A first of its kind analysis of the role of migration on London’s economy has been published today by London First and PwC. ‘Facing Facts: the impact of migrants on London, its workforce and economy’ draws on a comprehensive range of information, including detailed ONS Labour Force Survey data.
The report shows how London’s total workforce has grown from 4.3 million people in 2005 to just under 5.2 million, made up of people from around the UK, the EU and the rest of the world1.
Economic growth for the capital
London’s growing workforce is significantly contributing to economic growth and helping to create more jobs in the capital.
The analysis calculates that the economic value generated by London’s 1.8m migrant workers is £83bn per year, roughly 22% of the capital’s Gross Value Added (GVA).
On average, a migrant worker in a full-time job in London contributes an additional £46,000 net in GVA each year to the economy.
The additional GVA generated by 10 migrant worker jobs will support an additional four jobs in the wider economy,
The calculation of new jobs created by migration is underpinned by an overall increase in the number of people working in London (85,400 more people on average each year, equivalent to an average annual increase of 2.3%).
The number of UK-born Londoners of working age who are not in work – either unemployed, studying, looking after dependents or unable to work – is falling, from just over 608,000 people in 2005 to 537,400 by 2015.
Jasmine Whitbread, chief executive of London First, said:
“As the government debates what the UK’s post-Brexit immigration policy should be, it’s critical we’re informed by the facts. Global migration is an important part of London’s ongoing success, many parts of our economy would struggle without it. Today’s report is a significant step forwards in setting out the facts and providing the clearest picture to date of the people living and working in London.”
Julia Onslow-Cole, global head of immigration at PwC and a member of the Mayor of London’s Brexit expert advisory panel, said:
“This research provides businesses with new information to help them assess their future resourcing requirements ahead of the UK’s exit from the EU. Employers have much to consider from an immigration and skills perspective. They need to analyse the impact of immigration changes on their business and, if they are reliant on EU workers, consider the medium to long term implications.
“This research provides food for thought for policy makers and it’s imperative that businesses take the opportunity to respond to the Industrial Strategy consultation and collaborate with the Government on education and skills training, in order to upskill future generations of workers.”
Other findings from the report include:
London’s skilled workforce
London tends to attract skilled workers, defined as someone with specific proficiency, training, knowledge and ability in their profession. Nearly 60% of people from the EU-15 countries2 are in managerial and professional roles in London. There is a marked difference when compared to workers from countries that joined the EU after 20043, with one in five (22%) workers based in London in managerial and professional roles, one in seven (15%) in supervisory and intermediate roles, but most are either self-employed or working for a small business (32%) or are in semi-routine or routine work (31%).
One reason for this is the high proportion of EU born people working in the construction industry.
London’s construction industry
Builders, developers, contractors and engineers employ nearly 300,000 people in London, around half of whom were born in the UK, 30% were born in the EU and 20% were born in the rest of the world. Demand for construction workers looks set to grow as London builds more homes and completes Crossrail, the extension of the Northern Line and the Tideway Tunnel alongside other infrastructure projects.
But London is struggling to attract and train the workforce its infrastructure projects need. Today, London and the South East have a shortfall of 60,000 people in the construction industry4. Apprenticeships are trying to address the shortfall, with a 43% increase in the number of construction apprenticeships nationally since 2012 (from 14,000 to 20,000). But the number of apprenticeships successfully completed in inner London has fallen by 32% over the past few year (730 in 2011/12, compared to 500 in 2013/14).
Looking at London’s boroughs
Overall, one in three Londoners were born overseas (37%), an increase from 31% in 2005. But the migration picture varies across London’s boroughs. For example, Kensington and Chelsea has a relatively high proportion of migrants but has seen little change over the past ten years (49.5% of residents in 2015 were born overseas, compared with 49.1% in 2005). In comparison, Harrow’s migrant population has increased from nearly 33% in 2005 to just under 50% in 2015.
About the analysis
The primary data source used in this work was the Labour Force Survey from 2005-2015 published by the Office for National Statistics, ONS. The Labour Force Survey is the largest household study in the UK and provides the official measures of employment and unemployment. The survey is published on a calendar quarterly basis and involves approximately 40,000 responding UK households each quarter – which is equivalent to approximately 100,000 individuals a quarter or 400,000 individuals a year.
All analysis of LFS data was conducted using the ONS Virtual Microdata Laboratory (VML) service, in accordance with the rules of the Approved Researcher scheme. The version of the data held in the VML has had all names, addresses and other identifying variables removed by ONS, prior to analysis, to protect confidentiality of the survey respondents.
1 As of 2015, the most recent year for which a full data set is available
2 EU15 countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom. UK data excluded for this data point
3 Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, Romania and Bulgaria
4 Data from the Construction Industry Training Board
About London First
Set up 25 years ago, London First is a non-profit organisation with a mission to make London the best city in the world to do business. It works with business leaders, national and local government to support London’s global competitiveness. One of its first successes was the creation of an executive mayor for London. That success established the role of business leadership in improving and promoting London within the UK economy and to the world. Further successes include pushing for Crossrail, based partly on business financing it, and the creation of Teach First, incubated by the London business community and now improving results in schools around the country.
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