London is one of the regions within the UK defying trends in the labour market.
By: Zahra Jawad
It was reported that the capital has seen a rise in job postings, with fresh data highlighting a 1.7% increase in April compared to the previous month.
Yet despite such optimistic figures, recent ONS data has revealed that London has the highest rate of unemployment in the country. The numbers show that London’s unemployment rate sits at a staggering 6.2% for individuals aged 16 and over. The rate increased by 0.3% over the past year, despite a marginal fall in the inactivity rate.
Although the Recruitment and Employment Confederation (REC) reported an increase in job postings, the divide between the supply and demand for labour goes beyond just numbers. The disconnect between job seekers and employers continues to grow.
What’s causing this divide?
While it is no surprise that London and the UK have been hit by an unfavourable landscape of socio-economic factors such as tax hikes and Donald Trump’s tariffs, the problem is also intrinsic. As technology, sustainability, and AI continue to reshape global economies, London’s reputation as an economic hub must keep pace. But the core issue lies in a lack of relevant skills.
Despite being a robust economic powerhouse, London faces a challenge in preparing its workforce to meet the demands of its leading industries. The city boasts a highly educated population, with over 50% of residents holding degrees in higher education. Yet, the skill gap persists.
Levelling Up
According to a report by People Management, the most cited areas of shortage include engineering, AI, and green technology. Many firms are hesitant to implement these emerging tools due to a lack of qualified staff, strategic training plans, and digital infrastructure. This not only hampers productivity but also threatens to slow national progress on innovation, net-zero targets, and economic competitiveness.
Around 27% of employers have reported a shortage of qualified candidates for new and emerging green jobs. And while many graduates hold degrees, they lack the specialised training required for these roles.
Low awareness and limited guidance on how to enter these careers remain major issues. Experts have called for stronger alignment between educational institutions and employers to help address the so-called ‘skills issue’.
While the uptick in job listings might suggest a thriving employment landscape, the reality is far more nuanced. The figures mask a deeper mismatch — one where Londoners are eager to work but lack the specialised skills that industries urgently need.
The government has begun addressing this issue, taking steps to bridge the gap. Just last month, in April, Sadiq Khan welcomed £27 million in Government funding for ‘skills bootcamps’ designed to “fast-track Londoners into good jobs within the green and digital creative industries.”
Closing this gap won’t happen overnight. It will require coordinated efforts across education, government, and industry to ensure that skills development keeps pace with the city’s economic evolution.
