London Councils commissioned Volterra to forecast what unemployment in London look like in the future and how will this differ among different sub-groups of Londoners and different areas of London (boroughs and sub-regions). Volterra produced forecasts for two time periods – to April 2021 and to September 2022. Key findings included:
- The LFS unemployment rate in London (based on the ILO definition of unemployment) is forecast to rise to 9.4% in December 2021 in the core scenario, 1.1 percentage points below the 2011 quarterly peak. This amounts to 464,000 Londoners unemployed. In the worst-case scenario, unemployment would rise to 11.8% in February 2022, equating to 580,000 unemployed Londoners. The LFS unemployment figures can miss out some Londoners. The alternative claimant count gives an estimate of 671,000 Londoners unemployed in the core scenario.
- There are significant variations between sub-regions. In absolute terms Central London Forward (CLF) will be home to the most unemployed people, estimated at 169,000 in Dec-2021 (core scenario), but will recover more quickly relative to other sub-regions. In relative terms, West London Alliance (WLA) is expected to be the hardest hit, with a peak unemployment rate of 10.4%. It is Local London (LL), however, where the unemployment rate (peaking at 9.6%) is predicted to remain persistently high for longest.
- Different groups in London have also been differentially impacted. The 16-24 age group is forecast to be the hardest hit, making up around a third of unemployed Londoners. This age group is however less likely to be furloughed, with older age groups being at highest risk of furlough. The older age group (50+) is at most risk of scarring. Our model predicts that 14,000 Londoners may drop out of the labour market.
- Unemployment rates for NVQ1 or NVQ2 (only) qualified residents are forecast to reach three to three and a half times the unemployment rate for residents with NVQ4+ qualifications at peak.
- Male Londoners typically have higher unemployment rates than females, but the latter will continue to face greater work inequality and in-work poverty.
- Ethnic minorities will continue to experience worse unemployment rates than white residents across London, although the differential is not forecast to widen as a result of COVID-19. The proportion of Universal Credit claimants who are also in employment has increased during 2020, signalling greater issues of in-work poverty since COVID-19 emerged and a need to focus on this demographic of residents in recovery strategies.