Work in the age of AI

29 September 2025

Fears about the impact of new technologies on jobs are age-old – and with good reason. Truly transformational technologies reshape and destroy work – but also boost productivity, fuel growth and create many more jobs. That, at the least, is what the history of the last 300 years, since the start of the industrial revolution, shows.

So past technologies have, in aggregate and over time, increased employment. But in thinking about today’s hot technologies most of us incline to the belief that ‘this time it’s different’ – that the latest technology is so transformational that it will destroy more jobs than it creates.

Could AI be that technology?

Many people think so. Geoffrey Hinton, the Nobel prize-winning computer scientist who has been called the godfather of AI believes it will increase unemployment. Dario Amodi, CEO of Anthropic, has said that AI could eliminate half of white collar entry level jobs in the next five years. Bill Gates goes further and has said that advances in AI will, over time, mean that humans will no longer be needed “for most things” in the world.

AI has been around for a long time, but today’s frenzy really took off with the launch of ChatGPT in November 2022. We can see the effects of the AI boom in tech shares, in the behaviours of corporates and in the surge in spending on tech and data centres in the US. So almost three years in, is AI starting to destroy jobs?

Unemployment has certainly risen in the US and UK since 2022, albeit from low levels and consistent with softer economic activity. Weakness has been particularly apparent in the market for new graduates, which has been widely attributed, at least in part, to the impact of AI on entry-level jobs, especially in finance, technology and business services.

A recent Stanford research paper found that employment of younger workers in AI-exposed sectors of the US economy, including software developers and customer service representatives, had contracted by 6% since the introduction of ChatGPT while employment among older workers had risen by 7%.

We can see similar pattern in UK job vacancy data. My colleague Tom Avis has found that the number of job ads for the 20 UK sectors most exposed to AI have fallen by 47% since mid-2022 while ads for the least exposed sectors fell by 26%.

Yet it’s too early to say that we are on the verge of mass job destruction.

It is impossible, at least using whole-economy data, to prove causation, especially in a weakening job market. Poorer job prospects in sectors that are exposed to AI could reflect the wider economic slowdown, the impact of old-fashioned competition or a search for cost savings. Employment in call centres, travel agents and administrative and back office functions has been shrinking for years, with older technologies, such as robotic process automation or even the internet, the main drivers. They, rather than AI, probably still are. It is not yet clear that AI is driving widespread organisational change. Earlier this year, for instance, MIT reported widespread disappointment among US companies with the performance of AI pilot schemes.

Job destruction and creation are, in any case, an essential part of a dynamic economy. Job stasis, in which sectoral employment is forever fixed, would mean economic stasis.

In the last 20 years the UK has created an additional 4.9m net new jobs, comprising 2.2m jobs destroyed and 7.1m created. Large though they are, these numbers understate the true scale of change, since they relate to the net change in jobs under about 450 different job classifications but exclude job gains and losses within classifications.

It’s also worth remembering that, AI, like previous technologies, will create jobs. The Stanford and Harvard papers mentioned earlier have found evidence of AI-related job growth in the US, for instance in cyber-security, AI ethics and machine learning engineering.

Even if we could accurately measure the scale of the AI effect on jobs, it would almost certainly be lost in the wider sweep of gains and losses.

History says that tech creates jobs. But AI’s growing capacity, and the possibility that it might reach beyond human intelligence, have stoked fears of mass unemployment. For now AI is nibbling at the edges of the job market. Only when AI is embedded in the workplace will we know whether this time it’s different.

OUR REVIEW OF LAST WEEK’S NEWS
The UK FTSE 100 equity index ended the week up 0.7% at 9,285.

Economics

The OECD increased its forecast for global growth this year to 3.2%, only marginally below growth in 2024, commenting that “global growth was more resilient than anticipated in the first half of 2025”
The US economy grew faster than previously estimated in the second quarter, pointing to greater resilience in the US economy
US president Donald Trump announced a 100% tariff on branded pharmaceutical imports unless the manufacturer is building a plant in the US. The EU expect to be protected from these higher tariffs due to their existing trade agreement of a 15% import tariff
US Federal Reserve Bank of Chicago president Austan Goolsbee warned against frontloading interest rates cuts “on the presumption that [inflation] will just be transitory”
US treasury secretary Scott Bessent said the US would be willing to financially support Argentina, if needed, following falling currency and equity prices as a result of local election results that undermined support for president Javier Milei’s economic reforms
Activity in the UK and US softened in September, according to a survey of purchasing managers
A group of 101 UK Labour Party MPs urged the government to raise taxes on gambling companies to fund the removal of the two-child benefit cap
The Resolution Foundation think tank said that the UK government should break its election promise by raising income tax in the upcoming Autumn Budget by 2%, while also cutting national insurance contributions, as part of measures to fund an expected shortfall in the public finances
Think tank New Financial suggested that the UK government could force pension funds to invest 20%-25% equity holdings in the UK, resulting in more than £75bn of additional investment into UK equities by 2030
The UK’s population increased by 755,000 between mid-2023 and mid-2024, the second fastest rate in 75 years, driven by immigration
Growth in euro area activity reached a 16-month high in September, according to initial surveys of purchasing managers, driven by increasing output in Germany
German business sentiment deteriorated in September, according to the ifo Business Climate survey. The ifo Institute commented that “prospects for an economic recovery have suffered a setback”

Business

US chip manufacturer Nvidia plans to invest $100bn in AI tech company OpenAI as part of joint plans to build AI data centres
A US court granted energy company Ørsted’s request to block Mr Trump’s order to cease work on a wind turbine project off the coast of New York, allowing the Danish company to restart work while the lawsuit continues
US vice-president JD Vance said TikTok will be valued at $14bn under plans for the social media company to split from its Chinese parent
CEO of pharmaceutical company Eli Lilly, Dave Ricks, said the UK was “probably the worst country in Europe” for drug prices, following recent disputes between the government and drugmakers over pricing
The UK government approved £2.2bn plans to build a second runway at Gatwick Airport
UK carmaker Jaguar Land Rover (JLR) said it has extended its production shutdown until October following a cyber incident
The UK government approved a £1.5bn loan to JLR to support companies in its supply chain that had been affected by the closure of production
Fintech company Revolut pledged to invest £3bn in the UK as part of plans to become a fully licenced lender in the UK and expand into 30 new countries by 2030
Investment company Petershill Partners is the latest company to delist from the London Stock Exchange

Global and political developments

Danish prime minister Mette Frederiksen said a “hybrid war” has started in Europe following incidents of drones disrupting the country’s airports
German chancellor Friedrich Merz advocated using frozen Russian assets to loan €140bn to Ukraine to finance its war effort
France joined the UK, Australia, Canada and Portugal in formally recognising a Palestinian state
US envoy Steve Witkoff presented the Trump administration’s new proposal for Gaza to Arab and Muslim leaders, which includes calls for a permanent ceasefire
Mr Trump said Ukraine could reclaim all lost territory from Russia following discussions with Ukrainian president Volodymyr Zelenskyy at the UN
The US government filed charges against former FBI director James Comey, who investigated potential contacts between Mr Trump’s 2016 election campaign and Russia, regarding “serious crimes related to the disclosure of sensitive information”
Former French president Nicolas Sarkozy was jailed for five years for criminal conspiracy related to illicit funding from former Libyan leader Muammar Gaddafi
The UK government announced plans to issue all adults a digital ID card as part of plans to tackle irregular migration and illegal working
Detailed polls by YouGov indicate that Reform UK would be the largest political party in a hung parliament if an election were held today
Manchester mayor Andy Burnham said Downing Street was creating a “climate of fear” and that some Labour MPs are urging him to challenge the leadership of UK prime minister Keir Starmer

And finally… 25 teams from around the world descended on Vienna to take part in the inaugural World Tram Driver Championships. Participants had to navigate eight challenges, with up to 500,000 people tuning in online to watch the team from Austria claim victory – a tram-endous event

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