EU worker shortages driving up London labour rates
A shortage of EU workers is starting to drive up labour costs in London, according to a leading payroll specialist.
New payroll data for self-employed workers during shows average earnings in London increased by 4.5% to £885 per week.
Ian Anfield, managing director of employment contract services specialist Hudson Contract, said: “We are starting to see the impact of people leaving the UK ahead of the EU Settlement Scheme deadline on June 30 and not being replaced by incomers.
“First and foremost, this is affecting London, which has the highest concentration of foreign construction workers and the most transient labour market.
“The Brexit effect on labour supply is slower the further away you go from the capital and many EU workers have settled in the North of England.”
He added: “In central London, the prime housing market is growing for the first time since the start of the pandemic, a sure sign of the high spirits felt across the entire sector.”
| Region | May Average |
April to May % Change |
Year on Year % Change |
| North East | £671 | -8.6% | -7.8% |
| North West | £827 | -4.1% | 4.0% |
| Yorkshire and the Humber | £821 | 0.5% | 9.0% |
| East Midlands | £954 | 1.7% | 17.2% |
| West Midlands | £920 | 3.5% | 1.4% |
| London | £885 | 4.5% | 2.8% |
| East of England | £949 | -0.3% | 8.3% |
| South East | £923 | 0.7% | 5.4% |
| South West | £863 | 1.9% | 10.1% |
The West Midlands also saw a significant rise in weekly earnings for subcontractors, increasing by 3.5% to £920 during May.
The region tends to have a larger supply of domestic tradespeople that have traditionally commanded higher earnings.
The cost increase mirrors an acute shortage of building materials in the West Midlands as a result of significant house building activity and major infrastructure projects in Birmingham including new stations for high-speed rail and facilities for the Commonwealth Games in 2022.
Anfield added: “There is shedloads of construction work about and growing pressure on the availability of both labour and materials.
“We expect some respite for construction companies with the closure of the government’s Self-Employment Income Support Scheme in September which should encourage claimants back onto sites.”
Last month, mechanical and engineering tradespeople had the strongest growth in earnings which rose 5.7% to £1,068 per week.
They were followed by joinery and plumbing contractors, whose earnings increased by 4.5% to £1,011 and £967 respectively.
updated: 15/06/2021
Let us know what you think:
You are here: Blog / EU worker shortages driving up London labour rates