AI and National Insurance rise linked to jobs market slowdown

New research from Reed suggests that the combined impact of artificial intelligence and rising National Insurance costs is contributing to a slowdown in the UK jobs market. The survey claims that 15 percent of employers said the adoption of AI had led them to reduce hiring, while 22 percent cited higher National Insurance contributions as a reason for cutting back. In total, around a fifth of organisations reported putting a freeze on recruitment. The findings coincide with official data from the ONS, which confirms continued weakness in the labour market. According to Reed’s own figures, job postings on its platform were down 18 percent year on year in August, while applications fell by 25 percent despite a modest rise in advertised salaries of 1.4 percent.

Reed has responded with a new initiative it calls the “Million Jobs Giveaway”, which offers up to a million free job listings to employers until the end of the year. The aim is to help boost the number of available roles as the labour market enters one of its busiest periods in the new year.

James Reed, chairman and chief executive, warned of structural pressures on employment: “We are seeing a severe jobs drought, exacerbated by the march of AI and rising employer costs. Declining vacancies over three years is unprecedented in my career. There is a risk of a hollowing-out of jobs, this time among white collar rather than blue collar roles.”

Some sectors remain more resilient. Social care and hospitality are highlighted as areas less exposed to automation and continuing to recruit. Reed said carefully targeted measures are needed to support job creation.

The survey also highlights the challenges faced by jobseekers. Forty-one percent said they were struggling with fewer vacancies, 39 percent pointed to intense competition for roles, and the same proportion cited low pay. While concerns about the job market remain widespread, a majority of jobseekers believe conditions will improve, with over a quarter planning to change roles when they feel more confident.