1 in 6 UK employers expect AI to ‘shrink’ workforce, finds CIPD

Around one in six UK employers expect AI to shrink their workforce over the next year, according to new research from the Chartered Institute of Personnel and Development (CIPD), the professional body for HR, learning and development in the UK.

Of those, 62 per cent believe that clerical, junior managerial, professional or administrative roles are most likely to be lost because of AI.

The CIPD found the risk is highest in large private sector firms, where a quarter expect headcount to fall, compared with 17 per cent in the private sector overall and 20 per cent in the public sector.

Among those who expect headcount to shrink because of AI in the next 12 months, around 26 per cent expect to lose more than 10 per cent of their workforce.

The CIPD said its survey, which asked over 2,000 employers about their hiring redundancy and pay plans, highlights the need for “urgent” action to support people whose roles are most exposed to AI.

The organisation added that those in early-career or lower-level professional roles, and industries including finance and insurance, IT and administrative and support services will need the most help.

The research recommended that the government avoid measures that dampen recruitment or limit opportunities for those displaced by AI.

With employer confidence already at a record low outside the pandemic, the CIPD said it is important that measures in the Budget and Employment Rights Bill do not undermine hiring further.

James Cockett, senior labour market economist at the CIPD, said that while that AI is transforming the way many people work and has great potential for improving productivity and performance, it also risks leaving many people behind.

He highlighted that jobseekers are already feeling the impact of slower hiring, adding that measures in the Employment Rights Bill could make it even harder for employers to take on people with less experience and more development needs.

“It’s crucial that we see rapid progress on the development of the Growth and Skills Levy, informed by genuine consultation with employers, to ensure workers are equipped with the skills for an AI-driven economy,” he added. “We need to see a stronger focus by the government and employers on longer-term workforce planning and investment in skills to help people use AI effectively in their roles or transition into different jobs or occupations as AI use grows.”

Last month, Amazon said it would cut 14,000 corporate roles, citing generative AI as the most transformative technology since the internet

In the same month, consultancy firm PwC shared in its annual report that it had cut its global workforce by 5,600 in the over the past financial year having spent almost $1.5 billion to expand its AI capabilities.

Despite the potential for layoffs, the survey also found that 61 per cent of employers plan to recruit in the next three months compared from 67 per cent the previous year.

Intention to recruit remains the highest in the public sector at 74 per cent, while 58 per cent of employers in the private sector plan to hire new staff.