By Nick Litsardopoulos, Research Economist, IES.
An analysis of advertised salaries of job vacancies in London
Following the National Minimum Wage increase of 6.7% in April 2025, average advertised salaries showed the strongest pay growth since mid-2022, and news headlines saying that salaries have reached new record highs. However, living costs have also risen during that time, and in some areas, like London, much faster than salaries. Many Londoners continue to struggle to make ends meet with the cost of living in the capital. What is more, the last ONS Labour Market Overview (Sep 2025) showed that the estimated number of vacancies in the UK fell by about 1.4 percent on the quarter, to 728,000, in the three-month period of June to August 2025. The ONS noted that “This is the 38th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in 9 of the 18 industry sectors”.
London is a major business hub and where the heart of the entrepreneurial activity in the UK beats the loudest. While London has been hailed as the UK’s most important engine of economic growth and a centre for business, it is also the UK’s most expensive area to live in. Nonetheless, despite differences in the cost of living between the capital and other major cities in the country, it used to be the case that the average Londoner remained financially better-off compared to other cities. That may no longer be the case.
The Living Wage Foundation calculates the “real living wage” based on what a household needs to cover essentials like rent, groceries, and utilities, while a calculation for London considers the specifics of the higher cost of living in the capital. The real living wage currently stands at £12.60 across the UK and £13.85 in London. Furthermore, the minimumincome.org.uk calculator of the Joseph Rowntree Foundation’s Minimum Income Standard (MIS) project, allows users to differentiate the living wage estimations between Outer and Inner London areas. A single working person household without dependants living in Outer London currently needs to earn £45,502 to able to afford a decent standard of living. The equivalent for Inner London is about £5,000 more, with an estimate of £50,446 to able to afford a decent standard of living.
Using the Adzuna intelligence portal we can find out what are the median salaries advertised in job vacancies in Inner and Outer London and see how they compared to the living wage calculation that can afford Londoners a decent standard of living.
The salary trend for the UK during the most recent 12 months for which data are currently available shows a reversal of an increase that took place in spring 2025, with the median salary sitting currently around £36,500 from the previous £34,000 a year ago.
- UK Salary Trend – 6 months to Aug 2025
For Inner and Outer London, the 12 months median salary trend shows how dramatically different the situation is. In both cases the peak seems to have been reached in June 2025 with most of the salary gains having been wiped out by August 2025 in Outer London, whereas for Inner London salaries have suffered lower losses and somehow managed to partially sustained previous gains.
2. Inner London Salary Trend – 12 months to Aug 2025
3. Outer London Salary Trend – 12 months to Aug 2025
Looking in more detail the advertised salaries across the job vacancies of the past 12 months to August 2025 for Inner and Outer London, we find that only a small minority match or are higher than the respective living wage target; most of them miss the mark by several thousand pounds. Out of 4,343 job classifications mapped in Adzuna data only 36.8 percent passed the respective Living wage mark for Inner London and 30.7% for Outer London.
- Inner – Outer London Living Wage statistics (Adzuna classification)
We also looked at the salaries using the Standard Occupational Classification classifications (i.e., SOC sub-major). The picture shows very clearly that the vast majority of median salaries across the 26 SOC classifications we examined fall below the living wage mark. Three SOC job classifications pass the mark in both Inner and Outer London: Corporate managers and directors, Business media and public service professionals, and Science research engineering and technology professionals. For the Outer London the Health professionals also passes the living wage mark. However, in the vast majority of advertised job vacancies the salaries offered fell short of the living wage mark.
5. Inner – Outer London Living Wage statistics (SOC classification)
London has always commanded premium salaries. The capital’s wages consistently outpace the rest of the UK, and recent data confirms this trend continues. According to the latest job market analysis, London remains the highest-paying region with average salaries at £48,643. On the surface, this looks healthy. However, a troubling picture emerges: many jobs advertised in London simply don’t pay enough to offer decent standard of living to the people to live there. The job offers simply don’t meet the living costs of life in the capital.
The Real Cost of Living in London
The Minimum Income Standard, calculated through research with members of the public about what constitutes an acceptable standard of living, reveals stark truths about life in London. These figures aren’t about luxury or comfort. Instead, they represent the basic income needed to afford essentials and participate meaningfully in society. For a single working-age adult living in Inner London, the required income exceeds £50,000 annually to cover minimum needs and participate in the city. This isn’t just about rent and transport. It includes everything from adequate nutrition to occasional social activities that prevent isolation in one of the world’s most vibrant cities.
The situation differs between Inner and Outer London, but not as dramatically as many assume. Research indicates that a minimum London Weighting needs to be £9,600 in Inner London and £6,549 in Outer London to cover the additional costs of a minimum living standard. These aren’t just arbitrary figures, but reflect the genuine premium that Londoners pay for housing, transport, childcare, and countless other necessities compared to elsewhere in the UK.
What is more, the gap is growing. While Inner London’s median advertised salary of nearly £50,500 might seem adequate, this can be deceptive. Average metrics of salaries like the median or the mean are skewed by high-earning positions in certain sectors such as, finance, tech, and senior management. The reality for many job seekers is quite different. Consider the jobs that keep London functioning: retail assistants, hospitality workers, care staff, administrative roles, and junior positions across numerous sectors. Many of these essential roles have advertised salaries well below what is needed for a minimum acceptable standard of living in the capital. Even positions offering what appears to be decent money elsewhere in the UK fall short when London’s cost of living is factored in.
The government’s National Living Wage currently stands at £12.21 per hour from April 2025, yet this leaves workers earning at least £760 per year less than those on the real Living Wage, and substantially less than those earning their living in London. For someone working full-time at the National Living Wage, their annual salary of approximately £23,900 doesn’t even come close to the £50,500 needed in Inner London or even the reduced requirement of £45,000 for Outer London areas. For families, the mathematics becomes even more challenging. A couple with two children living in Outer London needs £906 each week, highlighting how extra costs affect families particularly severely. Housing policy, transport costs, childcare provision, and wage regulations all need to reflect London’s genuine cost of living.
This salary shortfall isn’t just a statistical curiosity; it shapes lives and limits choices. Workers living in London on insufficient incomes face impossible decisions. Should they commute from increasingly distant locations, sacrificing hours each day and precious time with family? Should they share accommodation well into their thirties? Should they skip social activities, professional development opportunities, or proper healthcare to make ends meet?
When job advertisements fail to acknowledge these realities, they contribute to a growing crisis of affordability that threatens London’s social fabric. The implications extend beyond individual hardship. When essential workers cannot afford to live near their workplaces, London faces recruitment and retention crises in critical sectors. Schools struggle to find teachers. Hospitals battle staff shortages. Businesses lose talented people who simply cannot make the numbers work.
Progressive employers are beginning to respond. An increasing number have committed to paying the real London Living Wage, recognizing that doing so improves recruitment, reduces turnover, and contributes to a healthier, more sustainable workforce. Yet these remain the exception rather than the rule. London’s job market remains dynamic and full of opportunities. However, when advertised salaries consistently miss the mark on living costs, something has to give, and too often, it’s the well-being and the financial security of working Londoners that suffers. Closing this gap isn’t about demanding luxury. It’s about ensuring that people who work in London can actually afford to live there with dignity and security.
IES is an independent, apolitical, international centre of research and consultancy in public employment policy and HR management. It works closely with employers in all sectors, government departments, agencies, professional bodies and associations. IES is a focus of knowledge and practical experience in employment and training policy, the operation of labour markets, and HR planning and development. IES is a not-for-profit organisation.
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