Graduate labour market update: AI in the workplace

Charlie Ball looks at the latest economic data and fresh analysis of the UK labour market, with a focus on the impact of - and attitudes towards - AI in the workplace

Monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in May 2023, data from the Office for National Statistic shows.

Meanwhile, the number of vacancies in April to June 2023 was 1,034,000, a decrease of 85,000 from January to March 2023.

• April to June 2023 saw the number of vacancies fall on the quarter for the 12th consecutive period, decreasing by 85,000. The industry sectors displaying the largest falls in vacancy numbers were accommodation and food service activities, and human health and social work activities, down on the quarter by 15,000 and 14,000, respectively. The industries that saw the largest growth on the quarter were real estate activities and other service activities, each growing by 3,000.
• When comparing April to June 2023 with the same time last year, total vacancies decreased by 265,000 with the largest falls in accommodation and food service activities and information and communication, which were down by 46,000 and 33,000 respectively. However, despite persistent falls in the number of vacancies over the last year, the total number of vacancies remain 232,000 above January to March 2020 pre-pandemic levels, with human health and social work activities showing the largest increase, at 51,000.
• In March to May 2023, the number of unemployed people per vacancy was 1.3, up from 1.1 the previous quarter (December 2022 to February 2023) as the number of vacancies fell while unemployment rose. This remain a historically low figure, but is a very significant signal that the labour market is beginning to loosen - become easier for employers to recruit.
• Nevertheless, with as many of half of vacancies being at graduate level, and the majority of the unemployed having low levels of formal qualification, it is likely that there are more graduate vacancies than unemployed graduates in the UK at the moment.
• The estimate of payrolled employees for June 2023 shows a monthly decrease, down 9,000 on the revised May 2023 figure, to 30.0 million, but this figure will likely be further revised in time.
• In March to May 2023, the number of people reporting redundancy in the three months prior to interview increased by 0.2 per thousand employees compared with the previous quarter, to 3.3 per thousand employees. This remains below pre-pandemic levels.
• Total actual weekly hours worked in the UK have been generally increasing since the relaxation of coronavirus lockdown measures. However, this was followed by a slight decrease since April to June 2022. In the latest quarter, total actual weekly hours worked increased by 4.5 million to 1.05 billion hours, 2.7 million hours above pre-coronavirus pandemic levels.

Labour market data for Scotland is available here:

• The latest early payrolled employee estimates for June 2023 indicate that there were 2.44 million payrolled employees in Scotland. Compared with the same month the year before, the number of payrolled employees had risen by 1.0% (24,000). This compares with a rise of 1.5% for the UK over the same period. It was also up by 2.5% (61,000) compared with February 2020, the last month prior to the pandemic.
• Over the quarter the unemployment rate increased, while the employment rate decreased and the inactivity rate increased, these changes were not dramatic but do suggest a softening of the Scottish labour market.

Welsh data is also available:

• Early estimates for June 2023 indicate that the number of paid employees in Wales has increased by 1,600 (0.1%) over the month to 1.32 million.
• The employment rate in Wales was 71.9%. This is down 0.5 percentage points on the quarter and down 1.8 percentage points on the year.
• The unemployment rate in Wales was 5.0%. This is up 1.5 percentage points on the quarter and up 1.2 percentage points on the year.

The data for Northern Ireland can be found here:

• The number of employees receiving pay through HMRC PAYE in NI in June 2023 was 788,400, a 0.2% decrease over the month and a 1.6% increase over the year.
• NISRA, acting on behalf of the Department for the Economy, received confirmation that 210 redundancies occurred in June 2023.  Over the year July 2022 to June 2023, 1,340 redundancies were confirmed, 4.5% less than in the previous 12 months.
• There were 1,960 proposed redundancies in June 2023, taking the annual total to 4,150, almost double the previous year (2,080).
• The total number of weekly hours worked in NI was estimated at 28.6 million hours, an increase of 3.0% on the previous quarter, and an increase of 2.4% on the equivalent period last year.

And finally in this part of the round-up, regional data is here:

• For the three months ending May 2023, the highest employment rate estimate in the UK was in the South East (79.5%) and the lowest was in Wales (71.9%).
• The North East saw the largest increase in the employment rate compared with the same period last year, increasing by 3.0 percentage points, with Wales seeing the largest decrease of 1.8 percentage points.
• For the three months ending May 2023, the highest unemployment rate estimates in the UK were in both the West Midlands and Wales (5.0%) and the lowest was in Northern Ireland (2.5%).
• Wales saw the largest increase in the economic inactivity rate compared with the same period last year, up 0.8 percentage points, with the North East seeing the largest decrease of 2.0 percentage points.
• Comparing June 2023 with the same period last year, changes in payrolled employees ranged from the highest being a 1.7% increase in London to the lowest being a 1.0% increase in Scotland.

Also from the ONS, the total number of online job adverts decreased by 1% on 7 July 2023 compared with the previous week. In the latest week, there were decreases in 16 of the 28 online job categories. Four increased and eight remained unchanged.

The total number of online job adverts was 8% lower than the level seen in the equivalent period of 2022, with 24 of the 28 online job categories below their level of a year ago. The largest year-on-year decrease continues to be in the human resources (HR) and recruitment category, which has fallen by 42%.

26% of business were either using a hybrid model of working or working from home in June 2023. 75% of IT businesses and 59% of professional services business - both strongly majority graduate employers - were using hybrid or home working models, down a little on post-pandemic highs but both stabilising after recent falls as the labour market tightens.

The OECD have issued their 2023 Employment Outlook, with a focus on the impact of AI:

• Labour markets remain tight in most countries - the UK is no exception - but there are some signs of easing as the number of vacancies per unemployed has decreased slightly from historically high peaks.
• Vacancies in the UK remain well above pre-crisis trends, although they have come down almost 20% since the middle part of 2022. Analysis of online job postings reveals an increase in vacancies offering employee benefits, relative to before the COVID-19 crisis, suggesting that workers may have benefitted from the tight labour market of the last year.
• The OECD Economic Outlook projects that GDP growth in 2023 will remain modest at 0.3%, before a moderate improvement to 1.0% in 2024. This will initially be driven by government spending and investment, before private expenditure gradually becomes stronger, as wholesale gas prices abate.
• When considering all automation technologies including AI, the occupations at the highest risk of automation are typically lower-skilled and held by younger workers. 19% of employment in the UK is in occupations at highest risk of automation compared to an OECD average of 27%. This reflects the fact that AI is just one of many automation technologies.
• On average in the workplaces surveyed by the OECD, AI adoption has so far gone hand-in-hand with greater job satisfaction, improved mental and physical health, and higher wages for those workers with skills to develop and work with AI. Yet, some workers - e.g. those managed by AI, and female employees - have benefited less or have had negative experiences. Using AI entails risks for privacy, work intensity, and bias. Recent advances in generative AI may augment such risks. Addressing them is key to ensuring that AI contributes to more inclusive labour markets.
• In the United Kingdom there are bigger gender differences in attitudes to AI use at the workplace than in other countries. In the finance and insurance services industry, women in the United Kingdom were on average 22 percentage points less likely than their male peers to report positive impacts of AI on their job quality.
• Consultation on the use of AI was high among employers in the United Kingdom, with 78.8% reporting consulting their employees on the use of AI, the highest of all the countries in the OECD AI survey.

 The Recruitment and Employment Confederation, REC, the body for recruitment agencies, has also found the labour market is loosening as candidate availability increases.

Numbers of permanent placements fell, and temp positions grew, albeit slowly. Businesses are slowing hiring and layoffs are increasing - it's notable that the IT industry is particularly affected at the moment, something that we're hearing very strongly from our sources in student support and industry.

Candidate availability is up, not just because of layoffs but also because individuals are reacting to increased inflation and cost of living by seeking better paid work. However, despite all of these changes it remains a tight labour market and business who struggle to recruit or retain - particularly those who cannot match more competitive salaries - will find the market remains tough for them.

The CIPD released their annual Good Work Index for 2023:

• Most people like their work, find it satisfying and have good relationships with both line managers and colleagues.
• 48% of workers said they were meeting bills and commitments without any difficulties. Another third (33%) said they were doing so, but that it was a struggle from time to time.  However, 16% were signalling severe social distress, with 12% saying it was a constant struggle. Three per cent of workers said they were falling behind with some bills and commitments, and 1% said they were having real financial problems.
• 55% of workers agreed with the statement that they would enjoy having a paid job even if they did not need the money, while 43% agreed with the proposition that a job is just a way of earning a living and no more. 51% also agreed that they would work harder than they had to in order to help the employer or organisation, with only 20% disagreeing. Nevertheless, these figures are down in previous years as employees see their jobs in more transactional terms than in the past.
• 45% of workers in the public sector compared with 32% of those in the private sector felt that their pay did not reflect the responsibilities of the job. Public sector workers were more likely to report that their work impacted negatively on their mental health (35%, compared with 25% in the private sector). They were also much more likely to report that they felt exhausted most or all of the time (30% in the public sector, 29% in the private sector). They were also more likely to say that they felt under excessive pressure (25% against 21%). 42% of public sector workers reported that in a normal week they thought their workload was either far too much or too much, compared with 29% of private sector workers.
• But public sector workers were far more likely to feel they did useful work for society (69% against 41% in the private sector). They were also more likely to agree they were highly motivated by the core purpose of the organisation (55% against 42% in the private sector).
• 25% of workers found it difficult to meet commitments in their personal life because of the time they spend at work and 54% found that work made it hard to relax outside work time.
• In 2023, the most common form of formal flexible working was working at home, cited by 49% of workers, followed by flexitime at 37%. Other forms were relatively uncommon or rare. Twelve per cent said they had worked compressed hours, and 11% said they had cut their hours from full-time to part-time. Term-time working was reported by only 4% and job-share by just 3%. Only 5% of workers to whom home working was available had opted not to take it, and 12% had opted not to make use of available flexi time offers.
• 31% of those who said they had taken up at least one form of flexible working in the past 12 months said they were either offered or requested it when they accepted the job. Another 15% said they had requested when they started the job and 19% said they did not have to ask and adopted it anyway. Six per cent said it was imposed by their employer.
• 12% said that it was likely that they would lose their job this year, with 20% saying neither likely nor unlikely, and 60% saying it was unlikely.
• 32% said they would find it easy to find a new job if they lost their current role, slightly lower than the 37% who said it would be difficult. Another 22% said it would be neither easy nor difficult. 18% of workers said it was likely that they would quit their job this year, but 60% said it was unlikely, with 20% saying neither likely nor unlikely. The most important reason was to get better pay and benefits (34%), followed by better job satisfaction (27%), a better work-life balance (23%) and to do a different type of work (22%). However, also significant was discontent with the leadership of senior management, at 21%. Of those who moved jobs last year, most people reported that compared with their previous job, they had improved their pay (58%), they had more responsibility (53%), that the job was more fulfilling (53%) and that it had a better work–life balance (53%).

PWC's 2023 Global Workforce Hopes and Fears Survey details the attitudes and behaviours of nearly 54,000 workers in 46 countries and territories:

• 26% of employees say it is likely they will change jobs in the next 12 months, up from 19% last year. Workers who said they are most likely to change employers include those who feel overworked (44%), struggle to pay the bills every month (38%), and Gen Z (35%).
• Among workers who said they are likely to change employers, 47% said they find their jobs fulfilling compared to 57% of those unlikely to change employers. Those likely to change employers are also eight percentage points less likely to say that they can truly be themselves at work than their counterparts who intend to stay (51% vs. 59%).
• 21% now work multiple jobs, with 69% doing so because they need additional income. The share of workers with multiple jobs is higher for Gen Z (30%) and ethnic minorities (28%).
• The economic squeeze is also driving up pay demands, with the proportion of workers planning to ask for a pay increase jumping from 35% to 42% year on year. Among workers who are struggling financially, that number rises to 46%.
• 52% of employees globally expect to see some positive impact of AI on their career over the next five years. 31% said it'll increase their productivity/efficiency at work. 27% of workers view AI as an opportunity to learn new skills.

Deloitte's 2023 Digital Consumer Trends survey finds that 32% of those who have used Generative AI have done so for work:

• This is despite the fact that, across all respondents, only 23% believe their employer would approve of them using Generative AI for work purposes.
• 26% of respondents have tried a Generative AI tool. 30% say that they only used it once or twice, with 28% using it weekly. 9% say they use an AI tool at least once a day.
• 64% believe it may reduce the overall number of jobs available in the future. 48% of those aware of Generative AI believe it may replace some of their role in the workplace.

Indeed have published findings from their new Remote & Hybrid Job Tracker:

• In France, Germany, the UK and the US, job postings that overtly advertised remote or hybrid working arrangements were relatively rare prior to the pandemic. But by May 2023, the share of postings offering remote/hybrid work had more than doubled in each country.
• While the share of jobs advertising remote/hybrid work continues to grow and hit new highs in Western European countries, it has declined from its February 2022 peak in the US. This shows some of the dangers of extrapolating from widely-reported US trends to the UK.
• While the share of postings mentioning remote work has largely continued to grow, the share of searches actively seeking remote work has largely stagnated over the past year after spiking in the early period of the pandemic.
• In France, Germany, the UK and the US, postings that overtly advertised remote or hybrid working arrangements were relatively rare prior to the pandemic, in each case representing less than 5% of all job postings in early 2020 (ranging from a low of 1.9% in France to a high of 4.3% in Germany). By May 2023, the share had more than doubled in each country, rising to 8.4% in France and the US, 14.6% in Germany and 15.5% in the UK.
• Indeed have also issued their June UK Labour Market Update. Jobseeker interest in lower-paid, in person occupations like cleaning, community work, hospitality & tourism and construction remains lower than pre-pandemic, relative to the average job on Indeed. But higher-paid, remote-friendly occupations like tech, mathematics and media & communications continue to see increased jobseeker interest than pre-pandemic.

Written by

Charlie Ball

Head of labour market intelligence

Jisc