AI May Displace 3 Million Jobs in the UK, But Long-Term Losses Expected to Be Modest, Says Tony Blair Institute

AI May Displace 3 Million Jobs in the UK, But Long-Term Losses Expected to Be Modest, Says Tony Blair Institute

By Dan Milmo

Artificial intelligence (AI) could displace between 1 million and 3 million private sector jobs in the UK over the next two decades, according to a recent report by the Tony Blair Institute (TBI). However, the report, titled The Impact of AI on the Labour Market, emphasizes that these losses are likely to be temporary, with ultimate unemployment increases estimated in the “low hundreds of thousands” as new AI-driven roles emerge. TBI suggests that while the impact of AI on the workforce will bring significant disruption, it will also create new opportunities, leading to a relatively modest net job loss over the long term.

AI’s Projected Job Displacement and Creation Dynamics

As AI-driven tools like ChatGPT continue to advance and reshape the workplace, TBI projects that AI will displace between 60,000 and 275,000 jobs annually at the peak of disruption. These losses, however, are seen as relatively moderate, considering the UK workforce typically experiences around 450,000 job losses annually. More than 33 million people are employed across various sectors in the UK, and the adoption of AI is expected to enhance the labor market by increasing productivity and creating roles that previously did not exist.

TBI’s Forecast for Long-Term AI Impact on Employment

According to the report, while job displacement will peak towards the end of the next decade, unemployment is expected to stabilize due to new roles created by AI advancements. The institute anticipates that overall AI impact on employment will gradually “unwind,” driven by AI’s role in boosting productivity and creating dynamic job opportunities. As AI technology reshapes various industries, it will encourage employees to leave outdated roles and transition into new, AI-enabled positions.

“Our best guess is that AI’s peak impact on unemployment is likely to be in the low hundreds of thousands and for the effect to unwind over time,” the report states. This pattern aligns with previous technological shifts that spurred productivity, economic growth, and job creation in emerging sectors.

AI’s Influence on Economic Growth and the UK Labor Market

AI adoption in the UK is also expected to have a positive impact on GDP growth, with TBI estimating that it could contribute up to 1% GDP growth over the next five years, potentially rising to 6% by 2035. Despite an anticipated initial rise in unemployment due to job automation, TBI’s report indicates that new jobs will emerge as companies deploy AI to save time and boost productivity.

The report suggests a need for an “upgrade” in the UK’s labor market infrastructure, proposing the development of an early warning system to help workers understand how AI might impact their roles. Such a system could provide guidance on transitioning to new positions or reskilling in preparation for an AI-integrated workforce.

AI-Exposed Jobs and Sectors in the UK

TBI’s analysis highlights that administrative and secretarial roles, along with customer service and data-driven sectors like banking and finance, are most vulnerable to AI disruption. These jobs involve repetitive cognitive tasks and substantial data management, making them ideal for automation through AI models.

Key Job Sectors Likely to Be Affected by AI

1. Administrative and Secretarial Roles: Routine tasks performed by administrative staff are highly susceptible to automation with AI-driven software, which can save significant time and reduce human error.
2. Customer Service: AI-powered chatbots and virtual assistants can handle customer inquiries efficiently, potentially reducing the need for large customer service teams.
3. Banking and Finance: The finance sector, which generates large amounts of data, is well-suited for AI deployment. AI can analyze data for financial modeling, risk assessment, and customer insights, streamlining roles in the sector.

However, TBI also notes that sectors involving manual or highly skilled tasks, such as construction, are less likely to be disrupted by AI in the near future due to the complex physical work involved.

How AI Will Reshape the UK Workforce and Economy

While TBI’s report underscores the displacement risks posed by AI, it also emphasizes the positive role of AI in driving labor market dynamism. The technology will not only replace jobs but also create new ones by increasing demand for roles focused on AI management, maintenance, and training. This reflects previous trends where technological shifts have introduced new job categories and industries.

Projected AI-Driven Economic Benefits

• Increased Productivity: AI can reduce repetitive workloads, freeing workers to focus on high-value tasks, potentially increasing overall productivity.
• Enhanced Economic Growth: TBI estimates that AI could add up to 6% to UK GDP by 2035, driven by automation and efficiency gains.
• New Job Creation: AI is expected to spur job creation in emerging fields, including AI system design, ethics, data analysis, and AI-driven decision-making roles.

The report emphasizes that AI’s ability to boost workers’ productivity may help create more job openings. By following previous technology adoption patterns, AI could lead to new products, industries, and job roles that don’t exist yet.

Potential Challenges and Considerations for AI Integration

While AI’s growth promises many benefits, the report from TBI notes several considerations and challenges, particularly regarding workforce transition, compliance, and data privacy. The EU AI Act, the world’s first comprehensive legal framework for AI, will likely play a role in shaping how AI is deployed in businesses across Europe, influencing compliance and ethical AI practices in the UK.

Preparing the Workforce for AI Displacement and Transition

1. Reskilling and Upskilling: As job roles evolve, the need for reskilling programs becomes essential. TBI recommends investing in training for displaced workers to help them transition into new AI-enabled roles.
2. Regulatory Compliance: As AI systems require vast data access, businesses must navigate data privacy and compliance challenges to prevent data misuse and potential legal repercussions.
3. Early Warning Systems: The development of AI “early warning” systems could provide real-time insights into the sectors most affected by AI, helping workers anticipate and prepare for changes.

The report also suggests that businesses may take advantage of AI-enabled time savings by reducing headcount. TBI estimates that approximately 25% of the time private sector employees currently spend on tasks could be saved with AI integration, potentially leading to job cuts but also offering opportunities for workers to move into strategic, high-value roles.

Conclusion: Navigating AI’s Disruptive Potential with Caution and Opportunity

As AI’s transformative effects become increasingly apparent, TBI’s report underscores the importance of preparing the workforce for both challenges and opportunities that lie ahead. Although AI may displace millions of jobs, the ultimate job losses are expected to be relatively modest due to new roles created by AI-powered industries and applications.

Investing in AI education, reskilling programs, and forward-looking regulations will be critical in ensuring that the UK workforce can adapt to and benefit from AI advancements. By managing AI’s disruptive potential thoughtfully, the UK economy can leverage AI as a driver of productivity and growth, while minimizing long-term job displacement and promoting labor market resilience.

To learn more about the transformative potential of AI across industries, explore our article on latest AI developments, where we discuss innovative applications and their implications for the global workforce.