Report on the Impact of Artificial Intelligence on the UK Labour Market and Sustainable Development Goals

Executive Summary

This report analyses the evolving impact of Artificial Intelligence (AI) on the United Kingdom’s labour market. While current market cooling is predominantly attributed to macroeconomic factors, the increasing adoption of AI presents both significant challenges and opportunities for achieving the Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 4 (Quality Education), and SDG 10 (Reduced Inequalities).

AI’s Influence on SDG 8: Decent Work and Economic Growth

Current Labour Market Conditions

The UK labour market is experiencing a slowdown, with unemployment rising to 4.6% in the three months to the end of April. Economists and AI analyses concur that this trend is primarily driven by economic pressures rather than technological displacement. Key contributing factors include:

• Rising employment costs and higher taxes, including a £25bn increase in employer national insurance contributions.
• Monetary tightening and high interest rates.
• A broader economic slowdown, with growth projected at approximately 1% for 2025.
• Weaker hiring demand and a general adjustment of the labour market.

AI-Driven Job Displacement and Economic Pressures

Despite the prevailing economic climate, AI is an emerging factor in workforce restructuring, directly impacting the targets of SDG 8. High-profile corporations are integrating AI, leading to significant job cuts.

1. BT Group: Plans to shed up to 55,000 roles, partly due to investments in AI and digital automation.
2. Amazon: Has warned white-collar staff of potential job replacement by AI.
3. Ocado: Has reduced its workforce, citing cost reduction and the use of AI.
4. Microsoft: Is cutting 9,000 jobs globally as part of a broader strategic shift.

Rising wage bills and employment costs are incentivising companies to substitute human labour with technology, a trend that could undermine progress towards full and productive employment for all.

Aligning Technological Advancement with Sustainable Development

SDG 9: Industry, Innovation, and Infrastructure

The UK is actively fostering innovation in line with SDG 9. The government has highlighted £44 billion of investment in AI since last year, which has reportedly created 13,250 jobs over 12 months. This investment signals a commitment to building resilient infrastructure and promoting inclusive and sustainable industrialisation. However, the nature of these new jobs and their accessibility must be scrutinised to ensure equitable growth.

SDG 4 & SDG 10: Quality Education and Reduced Inequalities

The transition towards an AI-driven economy poses a direct challenge to SDG 4 (Quality Education) and SDG 10 (Reduced Inequalities). Evidence suggests a disproportionate negative impact on specific demographics and sectors:

• Youth and Graduates: University graduates face the most challenging job market since 2018, with entry-level vacancies falling by a third since the launch of ChatGPT. This is attributed to the automation of simpler, entry-level tasks.
• Vulnerable Sectors: Research indicates that professions in writing, translation, programming, IT support, public relations, and law are highly exposed to AI disruption.

Addressing these disparities is crucial for achieving inclusive growth. The gains from technological progress must be distributed equitably to avoid exacerbating existing inequalities.

SDG 17: Partnerships for the Goals

In a positive step towards managing this transition, strong partnerships are being forged. The UK government is collaborating with leading technology firms including Amazon, BT, Google, IBM, Microsoft, and Sage. This initiative, aimed at training 7.5 million people in essential AI skills, exemplifies the multi-stakeholder approach required by SDG 17 to navigate complex global challenges.

Analysis and Forward Outlook

While macroeconomic instability is the principal determinant of current UK employment trends, the influence of AI is undeniably accelerating. The historical precedent of technological revolutions suggests that while some jobs are destroyed, new and potentially different roles are created. The critical challenge lies in managing this transition effectively.

Ensuring that the AI revolution contributes positively to the 2030 Agenda for Sustainable Development requires a concerted focus on reskilling and upskilling the workforce (SDG 4), creating new forms of decent work (SDG 8), and implementing policies that ensure the benefits of productivity gains are shared broadly across society to reduce inequality (SDG 10).

SDGs Addressed or Connected to the Issues Highlighted in the Article

1. SDG 8: Decent Work and Economic Growth

   • The article’s central theme is the impact of Artificial Intelligence (AI) on the UK’s job market, directly addressing the goal of promoting “full and productive employment and decent work for all.” It discusses job losses at major companies like BT, Amazon, and Ocado due to AI and automation, the rising unemployment rate, and the overall state of the “slowing labour market.” It also touches upon economic growth, noting it is “expected to remain sluggish in 2025, at about 1%.”

2. SDG 9: Industry, Innovation, and Infrastructure

   • This goal is relevant as the article focuses on a major technological innovation (AI) and its integration into various industries. It highlights the accelerating investment in AI, with mentions of “£44bn of AI investment in Britain since last year” and companies planning to “redirect investment from staff to AI.” The discussion revolves around how this innovation is reshaping industries and business practices.

3. SDG 4: Quality Education

   • The article connects to this goal by highlighting the need for new skills in response to technological change. It explicitly mentions a government initiative “working with tech firms… to train 7.5 million people in AI skills.” This addresses the need to equip the workforce with relevant technical skills for future employment in an AI-driven economy.

4. SDG 10: Reduced Inequalities

   • The article implies a connection to this goal by pointing out the unequal impact of AI on the workforce. It states that “Younger workers are being particularly hard hit” and that “UK university graduates are facing the toughest jobs market since 2018.” The IMF’s estimate that AI could negatively affect half of the exposed jobs in advanced economies also points to a potential increase in inequality if the transition is not managed equitably.

Specific Targets Identified Based on the Article’s Content

1. Target 8.5: Achieve full and productive employment and decent work for all

   • This target is directly addressed through the discussion of rising unemployment, specific job cuts, and the challenges faced by certain demographics. The article states, “Unemployment rose to 4.6%,” and details plans by BT to “shed up to 55,000 workers.” The particular focus on youth is clear: “the number of entry-level job vacancies has plummeted by a third since the launch of ChatGPT.”

2. Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation

   • The article shows companies are pursuing this target by investing in AI to increase efficiency. It notes that “Rising wage bills could encourage companies to invest in technology as an alternative to hiring humans” and that “Looking at tech investment to bolster the bottom line is increasingly in vogue.” This reflects a push for technological upgrading to enhance productivity.

3. Target 9.b: Support domestic technology development, research and innovation

   • This target is reflected in the article’s mention of significant investment in AI within the UK. The statement that ministers “have trumpeted £44bn of AI investment in Britain since last year” demonstrates a focus on supporting and promoting domestic technological innovation.

4. Target 4.4: Substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment

   • The article directly points to efforts aligned with this target. The government’s plan to work with tech firms “to train 7.5 million people in AI skills” is a specific initiative aimed at increasing the number of adults with technical skills relevant to the evolving job market.

Indicators Mentioned or Implied in the Article

1. Unemployment Rate

   • The article provides a specific figure to measure the state of the job market: “Unemployment rose to 4.6% in the three months to the end of April.” This is a direct indicator for tracking progress towards Target 8.5.

2. Rate of Job Creation/Loss

   • The article provides several data points that serve as indicators of job market dynamics. These include BT’s plan to “shed up to 55,000 workers,” the loss of “276,000 jobs… since the chancellor Rachel Reeves’s autumn budget,” and the creation of “13,250 jobs in 12 months” from AI investment.

3. Youth/Entry-Level Employment Vacancies

   • To measure the impact on a specific demographic (young people), the article implies an indicator by stating “the number of entry-level job vacancies has plummeted by a third since the launch of ChatGPT.” This can be used to track progress towards inclusive employment under Target 8.5 and address inequality under SDG 10.

4. Investment in Technology/Innovation

   • A clear indicator for Target 9.b is the amount of capital invested in technology. The article quantifies this with the figure of “£44bn of AI investment in Britain since last year.”

5. Number of People in Skills Training

   • As a direct measure for Target 4.4, the article provides a concrete number for a skills initiative: the plan “to train 7.5 million people in AI skills.”

Summary of SDGs, Targets, and Indicators

Source: theguardian.com