As artificial intelligence adoption accelerates across industries, concerns are growing about its impact on employment.
One in six (17 per cent) of the 2,000 employers surveyed in the CIPD’s latest Labour Market Outlook expect AI to reduce their workforce over the next 12 months, with 26 per cent of those predicting the technology will lead to at least a 10 per cent reduction in headcount.
Of those expecting to shrink their workforce, 62 per cent felt that clerical, junior managerial, professional or administrative positions – typically entry level and often undertaken by younger people – were most likely to be at risk of replacement by AI.
James Cockett, senior labour market economist at the CIPD, said that while AI had “great potential” to improve productivity and performance, it “risks leaving many people behind”.
“Junior roles stand to be most affected by AI, but we need a national drive to retrain and upskill people of all ages and career stages,” he argued.
Employer confidence remains at a record low following increases to hiring costs introduced in the last budget. Cockett warned 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”.
To prepare employees for AI advances in the workplace, Cockett called for the “rapid development” of the growth and skills levy.
“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,” he said.
AI job losses at largest firms
AI job cuts are expected to be more prevalent at large private sector businesses, with 26 per cent anticipating a reduction in headcount. This compares with 17 per cent in the private sector overall and 20 per cent of public sector employers.
Despite AI’s impact on hiring, the net employment balance – the difference between organisations planning to increase versus decrease staffing levels in the next three months – remained unchanged from the previous quarter at +9.
However, the outlook was weaker in education and public services. The net employment balance in the non-compulsory education sector, which includes universities, dropped 11 points to -15, while in the public sector it fell from -6 to -8.
The number of employers that planned to make redundancies in the three months to December 2025 remained at 22 per cent.
The increased use of AI was already having consequences for employees in some sectors, according to Jim Moore, employee relations partner at HR services company Hamilton Nash.
“The job market will change drastically as a result of this shift,” he said. “Younger generations traditionally applying for entry-level white collar roles will find fewer job opportunities are available and this will likely result in a surge in unemployment and the accompanying benefits bill to the taxpayer.”
Moore called for the government and employers to focus training and qualifications for young people on areas where there was still strong demand, adding that more needed to be done to tackle “social stigma” around some roles. “It will be a long time before AI can replace electricians and plumbers, and there’s a labour shortage in the trades within the UK,” he said.
Jo Benelisha, director at recruitment agency Strictly Recruitment, added: “AI’s automation of entry-level work risks eroding the talent pipeline by removing vital learning opportunities, potentially widening inequality and slowing productivity gains if organisations fail to redesign roles.”
She argued that employers should focus on “reconfiguring jobs rather than reducing them” and provide early-career development and mentorship schemes alongside AI training. Government schemes, such as the growth and skills levy and lifelong learning entitlement, can also be used to fund AI training.
While the employment rights bill may initially raise compliance costs and slow junior hiring, Benelisha said that over time its protections for workers and focus on job quality could improve retention and workforce resilience.
Source- https://www.peoplemanagement.co.uk/article/1939164/one-six-employers-expect-job-losses-ai-cipd-finds