No wonder government ministers in recent weeks have started nodding along with fears that AI will take our jobs, with investment minister Lord Stockwood even suggesting that the government has discussed the idea of a universal basic income to provide for people thrown out of work by the technology. God forbid that voters should start to appreciate the real reasons why an expanding jobs market has been thrown into reverse under the Labour government.
Labour has destroyed one of the big advantages that the UK had over many of its immediate European neighbours: a flexible jobs market
No, it isn’t AI that is to blame for the loss of 171,000 payrolled jobs in the year to November. Nor is AI the reason why 37 per cent of the 2,000 employers surveyed by the Chartered Institute for Personnel Development (CIPD) say they are planning to scale back hiring in coming months. They say it has rather more to do with the Employment Rights Act which is about to make creating jobs an even more expensive and bureaucratic business than it is already. It will mean companies of all sizes having to recognise trade unions, offer guaranteed hours and shorten the period in which employees cannot claim for unfair dismissal (the government originally planned to eliminate this period altogether). Half of the companies surveyed by the CIPD said that they expected the legislation to increase workplace conflict. Moreover, the CIPD argues that the government has underestimated the cost to business of the Employment Rights Act, saying that the £1 billion estimate doesn’t take into account the extra work which will be placed on HR departments.
This, of course, comes on top of Rachel Reeves’s hike in National Insurance Contributions (NICs), which raised the rate for employer contributions and reduced the threshold at which they become payable, from £9,100 a year to £5,000 a year. The latter change has been especially harsh on firms who employ part-time workers. At first it seemed as if the changes to NICs was going to increase self-employment as companies took to hiring workers in less onerous ways than taking them on for full-time jobs. The number of people in self-employment increased from 4.266 million in the third quarter of 2024 to 4.342 million in the first quarter of 2025. But self-employment, too, is now dropping alarmingly, too, falling to 4.066 million in the third quarter of 2025. The economy, in other words, lost 200,000 self-employed workers in the government’s first year in office.
How many more real-life experiments will it take until governments finally learn the lesson: that heavy-handed employment laws might protect some existing jobs but only at the cost of disincentivising the creation of new jobs? France, with its hefty employment regulations and high unemployment rate, has been proving that for years, but for some reason it still hasn’t sunk in with our own trade union-funded ruling political party. Labour has destroyed one of the big advantages that the UK had over many of its immediate European neighbours: a flexible jobs market.
If the government was deliberately trying to encourage AI to take our jobs it couldn’t be doing better. AI bots, needless to say, don’t have rights against unfair dismissal, and neither do they tend to form trade unions. Nor, come to that, are staff employed elsewhere in the world subject to over-bearing UK employment law. There is a ‘jobs bloodbath’ in progress, but it isn’t being caused by AI – it is the result of the current government’s policies.
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