By Saskia Koopman

Copyright cityam

The UK government is seeking to strike a balance between the promise and the perils of AI, with ministers insisting they are preparing for a range of outcomnes as the technology reshapes the labour market.

Kanisha Narayan, a junior minister at the Department for Science, Innovation, and Technology (DSIT), said the administration was “monitoring data to track and prepare” for the impact of AI, while seeking to ensure workers are not left behind.

“We want to ensure that people have access to good, meaningful work”, he told MPs.

“AI will impact the labour market and government is working to harness its benefits in terms of boosting growth, productivity, living standards, and worker wellbeing, while mitigating risks”.

He continued: “We’re planning for varied outcomes, including giving people the skills to get those jobs and spread opportunity to fix the foundations of our economy to seize AI’s potential”.

Skills push amid rising risks

The minister pointed to the ‘get Britain working white paper’, published last year, which pledged “radical reform” to boost labour participation and acknowledged that automation and AI were likely to threaten low-paid, repetitive jobs.

Narayan highlighted the creating if a new AI skills hub, developed with Innovate UK and PwC, designed to provide digital training and close gaps in the workforce.

The government is also partnering with 11 major firms to retrain some 7.5m workers by 2030.

But, while ministers talk up reskilling, cracks are already emerging across key sectors.

Recent research from Juniper and Zopa Bank indicated that UK banks will pour £1.8bn into generative AI by 2030, at the cost of 27,000 jobs – around one in ten roles in the sectoe.

Much of the productivity gin will come from slashing back-office staff, with 178m work hours set to be cut over the next five years.

Zopa has responded with a ‘jobs 2030’ programme to retrain 100,000 banking employees, but concern remains around inevitable widespread displacement.

Hiring slowdown bites

Beyond the financial services, the tremors are being felt across the economy.

Job postings in highly AI-exposed roles like software engineering, consulting and design have slumped by nearly 40 per cent since 2022, according to McKinsey.

Graduate roles, apprenticeships and internships have dropped by almost a third, leaving advertised graduate vacancies at their lowest level since the pandemic.

The wider labour market is also under strain, with the UK suffering the sharpest hiring slump of any major economy trhis year, according to Manpower.

Autumn Budget hikes, particularly on employer national insurance contribtions, also dented confidence.

Hospitality alone shed 69,000 jobs since April, whole UKHospitality has warned as many as 200,000 roles could be lost over the next 12 months.

This comes as top UK business groups warned Peter Kyle of the Employment Rights Bill’s chilling impact on hiring.

‘Day one rights’, which would allow Brits to sue employers for unfair dismissal for employment under six months, is seen as one of the top three key issues that worry business groups, City AM reported last week.

Stringent rules that clamp down on zero hours contracts by forcing companies to offer guaranteed shifts could hinder firms’ capacity to offer flexible working, it has also been argued.