London’s need for its persisting skills shortages to be better addressed have been picked out as vital factors behind increases and unemployment and economic inactivity in the capital and difficulties the city’s and the country’s economies are facing more generally.
The latest UK labour market data released by the Office for National Statistics (ONS) indicate small increases in London’s unemployment rate during May, June and July 2023 compared with the previous three months (up by 0.3 per cent) and with the same period of 2022 (up by 0.5 per cent), and a larger ones in rates of economic inactivity – referring to people to aren’t working but also aren’t looking for work for various reasons – of two percent and one per cent respectively. The latter is the largest annual increase in any part of the UK.
Although in August the capital saw a 1.7 per cent increase in its number of payrolled employees compared with the same month of 2022 and year-on-year unemployment rate increases for May to July 2023 were higher in the East, East Midlands and South West of England, London’s number of workforce jobs fell by 72,000 according to the ONS – a higher number than in any English region and in Scotland, Northern Ireland and Wales.
Responding to the labour market figures, James Watkins, head of policy and public impact at the London Chamber of Commerce and Industry (LCCI), underlined the difficulties London companies have been having recruiting staff with the right qualifications and qualities, describing this as “the underlying factor” behind the new statistics which show that “the skills crisis is biting hard in the capital”.
Research by the LCCI has found that two-thirds of all London firms have faced difficulties with recruiting skilled staff, and Watkins highlighted a “skills roadmap” it has presented to education secretary Gillian Keegan and to Mayor of London Sadiq Khan. “We believe in flexible, agile training that delivers for learners, for businesses and for London,” added Watkins. “This must be about enhancing the economy – and enhancing peoples’ life chances”.
Antonia Jennings, the new chief executive of think tank Centre for London, also raised the issue of skills training, asking the government for “more investment in skills support for the people who need to retrain.”
She said the labour market data showed London to be “once again bearing the brunt of rising unemployment” which would be “a huge worry for many Londoners, especially as rising prices mean it’s increasingly hard to make ends meet here without a job” in a city where median incomes are the UK’s highest but housing costs in particular make a big dent in wages.
“A high growth region is only beneficial to its residents if it creates secure, well paid jobs,” Jennings said. She also called on the government to “raise benefits to match the real cost of living in London so people can survive while they find their next role”.
Figures for UK gross domestic product in July have also been released, measuring the value of goods and services produced during that month. Responding to those, Muniya Barua, deputy chief executive of BusinessLDN, described the national economy as being in “reverse gear” and “stuck in a low-growth trap”.
She renewed calls for the return of VAT-free shopping for international tourists and more action on childcare provision – two very big issues for London’s economy – and a renewed effort to resolve the long-running industrial disputes on the railways.