BoE Chief Warns AI Could Displace Jobs; Focus on Skilling Futures

Artificial intelligence is spreading across workplaces and public services, and the Bank of England says it could alter how people work. Governor Andrew Bailey stresses that the key to a smooth transition is strong training, education, and skills so workers can move into AI-enabled roles.

AI and the UK jobs market

In a broadcast interview on BBC Radio 4’s Today programme, Bailey said the economy must provide training, education, and the right skill sets to help workers shift into roles that use AI.

He noted that job seekers would find opportunities easier to secure if they have these AI-related skills, but cautioned that younger and less experienced workers may face hurdles securing entry-level positions as automation expands.

Preparing for an evolving recruitment pipeline

He added that the recruitment pipeline could change as AI reshapes demand for certain profiles, and that the impact will depend on how quickly workers can adapt.

While Bailey expects AI to complement human labour, he emphasized the importance of monitoring the transition and keeping an eye on the job pathways for new entrants.

Current state and sector effects

AI is now widely used in everyday life and across the public and private sectors. It helps computers analyse vast data, detect patterns, and follow instructions to support decision making.

Official data show the UK unemployment rate at 5.1% in the three months to October, with a notable rise among young workers aged 18 to 24. About 85,000 more young people were unemployed in that period, according to the ONS.

Implications for entry roles and big firms

Some analysts argue that higher minimum wages and taxes have made hiring new entrants less attractive. Yet several firms say AI may eventually reduce the need for junior staff, especially graduates, across fields such as law, accounting, and administration.

Mohamed Kande, PwC’s global chairman, told INLIBER that the firm is slowing its plans to grow headcount as AI capabilities expand, preferring to hire in different skill sets.

AI tools can now sift through data and documents in days rather than weeks, changing the economics of many projects.

Historical perspective and growth potential

Bailey recalled that concerns about new technologies have recurred for centuries, from the time of Queen Elizabeth I over early automation, to the Industrial Revolution. He suggested AI could displace some workers but is unlikely to cause mass unemployment in the long run.

He described AI as a major potential driver of productivity and growth across the economy, noting that widespread uptake will take time and depends on establishing the right conditions.

Valuation concerns and monitoring risks

The BoE has flagged the possibility of an AI market bubble, warning that valuations could swing sharply. Yet most large firms continue to generate cash flow, which Bailey said reduces the immediate risk of a sudden crash, though policymakers will monitor valuations closely.

Expert comment

Expert comment: An independent economist says AI's productivity gains hinge on broad retraining and a clear path for new workers to enter AI-enabled roles. Without that, displacement could outpace employment.

Summary

In summary, the Bank of England sees AI as a major growth opportunity for the economy but also a potential source of job disruption. The key to benefiting from AI lies in large-scale retraining, thoughtful hiring, and vigilant monitoring of market risk. Adoption will be gradual, with the pace shaping the impact on workers.

Key insight: AI is likely to reshape work, but proactive retraining can help workers move into AI-enabled roles while supporting economic growth. Source.

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