A Morgan Stanley analysis shows that the UK is experiencing the largest net job losses linked to AI adoption compared to other advanced economies, due to job displacement not being offset by AI-related hiring.
Productivity and job displacement remain similar across countries, but job creation varies: The analysis showed that productivity improvements from AI (about 11–12 %) were broadly similar across UK, US, Germany, Australia, and Japan, but the gap between job displacement and creation varied significantly.
- Companies in the United States reported net job growth, while the UK recorded net job losses.
- Germany and Australia saw more balanced outcomes, with cuts and new hires roughly offsetting each other, while Japan experienced slightly smaller net losses than the UK.
- In the UK, higher labor costs, slower economic growth, and a workforce heavily concentrated in administrative and professional services roles could be the reasons hiring is slowing down.
The report shows that AI’s impact on the workforce is highly country specific and it depends on various factors, such as labor costs, talent supply, and investment interest.
- High-cost markets are more likely to experience faster displacement as employers are more motivated to replace workers.
- AI productivity gains can arrive faster than workforce transitions.
Considerations for employers:
- Upskilling and reskilling: Prioritize training for skills that integrate AI to jobs and support internal mobility.
- Identifying risky jobs early: Use workforce analytics to identify at-risk roles ahead of decisions, allowing time for transition programs.
- Align metrics with productivity and workforce health: Tie AI deployment KPIs not just to cost reduction but also to role transformation and quality of work outcomes.
- Workforce planning: Redesign work around AI augmentation rather than outright replacement, where possible.
