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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.

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 whet…

This page brings together a series of maps using 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).


London households affected by the benefit cap (2014 Q3-2022 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 21,381 more London families in August 2022 compared to August 2019 (pre-pandemic). This means that the number of families with their benefits capped in London has more than doubled in the last three 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…

Work status of London households (2004-2021)

The proportion of working-age households where none of the adults are in employment (“workless households”) was consistently low at 8% between 2016 and 2020, having almost halved since 2004 when 15% of households contained nobody in employment. However, there was a slight increase to 9% in 2022 likely as a result of the COVID-19 pandemic. This means that in 2022, at least one adult does some work in 91% of working-age households in London.

In 2022 there were over 3 million households in London (50%) where all adults were in work. Another 2.5 million households in London (41%) contained some working adults and some who were not in work.

Work status of London households by net income quintile (2021/22)

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 8.7% of those in the bottom 20% of the net income distribution live in households where all adults work full time, while 61.5% of those in the top 20% of the net income distribution live in households where all adults work full time. On the contrary, nearly one in five of those in the bottom net income quintile live in economically inactive households, compared to just 1.6% of those in the top net income quintile.

Economic activity status of Londoners aged 16 and over (2023 Q2)

More than 4.7 million Londoners – 66.1% of the adult population – were in work of some kind in the year to June 2023. This is higher than the 60.2% of adults who are employed in the rest of England. Nearly one third of adults in London are classed as economically inactive (30.7%) - which means they are not employed, and not looking for a job or able to start work. There are many reasons someone might be economically inactive, such as  because they are too ill to work, retired, or a student.

There are over 313,000 more men in work in London than women. Men who live in London are also more likely to be self-employed than women – 14.1% compared to 7.8%. 

Women are significantly more likely to be economically inactive than men, with 38.5% of women not working compared to 29.3% of men. For many types of inactivity, women and men have very simil…

Proportion of jobs in London workplaces that are paid below London Living Wage by full-time/part-time status (2005-2022)

This page looks at 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. This means that jobs may be held by Londoners or by people who live elsewhere but commute into the capital. For data on jobs held by London residents only, please see 'Low-paid Londoners'.

Overall in 2022, over 14% of jobs in the capital were low-paid, down from 17% in 2021. 

The London Living Wage was introduced in 2005. It is a voluntary wage rate based on the amount of money that people need to live. The rate in London in April 2022 when the earnings survey we use for this analysis was conducted was £11.05. The number and proportion of low-paid jobs broadly rose for more than a decade since the London Living Wage was first introduced until 201…

Proportion of London residents' jobs paid below London Living Wage by full-time/part-time status (2005-2022)

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 jobs 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'.

The London Living Wage was introduced in 2005. It is a voluntary wage rate based on the amount of money that people need to live. The rate in London in April 2022 when the earnings survey we use for this analysis was conducted was £11.05. 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-p…

Proportion of borough residents' jobs that are low paid (2022)

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 2012 and 2020, and reductions in 2021 and 2022 (partly reflecting the distorting effects of the pandemic and furlough in London labour markets).

Brent was the borough in 2022 that saw the highest proportion of residents’ jobs being paid less than the London Living Wage with 23.6% followed by Newham at 21.2%. By contrast, Wandsworth and Hammersmith and Fulham were the only boroughs with less t…

Proportion of Londoners aged 16-64 receiving out-of-work benefits by benefit type (2014-2023 Q2)

12.9% of working-age Londoners are out-of-work and on benefits - a slight increase since last year (12.2%).

The number of out-of-work benefit claimants aged 16-64 jumped in 2020 in the wake of the COVID-19 pandemic, peaking at 14.7% in 2021.

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, 0.7% of working-age Londoners were out of work and claiming Universal Credit in 2016. By 2023, this proportion had risen to 9.7% of the working-age population. 

Compared to the rest of England

London has a slightly smaller proportion of its working-age population on out-of-work benefits than the rest of England - 12.9% compared to 13.1%. This was also the trend pre-pandemic - from 2013-2018, the proportion of the working-age population on out-of-work ben…

80:20 hourly wage ratio by London borough (2012, 2019 and 2022)

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 significantly higher in London than in England. In London, the 20% highest paid earn 2.5x more per hour than the 20% lowest paid. In England, the figure is 1.85.

Since before the pandemic, wage inequality has decreased in every borough where data are available, except for three: Merton, Wandsworth and Hackney. Every borough has a higher level of pay inequality than the England average.

Indexed gross hourly pay in London and England (2002-2022)

In both London and the rest of England, growth in hourly earnings between 2014 and 2022 was fastest for the bottom 10% of jobs. Compared to 2008 (real terms) level of hourly earnings, Londoners in the 10th job pay percentile have seen an increase of 10%. 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 £9.50 an hour (paid to workers over 23) in 2022.

Between 2021 and 2022 there was a decline in hourly gross pay across all pay percentiles (in 2022 real terms). However, the decline in hourly gross pay is greater for higher paid jobs (above the median) where the COVID-19 pandemic seems to have had a greater economic impact as they aren’t protected by the increase in minimum and living wages as the bottom jobs at the bottom…

Indexed gross annual pay in London and England (2002-2022)

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 figures for 2022 show continued significant reductions post-COVID, as pay has taken a downward turn for the bottom 10th percentile, the 50th percentile (the median), and the 90th percentile. The 90th percentile has been hit hardest with the top earners at their lowest level of real terms gross annual pay since 2002; the result of a 13% decline since the start of the COVID-19 pandemic in 2020.

Comparing annual earnings between different time periods gives a clearer pictur…

Percentage of people on out-of-work benefits by London borough (2022 Q1 and 2023 Q1)

People on out-of-work benefits, by London borough

Employment status of all adults aged 16+ in poverty (2011/12 - 2021/22)

Just below half (43%) 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, 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 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 14% to 6%

The proportion of people (aged 16 and over) in poverty who are working appears to be higher in London (51%) than it is in the rest of England (44%).

Main industry categories for those in in-work poverty (2021/22)

This indicator looks at the industries in which those experiencing in-work poverty are most likely to work. For example, 14% of people in London in poverty worked in admin and support services, with another 12% of people in human health and social work activities.

In the rest of England the most common industry for people in in-work poverty to work is wholesale/retail and motor repair (14%).

Occupation categories for those in in-work poverty (2021/22)

This indicator looks at the occupation categories for people in in-work poverty in London and the rest of England. Of everybody experiencing working poverty, more worked in elementary occupations than any other job, with 19% of people in in-work poverty in London categorised in this way. Elementary occupations consist of simple and routine tasks which mainly require the use of hand-held tools and often some physical effort. This group made up the same proportion (19%) in the rest of England.

The next largest occupation category for Londoners experiencing in-work poverty is associate professional & technical occupations where we find 17% of those in poverty, compared to 8% in the rest of England. This group consists of technical science, public services, and health and social care associate professionals. More details can be found here…

Number of children, adults, and pensioners in London in poverty by working status (2011/2012, 2016/2017 and 2021/2022)

In London people counted as being in poverty most frequently live in working households. This has been consistently the case for the last decade. In 2021/22 we find some 910,000 people in poverty are living in working households whereas just 370,000 in poverty are living in working-age workless households.

A similar pattern is true if we look at children in poverty. 510,000 children in poverty live in households where someone is in work, whereas 160,000 live in workless households.

230,000 pensioners in London are in poverty

Proportion of people in London in poverty by type of working houshold over time (1998/99 - 2021/22)

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 works. 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 nearly half of people (44%) living in such households being in poverty.
  • In contrast, only 8% 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 (28%) than those where the other adult works part-time (12%).

Numbers of non-working men and women aged 16-64 in London (2020 Q1 and 2023 Q2)

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 2020 Q1 to 2022 Q2 from 610k to 654k, while the number of women fell from 908k to 879k.

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 4.8% of non-working men fall in this category, 30.9% of women do.

The proportion of women who cite looking after family or home as their reason for not working fell in 2022 Q2 compared to 2020 Q1 from 36.2% to 30.9%, and so did the absolute number (329k to 272k). On the contrary, the proportion of women who were unemployed increased from 10.7% to 12.4%, with the absolute number rising from 98k to 109k. This chang…

Average travel time by public transport to jobs and services by neighbourhood income deprivation decile (2019)

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 21 minutes in London compared to 25 minutes in the rest of England. 

For 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 (such as schools, GPs and hospitals) is more than 25% 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 opportunit…

Underutilised labour market capacity in London (2009/10 - 2021/22 Q2)

The proportion of people in London wanting to work more than they currently do fell steadily from 17.8% of the working-age population in 2011/12 to 10.8% in 2019/20. During the COVID-19 pandemic, it increased to 12.6% in 2020/21, before coming down to 10% in 2021/22, which is the lowest for the time period covered by this indicator.

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 3.7% to 2.4% in the same period, before slightly increasing to 2.6% in 2020/21: and the proportion who are economically inactive but wanting work dropped from it’s peak of 6.9% in 2011/12 before increasing from 4.5% in 2018/19 to 4.8% in 2020/21.

Moving forward to 2021/22, the overall decrease in underutil…

Unemployment rates in London for men and women (Oct 1992 - Oct 2022)

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 6.5%, reaching levels not seen since 2015. This increase is likely the result of the slowdown of the economy caused by the COVID-19 pandemic. Other factors, such as those put on furlough and the change in inactivity within the labour market, should also be considered. Unemployment rates sharply decreased again in 2022 a year when pandemic restrictions were lifted, reaching their lowest level since 1992 (4.5% in August to October 2022).

Over the past three decades, the gender split of unemployment has become more even overall. 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. S…

Unemployment rate over time (2005 Q2 - 2023 Q2)

The picture now

Outer London’s unemployment rate is 5%, slightly above the rate in Inner London (4%). Both Inner and Outer London have higher unemployment rates than the rest of England (4.7%).

How this has changed over time

From 2012 until 2020, unemployment followed a steady decline after peaking in the aftermath of the financial Crisis. In Inner London, the unemployment rate more than halved from 2011 to 2020 - from 10.5% to 4.5%. It recovered to pre-financial crisis levels in 2014. In Outer London, it declined from 9.3% in 2012 to 4.6% in 2019, and did not recover its pre-crisis levels until 2017. 

Unemployment surged in 2021, likely as a result of the economic impact of the COVID-19 pandemic. This appears to have been sharper in London. From 2020 to 2021 the unemployment rate in Inner London rose by 38% (1.7 percentage points) and in Ou…

Unemployment rate by London borough (2022 Q1 and 2023 Q1)

The unemployment rates for the majority of London boroughs have seen large decreases year on year to Q1 2023 with only 3 boroughs seeing increases over the period.

Brent was the borough with the highest average unemployment rate in the year to 2023 Q1 (6.8%), having increased by 0.7ppts since Q1 2022. Kingston-upon-Thames is the borough with the lowest unemployment rate (2.3%).

There has been a decline in the unemployment rate in most boroughs, except Brent (+0.7ppts), Hackney (+0.9ppts), and Lewisham (+0.2ppts). The largest falls took place in Redbridge (-2.6ppts), Hillingdon (-2.4ppts) and Greenwich (-2.2ppts)

The figures presented here for the London boroughs are modelled estimates of unemployment for the 12 months to December of each year. The figure for the London average is based on responses to the Annual Population Survey.

Unemployment rates by age group (2005 Q2 - 2023 Q2)

The unemployment rate in London for those aged 16–24 increased by 2.9 percentage points in the year to June 2023 and now stands at 16.4%. Excluding the COVID-19 pandemic affecting 2021, this is the highest rate since 2016. 

By contrast unemployment for those aged 25–64 is significantly lower and saw a reduction in the unemployment rate from 3.8% in 2022 to 3.4% in 2023. 

Unemployment for people aged 65 and over was comparable to people aged 25–64 for the most recently available data (low survey response numbers mean we can’t report for 2022 or 2023; however, relatively few in this group are either in work or seeking work, as the majority are retired.

Unemployment rates among the working age population (16-64) are higher in London than in the rest of England, which has been true for the whole time period covered by this indicator. 

Compared t…

Proportion of workers in London in temporary employment (2011-2022 Q2)

Just over 5% of people in work in London are on temporary contracts. Temporary contracts are more prevalent amongst women in work than men: 30% more women than men were on a temporary contract in 2022 (Q2).

The proportion of workers on temporary contracts has remained relatively consistent over the past decade, fluctuating between just over 4.5% and just under 6% of all workers. In 2022 (Q2), 0.84% of women in work and 0.66% 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 (2013 and 2023 Q2)

The picture today

People of Pakistani/Bangladeshi background have the highest rates of not being in paid work, with 38.9% of the working-age population not working, followed by people of Black ethnic background (36.1%). 

White people have the lowest rate of being out of work (19.3%) followed by people of Indian background at 24%. 

How this has changed over time

Every major ethnic group in London has seen a fall in the proportion of people who are not in paid work in the decade up to June 2023. In 2013, almost half of Londoners of Pakistani/Bangladeshi background were not in paid work (48.9%), down to 38.9% today. 

People of Black ethnic background have had the smallest fall in the proportion of people not in work in the last decade (4 percent points). 

People of Black and Mixed background are also the only groups to have seen an increase in th…

Worklessness for men and women in London by country of birth (2021/22 Q1)

Just under two-thirds (63%) of working-age women in London who were born in Bangladesh did not work in the year to March 2021/22, the highest rate of any nationality. Pakistani women are not far behind with 61% not working. Of men in London who were born overseas, those from China have the highest rate of worklessness (28%).

Women originally from Portugal had the lowest rates of worklessness (2%), while those from Sri Lanka 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, France, Romania, Poland and Italy.