Mayoral Election Issues: The Economy and Jobs

Bike work-2London’s economy has changed dramatically in the last 30 years, and the incoming mayor will need to balance the ongoing boom in jobs with concerns over wages, affordability and equality.

The London jobs market has grown by 28% in 30 years. There are an estimated 5.3 million people working in London, up from 4.1 million in 1984.  In that time London has seen a massive expansion in professional roles and the collapse of manufacturing[1].

In 1984 manufacturing accounted for 11% of the jobs in London and was the biggest sector of the workforce. By 2013 it was just 2% of the workforce, and had seen a fall in job numbers of 74%.

Meanwhile the expansion of the professional, scientific and technical sector has seen 500,000 new jobs created. This sector includes jobs in real estate and shows an overall growth of more than 150%. Construction in the same period grew by just 20%. There are, it would appear, more jobs in selling houses than building them.

Other big growth sectors underline the changing nature of the workplace. Information and communication roles grew by 85% while admin and support jobs more than doubled. Sectors that have shrunk include those covering the public sector, down by 21% and transport and storage, which has fallen by 13%.

These trends are forecast to continue over the next 20 years[2]. In that time London will experience a 16% growth in the employment market creating nearly a million new jobs. This growth in employment to 6.4 million by 2036 will be driven by the professional sector, real estate and scientific and technical roles.

Demonstrating the shifting nature of work in the capital some sectors will see a decline. The reduction in manufacturing, will fall further, by 54%. That’s around 72,000 posts. Finance jobs are also forecast to shrink by around 9,000.

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The figures come from the GLA’s Employment Projection for 2015 which forecasts that jobs growth will be concentrated in inner London. Tower Hamlets stands out with an estimated 74% employment growth, adding 200,000 new jobs. That’s nearly a quarter of all the new posts in London for the period.

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But, as the map shows, many boroughs are predicted to show very low levels of job growth. And two, Croydon and Barking and Dagenham are expected to see a decline in employment, in line with current trends.

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These trends take place against the backdrop of a very mixed picture for skills and wages across the capital.

The continuing boom in professional and technical jobs requires a highly qualified workforce.  In general, London is well equipped to supply this, with better skills than the rest of the UK. Nearly half the working-age population has a degree-level or equivalent qualification[3].

The proportion of people educated and trained to this level (so-called level 4+) has been rising over recent years and remains consistently above the UK average.

Data from the Annual Population Survey from the Office for National Statistics shows London reached 49% with level 4+ qualifications by the end of 2014.

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However, this qualifications map varies across the capital. 9 boroughs in the centre and South West have more than 60% of the workforce with qualifications at level 4+. These include Wandsworth, Camden, Hammersmith and Fulham, Kensington and Chelsea, Westminster, City of London, Richmond and Lambeth.  However Havering, Barking and Dagenham, and Bexley have levels below the national average and half the level of the best-qualified boroughs.

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Conversely, these boroughs have high numbers with no qualifications.  In Barking & Dagenham it is twice the national average

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From qualifications flow wage levels.  Full time pay in London is, not surprisingly, the highest in the UK at £16.61 per hour compared to £13.36[4].  However, if you live in Newham or Barking and Dagenham you are likely to earn less than the national average. The hourly full time median rate is Newham is £12.90, yet across the river in Greenwich it is £3 higher.

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This pattern is repeated among part time workers.  A quarter of London jobs are part time, and average pay plummets from the £16.61 for full time posts to just £9.22.  Again, for part time workers in East London boroughs many are earning below the national average.  Workers in Newham are earning less than any of the UK’s regions, including the North East, despite far higher living costs.

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The current Mayor has been an advocate of the London Living Wage, a voluntary pay level currently set at £9.40 and not to be confused with the Government’s recently introduced National Living Wage for over 25s of £7.20 per hour.

Data from the most recent ONS Annual Survey on Hours and Earnings[5] revealed that more than three quarters of a million jobs in the capital were paying below the London Living Wage.  Women and the Under 24s are more likely to be in jobs that pay below the LLW, and many are in the sectors that are growing rapidly – food and accommodation, social care and cleaning.

10% of Londoners were still earning less than the National Minimum Wage, rising to 21% in Newham[6].

When it comes to the economy and employment the new Mayor will be dealing with two Londons.  At one end of the scale, a growth in highly skilled, well paid professional jobs placing pressures on the availability and cost of housing.  At the other end of the scale, a low skill, low pay workforce struggling to afford to live in the city.

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This report was produced in association with London Live’s special election programme, London Votes.