Jobs, AI and NEETs

Labour have done a great job of decimating the jobs market, amongst just about everything else they have touched. Staff output versus the cost of hire and ongoing training and operating costs has become another business burden alongside rising energy costs and higher interest rates. Changes to employee rights is also a turn off. There is little incentive to work as the recent news has demonstrated with the welfare bill outstripping the tax receipts. Businesses are looking at greater efficiency with AI, cost saving and streamlining still very much on the menu. No sector is truly safe and the youth leaving school have very few options due to the cost of hire and the cost of education which has also been in the recent new focus, concentrating on the surge of student debt. Not a great start in life is it?

I have no intention of hiring anytime soon. The Iran war's impact on energy prices, supply bottlenecks, and inflation hasn't helped, but the root cause is this government's economically illiterate policies, which have left employers facing record taxes and regulatory burden. The incentive to run a business is being systematically eroded. Most UK business owners I speak with have shifted from growth to survival, turning to AI agents to fill entry-level roles. The NEET crisis, already approaching one million is driven by a widening gap between academic skills and AI-driven market demands, compounded by record levels of work-limiting health conditions and a growing benefits culture. 2026 is defined by battening down the hatches. AI and automation are no longer emerging technologies but necessary shields against a perfect storm of rising taxes, regulatory overreach, and soaring costs.

The rise in NI and minimum wage won’t alter our own hiring decisions, but it would be naïve to assume they don’t exert a drag across the economy, particularly for labour intensive firms.
Likewise, war in Iran doesn’t directly shape our recruitment plans, but it undoubtedly raises uncertainty. Concerns surrounding inflation & the outlook for interest rates resurface, and business confidence softens accordingly.
Where we do see a more structural shift is in AI. Its increasing sophistication is easing pressure on teams, enhancing productivity without the need for headcount. That doesn’t imply an immediate impact on jobs, but it does suggest hiring decisions may become more measured over time.
Most concerning is the deteriorating outlook for young people. The rise in NEETs points to a deeper failure of entry level opportunity, which risks becoming entrenched. Policy must be directed at creating pathways into work. Without that, the long term economic & social consequences could be profound

Nearly 957,000 young people are now NEET, unemployment is at its highest since 2020, and the dominant explanation is automation. That is the wrong diagnosis.
Businesses are not replacing junior staff with AI systems. They are simply not replacing them at all. Entry-level roles are being absorbed into existing headcount or quietly eliminated — driven not by technology but by NIC increases and National Living Wage rises hitting margins where junior hiring is most discretionary.
AI is accelerating a shift that was already in motion. The sectors that have historically onboarded young workers were already contracting before automation became a credible option for most firms.
The real risk is not a future displacement event. It is a generation shut out of the workforce while policy targets the wrong cause. Entry pathways need redesigning around the current economic reality — not once the data catches up with what is already visible.

Increasingly stormy outlook! Worsening forecasts for jobs & the economy! Causes? The cost of job acquisition in the UK is at an all-time high & the incentives for business growth have never been so low. SME's have been hit by a perfect storm of international economic uncertainty with unhelpful waves of rising taxes and factory gate costs. The twin tornados of 2025's NIC & minimum wage increases have merged with this year's Middle East crisis/ energy shocks, AI innovations and general economic 'gloom'. Neets need jobs - but without the confidence in business to invest in growth - the forecast will remain very unsettled with no change in sight.