Working Paper 44: London’s labour market in the recent recession

Compared to the experience of recent recessions, London’s, and particularly the UK’s, labour market has shown surprising resilience to the recent economic downturn so far. Initial analysis would seem to suggest that reductions in wages, continued employment growth in the public sector and strong levels of corporate profitability moving into the recession (and correspondingly low rates of business failures during the recession) are the main factors that can explain this surprisingly strong labour market performance to date. Looking forward, low relative unit wage costs growth and strong corporate profitability should continue to provide support to the labour market in the short to medium term.