UK employers are creating jobs for experienced staff with artificial intelligence skills and cutting back elsewhere, according to new figures that show how the technology is starting to create a two-track labor market.
British firms posted about 10% fewer vacancies this month than in January 2025, data from job search website Indeed shared with Bloomberg shows. However, the fall disguised wide disparities as firms increasingly adopt AI to cut costs and boost productivity.
Software developers, whose profession has been transformed by AI and suffered dramatic job losses since 2022, are back in demand with postings rising 14%. Much of the increase came from senior roles and those directly linked to AI.
Meanwhile, occupations such as IT and engineering, where AI enhances the value of experience by taking over routine tasks, are among the few that have held up since last summer.
Elsewhere, from retail and manufacturing to white-collar roles that are more vulnerable to substitution like accounting or marketing, vacancies have fallen by double digits as employers take action to cope with higher employment costs and a more volatile economy.
“The UK labor market is increasingly splitting into two speeds,” said Jack Kennedy, senior economist at Indeed. “Demand is concentrating around experienced workers and roles directly connected to AI, rather than flowing evenly through the profession.”
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The nature of the jobs being created — leaning toward senior staff with specific technological skills — also means that they will be out of reach for many of those looking to move jobs, re-enter the labor market or land their first role.
That casts doubt on Prime Minister Andy Burnham’s plans to encourage more young people to pursue technical qualifications as a way to future-proof their careers. In a social media video, Burnham argued that AI may be able to write an essay, but it can’t make a train.
However, hiring has slowed steeply for blue-collar occupations. Manufacturing postings are down 58% since June 2022, and 18% below where they were last summer. Installation and maintenance, loading and stocking and construction jobs, have also failed to recover.
Youth unemployment in Britain is at its highest in over a decade, a problem Bank of England Governor Andrew Bailey blames on a “low hire, low fire” economy.
“For jobseekers, particularly those at the start of their careers, the bar is therefore rising as the stronger areas of the market increasingly require either specialist AI capability or substantial experience,” Kennedy said.
