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Worklessness

Key points

  • The number of unemployed adults in London fell by 75,000 between 2013 and 2014, and is now at its lowest level since 2008. Women make up an increasing share of the unemployed, with almost as many unemployed women as men.
  • The unemployment ratio (the number of unemployed adults as a proportion of all working-age adults) was 5.6% in Inner London, 5.2% in Outer London, and 4.8% in the rest of England in 2014. Over the past 20 years, Inner London has experienced a massive improvement in the unemployment ratio, having halved since the mid-1990s.
  • The unemployment picture is more mixed at the borough level, with seven boroughs experiencing an increase in the unemployment ratio between 2009-11 and 2012-14, mostly in Outer London. The highest unemployment ratios are in the East London boroughs of Barking & Dagenham, Tower Hamlets and Newham.
  • The unemployment ratio for 16-24 year olds in London at 10.7% is 2.5 times higher than for adults aged 25-64; but the gap with young adults in the rest of England has closed. Young adult unemployment ratios started rising in the early to mid-2000s, well before the recession.
  • Underemployment fell by 1.7 percentage points between 2013 and 2014, mostly due to declining unemployment. Despite this, it still remains above pre-recession levels.
  • The number of people in workless households has fallen considerably over the last 15 years from nearly 20% to less than 10%. Since the recession, there is a smaller proportion of people in households where all adults work but more in households where some work.
  • Worklessness differs by gender and country of birth, with women and those from certain countries such as Somalia and Turkey tending to have higher rates.
  • Half of working-age disabled adults in London are workless, a proportion twice as high as non-disabled adults.
  • The number of temporary and involuntary temporary contracts is at a 10 year high in London in 2014. These contract types have increased more quickly in London than the rest of England.

Commentary

In many ways, London's labour market is now recovering from the recession. The employment rate is near an all-time high, both unemployment numbers and the ratio are falling sharply, and underemployment is approaching pre-recession levels. This is good news. However, there is another side to the employment picture.

Some areas in London are doing much worse than others. Unemployment remains twice as high for young adults than it does for those aged 25 and over. The employment rate for disabled people is 25 percentage points lower than for non-disabled people, with a higher proportion of inactive and unemployed people. Despite falls in economic inactivity, improvements in unemployment have been minimal or non-existent for many ethnic minorities. The numbers of people on a temporary contract because they could not find permanent work is also at a high. The decline in fully working households during the recession has not yet been reversed. In sum, while many of these factors are improving, the proceeds of a stronger labour market have not been shared as widely as hoped.

However, things are likely to improve for these more marginalised groups if the labour market continues to strengthen. As workless people who are closest to the labour market are employed, growing companies will need to turn to those further away to continue to meet demand. However, this assumes that the labour market continues to strengthen. In either case, a public policy response is necessary to ensure that those further from the labour market are in a position to take advantage of a growing economy or are protected from a slowing one.