UK labour market shifts: AI impact, skills demand rise

Magnit has published a new report on the UK labour market, highlighting various economic challenges and shifts due to AI and onshoring.

The report was created by Magnit's Strategic Advisory team using proprietary data from Global 2000 client programmes, offering insights into the UK's talent dynamics.

The findings reveal a 2x increase in onshoring and nearshoring in global manufacturing fills in Western Europe, with the UK contributing to two-thirds of this activity. Content Strategy and Business Intelligence skills saw a YoY salary increase of 8%, while SharePoint Online and Snowflake skills rose by 4% YoY. Key roles in London, Birmingham, Manchester, Bristol, and Edinburgh include accountants, IT project managers, and cybersecurity engineers, which are highly sought after, with workers in these roles often approached by recruiters quarterly. The retail sector is noted to have an AI adoption rate of 11.5%, with a forecast reduction of 240,000 jobs in the next five years due to automation.

Dustin Burgess, Senior Vice President of Strategic Advisory at Magnit, provided commentary on the research, stating: "The report indicates that the UK's labour economy faces a multifaceted landscape, with sluggish GDP growth contrasting against areas of intense hiring competition. Organisations must navigate this complexity by rethinking their value proposition to land top talent while also redeploying and upskilling existing workforces wherever possible."

The Magnit report further elaborates on several trends affecting the UK labour market. The nation is encountering slow economic growth, projected at less than a 1% increase annually due to post-Brexit impacts and a need for advancements in capital and productivity. However, AI developments are projected to result in 610,000 new jobs by 2028, with the IT & telecommunications sector expecting the highest growth, adding around 320,000 positions to support AI technologies. The UK houses twice as many AI companies as any other European country.

There is a significant competition for roles such as accountants, IT project managers, and cybersecurity engineers, where demand exceeds supply. The UK's construction sector is also adapting to onshoring trends, fostering more investment in domestic skills and resources for greater stability. Western Europe's contingent engagements in manufacturing doubled to 13.9% of the global total, with the UK making up approximately 66% of this growth.

The report suggests that the UK's evolving regulatory environment under the Labour Party government could influence hiring practices, affecting skill requirements and compliance. Burgess added: "The last several years delivered a barrage of challenges for organisations, but the UK emerges with a reinforced mandate for change. With the right data-backed strategies, companies across the region can attract highly skilled talent and remain competitive amid evolving economic indicators."

This comprehensive report by Magnit's Strategic Advisory yields actionable insights by analysing aggregated data from multiple client programmes to offer a detailed overview of the UK's talent market landscape.