AI Impacts on the Workplace – Unemployment Hits New Highs as More Workers Consider Self-Employment
- TBA
- Apr 15
- 4 min read
Artificial Intelligence is reshaping the world at an unprecedented pace.
For the United Kingdom, this technological revolution is bringing more than just efficiency and opportunity; it is triggering a significant seismic shift in employment.
Multiple recent studies point to a stark reality: among major developed economies, the UK is becoming one of the nations most heavily impacted by AI, with the number of jobs lost to the technology already exceeding those newly created by it.
AI improves efficiency but reduces jobs
According to research from the investment bank Morgan Stanley, the net reduction rate of employment due to AI in the UK reached 8% over the past 12 months.
This figure is double the international average and surpasses other major economies, including the United States, Japan, Germany, and Australia.
Ironically, this is not because British companies have failed to use AI effectively; quite the opposite. The study shows that with the help of AI, the average productivity of UK firms has increased by 11.5%. Businesses generally believe that AI has significantly improved efficiency in areas such as customer service, routine task processing, and data analysis.
However, this efficiency has not translated into more roles. Instead, it has evolved into 'doing more work with fewer people', leading to a net decrease in available positions.
UK becomes the nation most affected by AI
The reason the UK is more susceptible to the impact of AI is closely linked to costs, tax burdens, and industrial structure.
Since April 2025, the rise in the National Living Wage and the increase in employer National Insurance contributions have made companies increasingly cautious about hiring. The emergence of AI provides a rational justification for 'no longer recruiting'.
Furthermore, the UK – and London in particular – is highly dependent on the financial and creative industries, as well as white-collar sectors such as law, accounting, consultancy, and marketing.
These are precisely the fields that AI is invading and restructuring first.
The Mayor of London, Sadiq Khan, has previously warned that London is at the sharpest edge of this transformation. He noted that AI could destroy large-scale employment and exacerbate social inequality, placing the city under unprecedented workplace pressure.
It is not 'low-skilled work' that disappears first
The reality is currently overturning the traditional perception that AI primarily threatens low-skilled roles.
Research from the job platform Adzuna shows that since the debut of ChatGPT in 2022, the number of apprenticeship, entry-level, and graduate positions in the UK has decreased by nearly one-third.
Morgan Stanley’s survey also pointed out that companies are most likely to cut early-career roles requiring two to five years of experience. This means many young people are seeing their roles disappear before they even have the chance to accumulate experience, leading to widespread anxiety about the future among the young workforce.
Official data from the Office for National Statistics (ONS) reveals that in the three months to October 2025, the UK unemployment rate rose to 5.1%, significantly higher than the 4.3% recorded during the same period the previous year. Within this, the number of unemployed people aged 18 to 24 increased by 85,000, representing the largest increase since November 2022.
Historically, this is not the first time workers have been 'replaced by machines'. In the nineteenth century, the appearance of automated power looms led factory owners to dismiss skilled weavers in favour of cheaper labour to operate the machines. At that time, because operating the machinery was relatively simple, highly skilled artisans were replaced by lower-skilled workers.
Overall, rather than AI 'occupying' low-skilled jobs, it is more accurate to say that 'AI is restructuring the nature of roles'. In a UK job market where hiring costs are rising, employers will increasingly prefer to hire someone who can flexibly use digital tools to improve efficiency rather than someone requiring long-term, repeated investment.
AI inspires entrepreneurial dreams
While finding a traditional job is becoming more difficult, people are not standing still. From another perspective, AI is stimulating an impulse towards entrepreneurship.
Surveys indicate that over half of the UK workforce has considered starting their own business. Among the younger demographic aged 16 to 34, approximately one-third believe that AI has significantly lowered the barrier to entry for individual entrepreneurship. It allows a 'one person plus a set of tools' model to complete work that previously required team collaboration, giving them the ability and confidence to launch their own ventures.
However, insufficient funding, the fear of failure, and uncertainty in the economic environment remain major practical obstacles, limiting the full release of this entrepreneurial potential.
AI itself is not the problem; the true challenge lies in whether society is prepared to bear the costs of transition and whether it provides a sufficient buffer and path forward for those who are displaced.
Regarding the employment shock caused by AI, OpenAI CEO Sam Altman has proposed buffer solutions such as Universal Basic Income, though he also emphasised that this cannot solve every problem. JPMorgan Chase CEO Jamie Dimon warned that if governments and businesses do not proactively intervene to help workers replaced by technology, social unrest will no longer be merely a theoretical risk.
What the UK is experiencing may simply be an early sample of what is to come. When AI becomes the new watershed, the issue we face is no longer just one of technological progress, but a long-term proposition concerning employment, fairness, and social structure.
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