HAMISH MCRAE: We cannot let AI take our youngsters’s jobs

The great British job machine is faltering, and the hardest hit are the young. For most of this century the economy generated a boom in employment.

In 2000 there were 27.3 million jobs. By October last year there were 34.2 million of them.

We rightly agonise about poor productivity growth compared with other developed economies and are right to worry about the quality of what was on offer, but the flip side was people who wanted a job could usually find one. Young Europeans in particular came here for opportunities they couldn’t find at home.

That’s changed. Unemployment is rising, with the overall rate at 5.1 per cent, the highest since the pandemic. Among 18 to 24-year-olds it is a shocking 13.4 per cent.

Worse, employment has been held up by the public sector. The private sector, which of course has to pay for all the people the Government has been hiring, has lost 150,000 jobs over the past year. We all know what seems to be the main reason for that: the increase in taxes on businesses, including employers’ National Insurance contributions (NICs) and business rates, coupled with a sharp rise in the living wage.

A young Labour MP explained to me that quite aside from the fact that they needed the money, by pushing up the cost of employment it would force companies to boost their productivity by investing more in equipment.

Weapon of mass destruction of jobs: These are very early days of AI, but it seems already to be destroying entry-level posts

I didn’t feel it helpful to point out to him that actually a lot of pubs, restaurants and High Street shops might instead be put out of business altogether.

Sadly that has happened across the land, and those are the places that give jobs, or rather gave jobs, to young people.

Since the higher NICs kicked in in April last year the decline in private sector employment has gathered pace, but in the past few months there has been a further blow to employment: artificial intelligence (AI).

Nearly all new technologies favour the young. They are more computer-savvy, more adaptable, more open to new ways of working, and so on. If you are shut out of your email, find a 13-year-old child or grandchild who will get you back in.

So young people got the jobs, while their elders struggled.

But AI is different. These are very early days, but it seems already to be destroying entry-level posts, while putting a premium on experienced staff.

Sir Sadiq Khan, the London mayor, may not be your favourite economic guru, but his warning last week that AI could become ‘a weapon of mass destruction of jobs’ has a ring of truth about it. He was talking about the impact on London rather than the country as a whole, but the City is an early adopter of technology. What happens here will spread.

Looking around the world the situation is confused, since we are in the middle of a revolution. But there are some clear trends.

One is that there are some hard-hit types of employment, including entry-level jobs in data analysis and IT support, where AI is performing tasks that previously were done by trainees.

Job advertisements for university-leavers have fallen sharply here, in Europe and in the US.

By contrast, demand for experienced staff does not seem to have declined, in fact rather the reverse at the top end.

There are scary projections, such as one that UK tech positions will halve in the next couple of years. Many young people are pessimistic about their future.

So what’s to be done? Khan says he is setting up a task force to assess the situation but, given the performance of this Government, many will roll their eyes at that.

Ultimately it will be up to businesses to invest more, including training the next generation, and for the City to mobilise its financial firepower to support this.

It’s a key message from Sir Nigel Wilson, in his interview and he’s right of course.

But it’s not just money. If I had to single out one thing enterprising companies could do to help train young people it would be to get experienced staff to come into the office five days a week.

As we all know, you learn by watching others. It is those human skills of experience and judgment that AI will never replace.