AI, employment, and the UK's industrial strategy
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AI has emerged as both a panacea and the harbinger of a dystopian future. For policymakers crafting Britain's industrial future, the challenge is fully burnishing one side of that coin, while minimising exposure to the other.
Nowhere is this more evident than in the UK's Invest 2035 strategy, setting out a vision of economic renewal rooted in advanced technologies and regional growth. 'Jobs will be at the heart of our modern industrial strategy,' wrote Chancellor Rachel Reeves and Jonathan Reynolds, Secretary of State for Business and Trade, in their foreword to the strategy's draft consultation. At the same time, it promises 'an ambitious approach to grow the AI sector and drive responsible adoption across the economy'. The question is how, or whether, those two ambitions can fully succeed in tandem.
PwC's latest Global AI Jobs Barometer, published in early June, analysed close to a billion job postings across six continents. It found that demand for roles with high AI exposure expanded at a slower pace than those less affected by AI. The gap between these groups has widened since 2020, with jobs least exposed to AI experiencing a surge in listings.
Invest 2035 focuses on eight 'growth-driving' sectors that are undoubtedly seeing greater AI penetration: advanced manufacturing; clean energy; the creative industries; defence; digital and technologies; financial services; life sciences; and professional and business services. PwC's report also found that roles with substantial AI exposure have undergone significantly more changes in skill requirements over the past five years. If jobs are to be at the heart of this new economy, one major challenge is how the UK equips its current and emerging workforce to fully engage.
The government's primary response to such questions lies with Skills England. Formally launched in 2024, the body is tasked with coordinating a fragmented post-16 skills system, and aligning it more closely with national economic priorities – including, crucially, the opportunities and risks posed by AI. With a mandate to 'drive forward a skills system that meets the needs of employers, learners and the wider economy', it is a key lever in delivering not just more jobs, but better ones.
'Skills England… will ensure that our workforce is equipped with the necessary skills to meet the demands of the modern economy,' Phil Smith, Skills England chair, told MPs in a parliamentary debate in February.
The idea of lifelong learning – once a political platitude – has become a central pillar of this transition. As the economic landscape shifts faster than traditional education systems can keep pace with, workers increasingly need access to flexible, modular training that fits around existing jobs and responsibilities. Yet, as the IPPR has pointed out, the UK's investment in adult skills still lags behind many OECD peers.
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In a widely discussed 2024 report on AI and labour market disruption, the IPPR argued that the UK faces a binary future. 'Already existing generative AI could lead to big labour market disruption or it could hugely boost economic growth. Either way, it is set to be a gamechanger for millions of us,' said senior economist Carsten Jung.
In that sense, industrial strategy cannot be separated from social policy. The government's proposed Advanced British Standard – a unified post-16 qualification intended to replace A-levels and T-levels – must prepare young people not only with subject knowledge but with the adaptability and analytical skills required in a rapidly evolving labour market. As automation touches roles from radiology to retail, the core
employability question shifts from what you know to how quickly you can learn.
That shift is not evenly distributed across society. In towns with industrial legacies or fragile labour markets, AI is more likely to displace than create jobs – unless there is targeted, place-based intervention. Invest 2035 makes regional rebalancing a core ambition. But the delivery depends on ensuring that skills provision reaches not just growing tech clusters but also under-served communities. Community learning providers like the Workers' Educational Association (WEA) have a role not just in teaching but in building confidence and trust – especially for older or insecure workers who may feel alienated by the pace of technological change. WEA chief executive Simon Parkinson has called for long-term policy and funding stability so providers can scale up their work: taking training 'to where people are, not where policy is most comfortable'.
There are, however, lingering gaps between strategy and delivery. While government rhetoric supports 'responsible adoption' of AI, it remains vague on how to mitigate job displacement in sectors most vulnerable to automation. Some analysts argue that Invest 2035, like its predecessors, risks overstating short-term
innovation gains while underestimating longer-term disruption.
Meanwhile, employer responsibility remains a crucial, under-addressed issue. If businesses are to adopt AI in a way that benefits workers, not just bottom lines, they must be incentivised to invest in staff retraining. At present, many treat upskilling as an externality – a public good best delivered by someone else.
Models such as Local Skills Improvement Plans (LSIPs), designed to give employers a greater role in shaping local post-16 training, have potential, but questions have been raised in regards to consistency of ambition and effectiveness. Without stronger national coordination, these initiatives may amount to well-meaning but fragmented efforts, rather than transformative change.
Indeed, the overarching challenge is neither technological nor economic – it is political. AI, like past waves of automation, will not distribute its rewards evenly or inevitably. The outcome will depend on the state's ability to shape markets and institutions in the public interest.
'AI… will transform jobs, destroy old ones, create new ones, trigger the development of new products and services and allow us to do things we could not do before,' Jung writes in 2025's The New Politics of AI: Why Fast Technological Change Requires Bold Policy Targets. 'But given its immense potential for change, it is important to steer it towards helping us solve big societal problems.'
Invest 2035 boasts similarly grandiose ambitions. Its success will not rest on ambition alone, however, but on how convincingly it connects the dots between technology, training and trust. For AI and jobs to serve as dual engines of growth, the UK must resist the temptation to treat them as separate problems. They are, in reality, two faces of the same future.
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