Employers Are Cutting Roles at an Alarming Rate, the Fastest Since 2020
Recent investigations conducted by Morgan Stanley have unveiled that the UK is witnessing a disproportionately higher rate of job attrition due to artificial intelligence (AI) compared to its global counterparts.
In an alarming trend, Britain is accruing net job losses rather than gains as a direct consequence of AI, with the repercussions on its workforce being markedly more acute than in similar economies, according to Morgan Stanley’s latest analysis.
Research focusing on firms that have integrated AI for over a year revealed that British companies experienced a net job reduction of 8% over the last twelve months, directly attributed to this technology.
This figure not only outstrips those of other surveyed nations, including Germany, the United States, Japan, and Australia, but is also approximately double the global average.
These revelations emerge at a time when the UK labor market exhibits signs of considerable stress.
Employers are now reducing positions at the fastest pace since 2020, with unemployment rates hovering near a five-year high, as per official statistics. Companies are contending with escalating wage obligations, meager economic expansion, and geopolitical strife.
Morgan Stanley assessed firms across five sectors, particularly sensitive to AI influences: retail and consumer goods, estate management, transportation, healthcare technology, and automotive.
Numerous organizations reported that their technological investments are yielding tangible outcomes. UK enterprises noted an average productivity surge of 11.5% from AI, aligning closely with gains observed in the United States.
However, the report underscores a stark contrast in employment results.
While American companies benefiting from similar productivity enhancements have managed to create more jobs than they have eliminated, UK firms are far less inclined to ramp up hiring following their adoption of AI.
Analysis from Deloitte and PwC similarly highlights that, notwithstanding the productivity uptick attributed to AI, this has not yet translated into heightened profitability, suggesting hiring trends may be a factor in this discrepancy.
A separate examination by Bloomberg, utilizing vacancy data from the Office for National Statistics, indicates that British employers are retracting from positions most susceptible to automation, such as software developers and consultants.
Since the advent of OpenAI’s ChatGPT in late 2022, job postings in those sectors have plummeted by 37%, a stark contrast to a 26% decrease observed globally.
In total, vacancies across the UK economy have diminished by over one-third since 2022, equating to approximately half a million positions, with a substantial portion of this decline concentrated in professional, scientific, and technical services, as well as administrative roles and IT.
Youth unemployment has escalated sharply, reaching 13.7% in the three months leading up to November, the highest level since 2020.
Employers surveyed by Morgan Stanley indicated that entry-level positions requiring two to five years of experience are among the most vulnerable to cuts or remaining unfilled in the UK.
While firms in the UK exhibit a similar propensity as their international counterparts to refrain from replacing roles vacated due to AI, they are significantly less eager to pursue recruitment in other areas.
Earlier this month, London Mayor Sadiq Khan cautioned that AI could evolve into a “weapon of mass destruction of jobs” if left unchecked.
Addressing an audience at Mansion House, he implored leaders to leverage the advantages of AI while instituting safeguards to avert “a new era of mass unemployment,” especially within London’s finance and creative sectors.
A survey conducted by City Hall London in November indicated that 56% of London employees anticipate AI will impact their jobs by 2026.
Notwithstanding these concerns, business leaders are resolutely advancing with AI technology.
Findings published in October by the British Standards Institution revealed that two-thirds of executives intend to escalate their AI investments, with over 40% acknowledging its use as a means to reduce headcount and a third reporting reliance on AI prior to hiring new personnel.
Source link: Computing.co.uk.
