Choosing “AI” instead of staff - Over 50% of companies in Britain plan investments in new technology
Half of UK businesses plan to prioritise investment in artificial intelligence over hiring, due to Chancellor Rachel Reeves' decision to increase employers' tax bills.
According to a survey by the Boston Consulting Group, about 51 percent of business leaders said they would "redirect investments from staff to artificial intelligence," as a result of increased social security contributions for employers. "People are starting to see the potential of these technologies to be more productive, in a world where employment costs are rising," the company leaders say.
Companies have warned of billions of pounds in costs from Reeves' move to increase the employer contribution rate and lower the earnings threshold. They are also preparing for a rise in the national living wage.
Some 57 percent of executives surveyed said they would employ fewer people in 2025 as a result of the reforms. The survey, conducted in 251 UK businesses with more than 50 employees each, found that investing in artificial intelligence was a priority for 44 percent of respondents this year.
The executives point out that the government is "increasing the costs of employing people in multiple ways at the same time, precisely at the moment when opportunities for reducing the costs of new technology are emerging."
Digitalization is already having an impact on employment. Telecoms group BT announced in 2023 that it would cut up to 55,000 jobs, or 42 percent of its workforce, by the end of the decade.
Meanwhile, the expansion of artificial intelligence has led companies to seek staff with technology-related skills. "It will replace some jobs, support others and create new positions, so it will balance itself," analysts explain.
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