The rapid automation of millions of jobs through artificial intelligence could intensify economic inequality across the UK unless the government steps in with targeted support, according to a new study by the Institute for the Future of Work (IFOW).

The three-year report found that businesses and workers alike face wide-ranging challenges, from rising skills gaps to concerns about job security and wellbeing, as AI-powered systems become more prevalent in factories, offices, and the public sector.

Christopher Pissarides, Nobel laureate in economics and the report’s lead author, cautioned that despite AI’s potential to boost productivity and growth, ministers need to address its implications for workers. He asked how AI could foster productivity and prosperity without creating more intense stress and pressure, and how it could open new opportunities without widening existing divides across the country.

The IFOW surveyed 5,000 employees and 1,000 businesses, discovering a pervasive sense of anxiety, fear, and uncertainty among workers regarding AI’s impact. While some large companies have established strategies to help employees adapt, smaller businesses appear less equipped to navigate the coming wave of automation. The report argues that, without substantial intervention, job displacement and significant changes in job roles could strain local economies and social structures.

Among its proposals, the IFOW recommends creating science centres inspired by London’s Francis Crick Institute in regional cities, a move aimed at preventing London and the Oxford-Cambridge arc from dominating biotech and other rapidly expanding fields. The authors also call for devolving more decision-making power to local authorities and strengthening the role of trade unions, including granting them digital access, collective rights to information, and new e-learning roles. These measures, they say, would support workers during the AI revolution.

According to James Hayton, professor of innovation at Warwick Business School and a contributor to the report, the impact on jobs, skills, and job quality comes down to how AI is implemented. He believes firms and managers have a crucial role to play in introducing AI in ways that enhance employee wellbeing and overall productivity, rather than viewing automation solely as a cost-cutting measure. The report concludes that with thoughtful governance and responsible deployment, AI could foster an inclusive labour market. However, a failure to act may exacerbate social divides, limit productivity gains, and undermine the prospects of smaller businesses and their employees.

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AI-fuelled job automation set to widen inequality in the UK, warns report