(Bloomberg) — UK businesses are dialing back hiring for jobs that are likely to be affected by the rollout of artificial intelligence, a study found, suggesting the new technology is accentuating a slowdown in the nation’s labor market.
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Job vacancies have declined across the board in the UK as employers cut costs in the face of sluggish growth and high borrowing rates, with the overall number of online job postings down 31% in the three months to May compared with the same period in 2022, a McKinsey & Co. analysis found.
But it has been the most acute for occupations expected to be significantly altered: Postings for such jobs — like white-collar ones in tech or finance — dropped 38%, almost twice the decline seen elsewhere, according to the consulting firm.
The data provides a glimpse of how AI has started to reshape the job market since late 2022, when the release of ChatGPT set off waves of investment in the new technology and started factoring into corporate planning.
“The anticipation of significant – albeit uncertain – future productivity gains, especially as the technology and its applications mature, is prompting companies to review their workforce strategies and pause aspects of their recruitment,” said Tera Allas, a senior adviser at McKinsey.
Businesses have been expecting the new technology to deliver big productivity gains and reshape large segments of the economy. Governments have also sought to harness its potential, with Prime Minister Keir Starmer recently focusing a cabinet meeting on how it could potentially be used to improve the government services and living standards.
In the near term, though, the technology appears to be exerting another drag on the UK job market just as tax increases prompt cuts in lower-skilled sectors like retail and hospitality and the pace of economic growth stalls. Separately, a monthly report by KPMG and the Recruitment and Employment Confederation found that hiring plunged in June at the fastest pace in nearly two years.
Occupations considered to be highly exposed to AI — meaning the technology can replace at least some of the tasks involved — have recorded the sharpest contractions in vacancies, McKinsey’s analysis showed. Demand for jobs such as programmers, management consultants or graphic designers fell more than 50% over the last three years.
Some of that may also be due to industry-specific issues and a challenging macroeconomic backdrop. But McKinsey said in some sectors, like professional services and information technology, the number of job openings dropped even as businesses reported healthy growth rates.
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