steadily fallen both in London and England overall. 

The last decade has also seen the convergence of unemployment rates in Inner London, Outer London and England. In 2004/05, the unemployment rate in Inner London was 3.9 percentage points higher than in England. By 2019/20, the difference b…

Unemployment rate by London borough (2014-17 and 2017-20 (Q2))

In the second quarter of 2020, the borough with the average highest unemployment rate was Tower Hamlets (7.2%), replacing Kensington and Chelsea from Q1 who are now 3rd highest with a rate of 6.5%. The borough with the lowest unemployment rate remained Richmond upon Thames was 3.2%. The figures presented here are averages of the three years up to the stated year. 

In most London boroughs, unemployment fell between 2017 and 2020. The largest falls were seen in Barking and Dagenham (-4.3ppts) and Greenwich and Tower Hamlets (both -2.5pts). 

Unemployment rose the most in Merton (1ppt) and Hammersmith and Fulham (0.9ppts), between 2017 and 2020.

Unemployment rates by age group (2004/05 - 2019/20 (Q2))

Unemployment rates for all age groups are higher in London than in the rest of England, and have been so for the whole time period covered by this indicator. Unemployment in London is most prevalent amongst those aged between 16 and 24, with 14.9% of this group being unemployed in 2019/20. This compares to just 3.5% of those aged between 25 and 64. Unemployment is also low for those aged 65 and over, at 3% in 2019/20, however relatively few in this group are either in work or seeking work as the majority are retired. 

Compared to other age groups, the unemployment rate for those aged between 16 and 24 rose faster following the financial crisis and has fallen faster since then. The impact of Covid is not yet shown in unemployment data, with relatively little difference in the most recent figure compared to those from 2018/19.

The unemployme…

Proportion of London's working-age population who are not in paid work by ethnic group (2009/10 and 2019/20 (Q2))

In the decade up to 2019/20, every major ethnic group in London has seen a fall in the proportion of people who are not in paid work. 

People of Pakistani/Bangladeshi background have the highest rates of not being in paid work, with 40% of the working-age population not working. This is, however, down from 50% a decade ago. 

The largest fall in rates of worklessness can be seen in people from “Other ethnic groups”. 

White people have the lowest rate of being out of work (20%) and also see the smallest fall (of 7 percentage points) in the last decade.

Worklessness for men and women in London by country of birth (2019/20 (Q2))

In 2019/20, of men in London who were born overseas, those from China have the highest rate of worklessness (27%). Of women in London who were born overseas, the highest rate of worklessness is 66%, for those born in Pakistan. 

South Africa has the lowest rates of worklessness for both men (1%) and women (8%). For most countries, the worklessness rate is higher for women than men. However, this trend does not hold true for those born in Spain.

Reasons for not working for men and women aged 16-64 in London (2019/20 (Q2))

This indicator shows the reasons for not working for men and women. The largest difference is amongst those who do not work because they are looking after their family or home, which is true for more than ten times as many women as men. There are 303,000 women within this category, but only 29,000 men. In contrast, unemployment is higher amongst men (129,000) than women (96,000).

Other categories of reasons for not working are broadly similar, for example with 191,000 men not working because they are students and 195,000 women.

Underutilised labour market capacity in London (2008/2009 - 2019/2020)

The number of people wanting to work more than they currently do has fallen steadily in London since 2012. For example, 10.5% of Londoners aged 16-64 were in this position in 2019/20, compared to 17.6% in 2011/12.

Each component part of this group has also fallen. For example, 2.4% of working-age adults were in part-time jobs because they could not find a full-time job in 2019/20, compared to 3.7% in 2011/12. The combined proportion of people who are not working but would like to (unemployed or inactive but wanting work) has fallen from 13.9% of the working-age population in 2011/12 to 8.1% in 2019/20.

Whilst this fall is positive, for those still left wanting more work, there are clear implications for the experience of in-work poverty, demonstrated in other London's Poverty Profile indicators.

Proportion of workers in London in temporary employment (2009-2020)

Over 5% of people in work in London are on temporary contracts. Temporary contracts are more prevalent amongst women in work than men: 50% more women than men were on a temporary contract in 2020.  

The proportion of workers on temporary contracts has remained relatively consistent over the past decade, fluctuating between just under 5% and just over 6% of all workers. In 2020, 1.27% of women in work and 0.56% of men in work were on a temporary contract and reported that it was because they could not find a permanent job.

Employment rate of 16-64 year olds by highest qualification level (2019)

Employment rates are, on average, higher amongst people with higher levels of qualifications. For example, 88.6% of Londoners aged 16-64 with qualifications higher than A-levels (such as university degrees) were employed in 2019 compared to 49.8% for people with no qualifications. 

Across all but the highest qualification level, employment rates are higher in the rest of England than they are in London. However, a much larger proportion of working-age people in London have qualifications higher than A-levels - 53% in London compared to 36% in the rest of England - meaning that overall employment rates are similar. 

There are a number of reasons why people may not be employed, including that they are studying, retired, looking after the home, sick or unemployed. As such, it is not necessarily a bad thing for any one individual to not be emp…

Number of children, adults, and pensioners in London in poverty by working status (2007/08, 2012/13 and 2017/18)

As employment rates have increased in the capital, so too has the number of adults in poverty who are in working families. In 2007/08, 740,000 working-age adults were in poverty in working families, compared to 1.05 million in 2017/18 (a 42% increase over the decade). There is a similar story for children in working families in poverty; 340,000 children were in this position in 2007/08, compared to 550,000 in 2017/18 (an increase of 62% over the decade).

In contrast, the number of working-age adults and children in poverty who are in workless families have both fallen over the last decade.

The number of pensioners in poverty in the capital has remained broadly stable in the last decade, with 250,000 in poverty in 2017/18.

Whilst there are more people in poverty in working families than in workless families, this (at least in part) is a refl…

Proportion of people in London in poverty by type of working houshold over time (1998/99 - 2018/19)

Household work status is closely related to the likelihood of the household being in poverty. This indicator focuses on poverty rates for families in London where at least one adult does some work. It shows that, on average, the fewer adults who are in work, the more likely the household is to be in poverty:

  • Those where no adult works full-time but at least one works part-time have the highest poverty rate, with over half of people (52%) living in such households being in poverty.
  • In contrast, only 9% of people who live in households where all of the adults work full-time are in poverty. 
  • In households with two adults where only one works full time, the poverty rate is higher for those where the other adult does not work (34%) than those where the other adult works part-time (16%). 

Poverty rates across all working households in London have …

Proportion of population aged 16 to 64 on out-of-work benefits across London boroughs (2015-2020 (Q2))

The proportion of working-age Londoners on out-of-work benefits has increased from 9.8% in May of 2015 to 12.2% in May of 2020. Overall, this is slightly higher than the rest of England where 12% of the population was on out-of-work benefits in the same time period in 2020. The increase in out-of-work benefits is understandable consequence of to the rising unemployment during the coronavirus pandemic.

Differences amongst boroughs are striking in 2020. In May, 16.2% of the working-age population in Haringey were on out-of-work benefits, whereas the lowest proportion was found in the City of London (5.5%). Haringey also sees also the largest change, with a 5.4 percentage points increase in out-of-work benefits in 2020 in comparison to 2020 

This variation between boroughs is also larger in 2020 than in 2015. In 2015 the difference between th…

Average travel time by public transport to jobs and services by neighbourhood income deprivation decile (2017)

Based on average travel times by public transport, Londoners have much better access to jobs and services than people in the rest of England. For example, the average journey time by public transport to the nearest large employment centre from the 10% most deprived areas is 20 minutes in London compared to 26 minutes in the rest of England. 

Based on the same measure, people living in the most income-deprived areas of London have slightly better access than those in less income-deprived areas. The average journey time to public services is more than 20% longer for the least deprived areas in London than the most deprived areas. 

Journey times are only part of how well Londoners can access jobs and services. Price is also an important factor with people on low incomes unable to make the most of the opportunities provided by the city’s publi…

Main industry categories for those in in-work poverty (2018/19)

This indicator looks at the industries in which those experiencing in-work poverty are most likely to work. For example, 13% of people in London in poverty who were in work in 2018/19 were working in ‘human health and social work activities’ and 11% were working in ‘construction’.

Together, the indicator shows that almost half of the people in in-work poverty in London work in one of four industries: human health and social work activities; wholesale and retail trade (including repair of motor vehicles and motorcycles); accommodation and food service activities; and construction.

Occupation categories for those in in-work poverty (2018/19)

This indicator shows the occupation categories of those in in-work poverty in London and the rest of England. Of everybody experiencing working poverty, more worked in elementary occupations than any other type of job, with 17% of people in in-work poverty in London in an elementary occupation compared to 14% in the next biggest category - associate professional and technical occupations. 

These most common occupations contrast with the rest of England where ‘elementary occupations’ are also most common for those in in-work poverty, but the second place goes to ‘skilled trades’ (16%) and there is a smaller share within ‘associate professional and technical’ (9%) as well as ‘professional occupations’ (11%).

The picture is very different for those working but not counted as being in poverty in London where ‘professional occupations’ make up …

Employment status of all adults aged 16+ in poverty (2011/12 - 2018/19)

Just below half (45%) of those aged 16 and over who are in poverty in London are economically inactive (retired, long-term sick, studying or looking after the home). Another 5% are unemployed.

However, 51% of those aged 16 and over who are in poverty in London are working. As the employment rate in the capital has increased, the proportion of those in poverty in the capital who are working has also increased (from 47% in 20011/12 to 51% in 2018/19). In contrast, since 2012/13, the proportion of people in poverty who are unemployed - that is, not working but actively seeking work - has declined from 15% to 5% 

The proportion of people (aged 16 and over) in poverty who are working is higher in London (51%) than it is in the rest of England (45%).

Economic activity status of Londoners aged 16 and over (2020 (Q2))

Over 4.6 million Londoners - 66% of the adult population - are in work of some kind. This is higher than the 60% of adults who are employed in the rest of England. 34% of adults in London are economically inactive. 

There are over 360,000 more men in work in London than women. The men who work in London are also more likely to be self-employed, with 16% of men who work in London doing so for themselves compared to 8% of women. 

Women are significantly more likely to be economically inactive than men, with 40% of women not working compared to 28% of men. For many types of inactivity, women and men have very similar rates, including long-term sickness, studying and unemployment. 

However, women were significantly more likely to not be working because they were looking after the home or family, with 9% of women -  just over 335,000 people - be…

English Index of Multiple Deprivation (rebased for London) (2019)

Deprivation varies significantly across London, and, to truly understand the diversity of deprivation across the city, it is useful to adapt national indices to compare within just London itself, excluding variations outside the capital. Mapped here are the deciles of neighbourhoods in London as defined by the Index of Multiple Deprivation, which integrates deprivation domains relating to income, employment, crime, living environment, education, health and barriers to housing and services, in various proportions, to produce an overall index.

Every neighbourhood in England has been given a deprivation score based on various measures which form each domain above, integrated together in various proportions to produce a single value. They are then ranked for England. We have taken these rankings and rebased, by excluding all non-London areas …

These maps show data from our London borough comparison tile.

Boroughs have been labelled higher, lower, or mid (average) according to threshold values of one standard deviation above or below the mean of all the borough values.

Actual weekly hours by gross weekly pay quintile (2010-2020 (Q2/Q3))

Looking at hours worked within London and the rest of England can give us useful insight on our working patterns pre- and post-pandemic. Actual hours worked are heavily impacted by external factors, such as a pandemic, whereas usual hours are not expected to change much over the years. 

Actual hours worked vary more across time and in particular between 2019 and 2020 for the bottom income quintiles. The decline in actual hours worked for the 2nd income quintile is most extreme between 2019 and 2020 in London. Whereas in the rest of England, there is a clear decline for almost all quintiles but it is most prominent in the bottom quintile.

Additionally, when disaggregating the data by gender we see a large gap between the amount of actual hours (and a smaller gap for usual hours) worked between men and women across the years. One reason coul…

Indexed gross hourly pay in London and England (2002-2020)

In both London and the rest of England, growth in hourly earnings between 2014 and 2020 was fastest for the bottom 10% of jobs. Compared to 2008 (real term) level of hourly earnings, London has seen an increase of 13.2%. This is above the England average of 6.9%. The rise was likely driven by the increase in the minimum and living wages. The National Living Wage (paid to workers over 25) increased from £7.50 an hour in 2017/18 to £8.72 an hour in 2020. 

Although, comparing hourly earnings between different time periods gives a whole other picture. When looking at the change in hourly earnings within the last year (in 2020 real terms) earnings decreased across all pay percentiles, although less so when comparing to that of 5 years ago. Since 2020, hourly gross pay seems to have increased for those around the median job pay percentiles and …

Indexed gross annual pay in London and England (2002-2020)

Annual earnings dropped tremendously since 2008 (in real terms) where in 2014 the bottom 10th percentile saw the largest decrease of 22.4%. 

Since then, there has been an increase in annual, in particular for the top 90th percentile as gross annual pay also includes bonuses. In 2020, the 90th percentile is close to their 2008 level annual earnings by shy of 4%. The 10 percentile is still 14.3% below the 2008 levels of earnings. 

Although, comparing annual earnings between different time periods gives a whole other picture. When looking at the change in annual earnings within the last year (in 2020 real terms) earnings have decreased across all percentiles, although less so when comparing to that of 5 years ago. Since 2020, annual gross pay seems to have increased for almost all job pay percentiles besides the top two. 

The data on annual ea…