UK Job Market Faces 31% Decline in Postings as AI Replaces Workers

The UK workforce has experienced a significant decline in recent months, with the introduction of artificial intelligence (AI) playing a substantial role in this shift. The job market has been slowing down, with job openings decreasing sharply as companies look to reduce costs in an era of meager growth and high borrowing costs. According to an analysis from McKinsey & Co., online job postings have declined by 31% over the last three months leading up to May compared to the same time in 2022. This trend is particularly pronounced in white-collar jobs within the technology and finance sectors, where job openings have decreased by 38%, almost double the drop seen in other sectors.

This decline in the workforce is adding further strain to the UK job market, which is already facing challenges due to tax rises and a slowing rate of economic growth. Lower-skilled industries such as retail and hospitality are also experiencing a wave of cuts, exacerbating the overall economic slowdown. Surveys indicate that UK businesses are cutting back on hiring at the sharpest rate in nearly two years, with increased payroll taxes continuing to impact the job market. In June alone, appointments for permanent positions in the UK recorded the highest decrease in more than 22 months, while the number of job seekers increased.

McKinsey’s analysis suggests that jobs exposed to technology are at great risk of being partially or fully replaced by AI, leading to a decrease in job openings. For instance, the workforce in roles such as programmer, management consultant, and graphic designer has dropped over 50% over the past three years. This trend is not solely due to rising issues in specific industries or a challenging overall economy; even in fields with strong growth rates, such as expert services and IT, job openings have declined. Tera Allas, Director of Research and Economics in McKinsey’s United Kingdom and Ireland office, noted that the hope for future productivity improvements, though not guaranteed, is causing companies to rethink their workforce plans and hold off on certain hiring activities as technology and its uses develop.

The impact of AI on the job market is not limited to white-collar professions. Entry-level positions, such as summarizing meetings or reviewing documents, are particularly susceptible to being replaced by AI. This technology is accelerating the decline of these positions as companies seek to save money by cutting staff. Job openings in data science and analytics, which offer various entry-level positions, have faced a decline of approximately 50% since before the pandemic. Additionally, entry-level jobs such as apprenticeships, internships, and junior roles that do not require a degree have declined by nearly a third since the introduction of ChatGPT at the end of 2022.

James Neave, Head of Data Science at Adzuna, highlighted that the rapid rise of AI is yet another hurdle for fresh-faced job seekers, who are still suffering the impacts of COVID-19, with inflation, harsh economic circumstances, and depressed business confidence. Contrastingly, sectors such as real estate or education, which place little emphasis on technology, have seen an increase in job openings during this time. This disparity underscores the transformative impact of AI on the job market, with technology-driven sectors experiencing significant job losses while traditionally low-tech sectors remain relatively stable.