UK employers are rapidly adopting artificial intelligence to boost productivity, but early evidence suggests this shift is already reshaping headcount and raising concerns about a potential future talent vacuum, new research from Barnett Waddingham (BW) reveals.
The findings from 500 UK HR and business leaders find that seven in ten employers (71%) report they have invested in AI or automation this year to improve cost efficiency and productivity, and nearly two-thirds (62%) are training their staff on how to use AI tools. 55% of businesses have built or bought AI assistants for key functions, and a mere 5% of all British firms have a blanket ban on AI across their business.
This reflects a moment of rapid transition. Many organisations see AI as a source of competitive advantage; over a third (36%) say successful implementation would be the single biggest strengthener of their position as an employer of choice, above and beyond successfully improving their employee benefits offering (20%), successfully retaining their workforce (20%), or successfully recruiting the younger generation (15%).
But adoption is not occurring without consequence: almost one in five employers (18%) say they have made mid-level roles redundant as a direct result of AI, while 17% report making redundancies among junior roles and 15% among senior staff. This is true across businesses of all different sizes, and goes some way to explaining the growth in the jobseekers pool and fall in the number of vacancies revealed by recent jobs data.
At the same time, employers are recognising the risks of automation on talent pipelines. Two-thirds (66%) are worried that AI’s growing prevalence will mean new entrants join the workforce without the grounding typically gained through junior roles. Without younger, less experienced workers entering the workforce automation risks dismantling the traditional talent pipeline by taking over routine junior tasks. In doing so, it threatens the fundamentals of our workforce structure and long-term succession planning, fracturing the talent pipeline from junior to senior positions.
With the current generation approaching retirement, employers may struggle to find qualified candidates, creating a concerning gap in suitable candidates for senior positions. When combined with concerns about the shrinking availability of overseas talent due to immigration (64% concerned) and of domestic talent due to declining birth rates (63% concerned) and increasing long-term sickness (68% concerned), businesses are facing a looming talent crunch.
Barnett Waddingham warns that careful planning is now essential - without redesigned junior roles and clearer development pathways that factor in AI, businesses could be left without the talent depth required in the years ahead.
Paul Leandro, Partner and Head of People Risk at Barnett Waddingham (BW): “AI must be an enabler, not a substitute for a skilled workforce. The employers who gain the most from automation will be those who redesign roles so people and AI can work in unison - strengthening capability rather than eroding it. Becoming overly reliant on AI brings risks of its own; without human oversight, challenge and context, organisations can easily introduce new vulnerabilities into critical decisions.
“As more routine tasks are automated, the focus shouldn’t be on removing early-career roles, but evolving them. Businesses need employees who understand how AI works in practice, who can apply judgement, and who can develop the experience required to become future leaders. After all, experience and expertise, not just algorithms, will determine which businesses thrive in an AI-driven future.”
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