A significant share of UK employers are bracing for workforce reductions in the coming year, with nearly one in six businesses expecting to cut jobs and replace staff with artificial intelligence, according to new research from the Chartered Institute of Personnel and Development (CIPD). The findings, drawn from a survey of more than 2,000 employers, highlight accelerating tensions between the drive for digital productivity and the upheaval facing workers across sectors.
The impact of automation is projected to fall disproportionately on clerical, administrative, and junior managerial roles. Nearly two-thirds (62%) of employers expecting layoffs cited these positions as the most vulnerable. The risk is most acute among large private sector employers, 26% of whom predict staff headcount reductions—significantly higher than the public sector (20%) or private companies as a whole (17%). The financial services and IT industries are among those facing particularly high exposure, with over a third of employers in finance expecting job losses due to AI deployment.
James Cockett, senior labour market economist at the CIPD, said AI offers “huge potential for improving productivity and performance” but warned it also risks “leaving many people behind.”
He called on the government to improve support for those most at risk – particularly workers in early-career or lower-level roles – and prioritise investment in reskilling and upskilling initiatives to help them adapt to technological change.
Amazon’s major workforce restructuring offers a high-profile example of AI’s disruptive influence. The tech giant plans to eliminate 14,000 corporate jobs, nearly 4% of its white-collar workforce, in what executive Beth Galetti described as a move to make the company “leaner and more agile” as it expands investments in generative AI.
Galetti emphasised the potentially transformative impact of AI, describing it as “the most transformative technology” since the internet. Amazon CEO Andy Jassy echoed that sentiment, stating, “As we roll out more generative AI and agents, it should change the way our work is done. We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs”. The company expects automation to particularly affect office and technical roles, while warehouse operations remain largely untouched for now.
Broader economic signals reinforce the picture of a labour market in flux. Pay rises are forecast to average 3% over the next year, but overall hiring intentions have dipped to their lowest levels since the pandemic, reflecting uncertainty about the future impact of automation and rising business costs. Analysts note a steep 43% reduction in job vacancies since 2022, underscoring both the immediate effects of AI and the wider economic slowdown.
Policy responses are beginning to take shape. The UK government has emphasised support for digital skills, new AI-focused education initiatives, and the creation of “AI growth zones” designed to foster job creation in emerging sectors. Skills England and other bodies are working to identify future talent needs and ensure pathways for retraining as technology evolves. The government has also committed to balancing innovation with fairness, aiming to ensure that “Britain maintains its position as a world leader in AI, even as the competition increases”. Yet, business leaders caution that further tax increases or policy changes could harm labour market stability and call for a collaborative approach to workforce transition.
Despite concerns about job displacement, most experts predict that AI’s impact will eventually balance out, creating new roles even as old ones disappear. However, these benefits are not expected to manifest evenly or immediately, leaving particular groups of workers vulnerable in the short term. As Sir Tony Blair’s think tank noted, “AI could displace up to three million private sector jobs in the UK,” but this process is likely to be gradual and offset over time by new opportunities.
