Work, Worklessness & Benefits

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

Pandemic Claimant Count Change: Baseline and Increase Levels (2020-21)

Key findings

  • Every area has seen an increase in claims
  • Average threefold increase
  • Significant increase in areas with historically high levels of employment (shown in orange)
  • Areas with higher numbers of food service, transportation and hospitality workers hit hard (east Newham, north Brent, south Waltham Forest and south Hillingdon)

Every area has seen an increase in the claimant count, with the average being almost a tripling across the 14 month period. The size of the increase, however, is uneven. While some areas have historically had high unemployment levels, other areas with traditionally high levels of employment have seen substantial increases, well over and above the London average, while others have been less impacted.

The first map above shows the size of the increase in each of London's ~4800 small statistical areas (LSOAs) and…

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.

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 …

Actual weekly hours by gross weekly pay quintile across Q2 - Q3 in London and the rest of England (2010-2021)

Looking at hours worked within London and the rest of England can give us a useful insight on our working patterns pre- and post-pandemic. Actual hours worked are heavily impacted by external factors, such as the COVID-19 pandemic, whereas usual hours are not expected to change much over the years. 

Actual hours worked varied particularly between 2019 and 2020 for the bottom income quintiles within England. Within London, the decline in actual hours worked for the 2nd income quintile is most extreme between 2019 and 2020 - dropping from 36.8 to 25.6 hours per week. For almost all income quintiles, the amount of actual hours worked has bounced back to pre-pandemic levels as the economy recovers. However, for those in the 2nd income quintile, the amount of hours in 2021 (33.1 hours) are still below pre-pandemic levels in 2019 (36.8 hours).

A…

London households affected by the benefit cap (2014-2021 Q3)

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 39,573 more London families in August 2021 compared to August 2019 (pre-pandemic). This means that the number of families with their benefits capped in London has tripled in the last two years. 

A possible explanation for this unprecedented increase could be the influx of new households on Universal Credit since the start of the COVID-19 pandemic. Furthermore, the additional £20 pound per week for those on Universal Credit could place households in a position where their benefits …

Work status of London households (2004-2020)

The proportion of working-age households where none of the adults are in employment (“workless households”) has been consistently low at 8% since 2016, havng almost halved since 2004 when 15% of households contained nobody in employment. This means that in 2020, at least one adult does some work in 92% of working-age households in London.

In 2020 there were over 3 million households in London (51%) where all adults were in work. Another 2.5 million households in London (42%) contained some working adults and some who were not in work.

Work status of London households by net income quintile (2019/20)

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 7.6% of those in the bottom 20% of the net income distribution live in households where all adults work, while 56.6% of those in the top 20% of the net income distribution live in households where all adults work. On the contrary, one in five of those in the bottom net income quintile live in workless households, compared to just 2.1% of those in the top net income quintile.

Economic activity status of Londoners aged 16 and over (2020/21 Q3)

Nearly 4.68 million Londoners - 65% of the adult population - were in work of some kind as measured across the year to September 2021. This is higher than the 59% of adults who are employed in the rest of England. Nearly three in ten adults in London are classed as economically inactive (30%).

There are over 300,700 more men in work in London than women. The men who work in London are also more likely to be self-employed, with 13% 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 38% of women not working compared to 25% of men. For many types of inactivity, women and men have very similar rates, including long-term sickness, studying and temporary sickness. 

However, women were significantly more likely to not be working because they wer…

This page shows the proportion of jobs in London paid below the London Living Wage by:

  • employment type (full-time and part-time)
  • industry
  • occupation
  • borough

Here we focus on workplace based numbers, so jobs may be held by Londoners, or commuters into the capital but resident elsewhere. For data on jobs held by London residents only, please see 'Low-paid Londoners'.

Overall in 2021, more than 17% of jobs in the capital were low-paid. 

The number and proportion of low-paid jobs broadly rose for more than a decade since the London Living Wage was first introduced in 2005 until 2018, when more than 1 in 5 jobs in the capital were low-paid (totalling 871,000 jobs in London). These low-paid jobs were divided almost equally between full and part-time, however as there are so many more full-time jobs overall, they represent very different pro…

This page looks at jobs held by London residents that are paid below the London Living Wage broken down by:

  • employment type (full-time and part-time)
  • sex
  • sex and employment type
  • ethnicity
  • disability
  • qualification level
  • employment status (permanent and non-permanent)

These may be located within London or outside the capital. For a similar analysis focused on jobs located in London only, please see 'Low-paid jobs in London'.

From the introduction of the London Living Wage in 2005, low-paid jobs held by Londoners rose over the decade to 2015, when almost 1 in 4 jobs (23.4%) held by Londoners were low-paid.

Although the number of jobs held by London residents in low-paid jobs was split more or less evenly between those in part-time and those in full-time jobs, the proportions are quite different. While more than 1 in 2 part-time jobs held by…

This page looks at jobs paid below London Living Wage across London boroughs. Here we use data restricted to jobs held by people who live in London (residence-based), and their job may be based outside of London. For jobs located in boroughs, please see 'Low-paid jobs in London', chart four.

Most boroughs follow the same trend for London as a whole, with significant increases in low-paid jobs held by residents in most London boroughs between 2011 and 2019, and reductions in 2020 and 2021 (partly reflecting the distorting effects of the pandemic and furlough in London labour markets). 

Brent and Enfield were the boroughs in 2021 that saw the highest proportions of residents’ jobs being paid less than the London Living Wage with 29.5% and 29% respectively. By contrast, Kensington and Chelsea and Richmond upon Thames saw only 10.5% …

Proportion of Londoners aged 16-64 receiving out-of-work benefits by benefit type (2013 - 2021) (Q2)

The proportion of working-age Londoners on out-of-work benefits fell between 2013 and 2018 with a modest increase in 2019. 2020 and 2021 however has seen a large increase in Universal Credit claimants (out of work) compared to 2019 (3.3% to 9.2% and 10.6% of people aged 16-64). This, at least partly, likely reflects employment status changes due to the COVID-19 pandemic.

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, 0.4% of working-age Londoners were out of work and claiming Universal Credit in 2016. By May 2019, this proportion had risen to 3.3% of the working-age population and just over a year after the pandemic began (May 2021) 10.6% of those out of work were claiming Universal Credit. 

Compared to London, the proportion of the wo…

Indexed gross hourly pay in London and England (2002-2021)

In both London and the rest of England, growth in hourly earnings between 2014 and 2021 was fastest for the bottom 10% of jobs. Compared to 2008 (real term) level of hourly earnings, Londoners in the 10th job pay percentile have seen an increase of 11%. The rise was likely driven by the increase in the minimum and living wages. The National Living Wage increased from £7.50 an hour (paid to workers over 25) in 2017/18 to £8.91 an hour (paid to workers over 23) in 2021. 

Between 2020 and 2021 there is a clear decline in hourly gross pay for the top job pay percentiles (in 2021 real terms). The COVID-19 pandemic seems to have an economic impact on the hourly gross pay of those higher paid jobs (above the median), as they aren’t protected by the increase in minimum and living wages as the bottom jobs at the bottom percentiles are.

When looking…

80:20 hourly wage ratio by London borough (2021 and 2011)

There are many ways of measuring pay inequality. This indicator considers the 80:20 hourly wage ratio, which shows how much greater hourly pay is for those at the 80th percentile of the hourly pay distribution than for those at the 20th percentile. The larger the ratio, the more unequal hourly pay.

Based on this measure, pay inequality is higher in London than in England. Whilst this was also true in 2011, the gap between the two has grown over the decade. In London, the 80:20 pay ratio is 2.64, meaning that hourly wages at the 80th percentile are 2.64 times larger than at the 20th percentile. In England, the 80:20 ratio is 1.94. 

Amongst the London boroughs where valid data are available, Kingston has the highest level of pay inequality ratio of 3 in 2021. On the other side of the spectrum, Sutton has the lowest pay inequality ratio of 2.…

Indexed gross annual pay in London and England (2002-2021)

Annual earnings dropped tremendously since 2008 (in real terms) where in 2014 the bottom 10th percentile saw the largest decrease of 20.6%. 

Up to 2020, there has been an increase in annual pay, in particular for the top 90th percentile as gross annual pay also includes bonuses. In 2020, the 90th percentile was close to their 2008 level annual earnings, shy only of 1.9%. 

The impact of the COVID-19 pandemic is clearly evident in the figures for 2021, as pay takes a downward turn for both the bottom 10th percentile, the 50th percentile (the median), and the 90th percentile. The 90th percentile seems to be hit harder than the 10th percentile in terms of the reduction in gross annual pay.

Comparing annual earnings between different time periods gives a clearer picture to annual pay growth or decline over time. When looking at the change in ann…

Percentage of people on out-of-work benefits by London borough (2019 and 2021, Q2)

The proportion of working-age Londoners on out-of-work benefits has increased since 2016, but has dramatically shot up in all boroughs in the last two years. This increase is an understandable consequence of rising unemployment during Covid-19.

Barking and Dagenham has 18.3% of the working-age population on out-of-work benefits in May of 2021 , as compared to 11.1% in the same month in 2019. This increase by 7.2 percentage points is one of the highest changes amongst the London boroughs. However, Newham has seen the largest percentage point increase by 8.3 percentage points, followed by both Brent and Haringey at 7.9 percentage points.

The City of London has both the lowest overall proportion of the working-age population on out-of-work benefits and smallest increase since the pandemic (3.5% in 2019 to 5.1% in 2021).

Employment status of all adults aged 16+ in poverty (2011/12 - 2019/20)

Just below half (44%) 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 6% are unemployed.

However, 49% 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 stayed at a similar level (47% in 20011/12 to 49% in 2019/20). 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 6% 

The proportion of people (aged 16 and over) in poverty who are working appears to be higher in London (49%) than it is in the rest of England (45%).

Main industry categories for those in in-work poverty (2019/20)

This indicator looks at the industries in which those experiencing in-work poverty are most likely to work. For example, 12% of people in London in poverty who were in work in 2019/20 were working in ‘human health and social work activities’ and another 12% were working in ‘construction’.

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

Occupation categories for those in in-work poverty (2019/20)

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 `professional occupations` than any other job, with 20% of people in in-work poverty in London categorised in this way. The group made up a smaller proportion (12%) in the rest of England. (Note this group consists of a wide range of occupations including teaching and nursing professionals - more details can be found here).

The next largest occupation category for Londoners experiencing in-work poverty is `elementary occupations` (17%) which is a group characterised by roles that do not require formal qualifications. This group was most common in the rest of England (18%).

The picture is very different for those working but not counted as being in poverty in London where ‘pr…

Number of children, adults, and pensioners in London in poverty by working status (2009/2010, 2014/2015 and 2019/2020)

As employment rates have increased in the capital, so too has the number of adults in poverty who are in working families. In 2009/10 870,000 working-age adults were in poverty in working families, compared to 1 million in 2019/20 (a 15% increase over the decade). This tendency is stronger for children in working families in poverty: 380,000 children were in this position in 2009/10, compared to 610,000 in 2019/20 (an increase of 60% 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 260,000 in poverty in 2019/20.

Whilst there are more people in poverty in working families than in workless families, this - at least in part - is a refle…

Proportion of people in London in poverty by type of working household over time (1998/99 - 2019/20)

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 half of people (50%) 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 (14%). 

Poverty rates across all working households in London have incre…

Numbers of non-working men and women aged 16-64 in London (2019/20 Q1 and 2020/21 Q3)

This indicator shows the reasons for not working for men and women, as well as the number of working-age people who are not working in London.

The number of men who are not working increased from 2019/20 to 2020/21 from 600,000 to 680,000, while the number of women who are not working stayed similar, around 900,000. The increase in the number of non-working men is likely the result of the COVID-19 pandemic and is largely fuelled by a rise in unemployment from 130,000 to 165,000, an increase of 25%. The number of students, retired and inactive men also increased.

The largest difference between men and women is the proportion of those who do not work because they are looking after their family or home. While only 4% of non-working men fall in this category, 29% of women do.

The proportion of women who cite looking after family or home as thei…

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…

Underutilised labour market capacity in London (2008/09 - 2021/21 Q3)

The number of people in London wanting to work more than they currently do fell steadily from 17% of the working-age population in 2011/12 to 11% in 2018/19, before increasing slightly to 13% in 2020/21. This latter period is the first complete year post COVID-19 which may account for the small rise, despite initiatives such as the furlough.

Since a peak in 2011/12, the proportion of people who are unemployed fell from 7.2% to 3.7% in 2019/20, before an uptick in 2020/21 to 5.2%. The proportion who are part- time but want full time work fell from 3.8% to 2.4%, before slightly increasing to 2.7% in 2020/21, and the proportion who are economically inactive but wanting work dropped from it’s peak of 6.7% in 2011/12 before gradually increasing from 4.4% in 2018/19 to 4.7% in 2020/21.

Whilst this fall is positive, for those still left wanting m…

Unemployment rates in London for men and women (1992-2021 Q3)

The unemployment rate in London more than halved since its post-financial crisis peak in 2011 (10.3%) to 4.5% in 2019. 2020 saw it increase substantially to 6.6%, reaching levels not seen since 2014, before starting to drop back again in 2021 (5.4%). This increase is likely the result of the slowdown of the economy caused by the COVID-19 pandemic, the very start of which is 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. 

Over the past three decades, the gender split of unemployment has become more even. In 1993 the unemployment rate was more than 40% higher amongst men compared to women, but by the early 2010s the numbers were broadly similar for both genders. Since 2011, the unemployment rate has fallen similarly for both women (fr…

Unemployment rate over time (2004/05 - 2020/21 Q2)

After peaking in the aftermath of the financial crisis, unemployment followed a steady decline until 2019/20: in Inner London, it halved from 10.5% in 2010/11 to 4.5%, dropping below its pre-crisis levels by 2014/15; while in Outer London, it declined from 9.2% in 2011/12 to 4.7% in 2018/19, and it did not recover its pre-crisis levels until 2015/16. 

Throughout this period, unemployment has remained consistently higher in London than in England as a whole, where the rate stood at 4.9% in the 12 months to September 2021 compared to 6.5% for London overall.

2020/21 shows a clear change in the declining trend that defined the story of unemployment since the financial crisis. The notable surge in 2020/21 is likely a result of the economic impact of the COVID-19 pandemic, which appears to have been sharper in London, particularly in Inner Lond…

Unemployment rate by London borough (2015-18 and 2018-21 Q3)

The borough with the highest average unemployment rate in the 2018-2021 Q3 period was Barnet (8.2%), replacing Tower Hamlets from the comparison period October 2015 to September 2018 (then 9.1%, now 6.2%). The borough with the lowest unemployment rate is Kingston upon Thames (3.8%). Merton had the lowest unemployment across 2015 to 2018 Q3 at 3.3%.

Unlike in previous quarters, change between our time periods now shows a mixed picture, with the large falls taking place in Tower Hamlets (-2.9ppts) and Kensington and Chelsea (-2.4ppts), whereas unemployment has seen rises in Barnet (+4.1ppts), Waltham Forest (+3.2ppts), Hillingdon (+2.7ppts), and Hammersmith and Fulham (+2ppts).

The figures presented here are averages of three-year periods, with each survey year representing 12 months between October and September quarters.

Unemployment rates by age group (2004/05 - 2020/21 Q3)

Unemployment rates have increased in the year to September 2021, and this has been felt most acutely in London by those aged 16-24, who have seen it increase from 16% to 20%.

Unemployment rates for all age groups are higher in London than in the rest of England, which has been true for the whole time period covered by this indicator. Unemployment in London has always been most prevalent amongst those aged between 16 and 24, compared to just 5% of those aged between 25 and 64. Unemployment is also low for those aged 65 and over, at 4% in 2020/21, 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 also rose faster following the financial crisis and has fallen faster since 2014, bottoming in 2018/19 to then r…

Proportion of workers in London in temporary employment (2010-2021 Q4)

Just over 5% of people in work in London are on temporary contracts. Temporary contracts are more prevalent amongst women in work than men: over 60% more women than men were on a temporary contract in 2021 (Q4).

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 2021 (Q4), 0.94% of women in work and 0.59% of men in work were on a temporary contract and reported that it was because they could not find a permanent job.

Proportion of London's working-age population who are not in paid work by ethnic group (2009/10 and 2020/21 Q3)

In the decade up to 2020/21, 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 39% of the working-age population not working. This is, however, down from 52% a decade ago. 

The largest fall in rates of worklessness can be seen in people of 'Other' ethnicity.

Indian people have the lowest rate of being out of work (21%), and White people have seen the smallest fall (of 5 percentage points) in the last decade. 

The definition of worklessness used here includes unemployment as well as many types of economic inactivity including looking after the family/home, students, long term and temporary sickness etc. (see our indicator on Reasons for Not Working for a full list of these groups).…

Worklessness for men and women in London by country of birth (2020/21 Q3)

Just under two-thirds (65%) of working-age women in London who were born in Pakistan did not work in the year to September 2020/21, the highest rate of any nationality. Bangladeshi women are not far behind with 64% not working. Of men in London who were born overseas, those from Bangladesh and the Philippines have the joint-highest rate of worklessness (30% and 28%). 

Women originally from Portugal had the lowest rates of worklessness (14%), while those from Australia and Germany had the lowest rate for men (9%). For most countries, the worklessness rate is higher for women than men, although this trend does not hold true for countries such as Lithuania, Portugal, and Italy.