As unemployment rises, the AI era of universal basic income has just got closer

Independent

19-07-2025

It is becoming harder and harder to talk to a human being. Twice recently I have wanted, needed, to speak to customer services. On each occasion, finding the actual phone number proved tortuous. There are FAQs and online 'help' to be bypassed, and even if you get through, an automated message implores you to return to the internet.
Likewise, a new Thai restaurant has opened up the road, and its novelty is not the food but a robot waiter. How we revel in its brilliance. How we forget, too, how warm and friendly were the staff in the old place before it was taken over by tech-minded – and yes, penny-pinching – newcomers.
Progress, I'm meant to say. That may be so, but these are also jobs. And work is slowly but surely disappearing. At an E2E business networking gala the other evening, a panel of successful entrepreneurs was asked what effect AI was likely to have on staffing. 'Net positive' was the answer from a tech boss. That sounds good, and there was plenty of nodding from a packed crowd, but what I think he was really saying was that some employees would go, others would join, and the overall effect would be beneficial for the bottom line.
Not everyone was so enthusiastic. Those wondering what the future holds for their children were probably not applauding. Because commercial folks are humans, too – we were reminded of that, forcibly, by Steve Byrne, CEO of Travel Counsellors, the UK's largest and fastest-growing digital platform for travel operators. In a quite brilliant address at the same E2E event, Byrne, whose business was listed by the London Stock Exchange as one of its 100 'companies to inspire' and has twice won Amazon's Growing Business of the Year, spoke passionately of the need to treat people – staff, customers, everyone – properly, and to build relationships.
He was spot on, but that is easier said than done when AI is gobbling up jobs like some kind of employment Pac-Man. Byrne was speaking on the very day that the latest official UK unemployment figures had reached 4.7 per cent, their highest level since June 2021. The Office for National Statistics accompanied this announcement with the news that wage growth had slowed.
A couple of weeks before that, it was revealed that the number of entry-level roles being advertised had fallen by a third (32 per cent) since the launch of OpenAI's chatbot in November 2022. It's a decline that is outpacing the decrease in the number of overall vacancies, which fell from 1,091,909 to 858,465 – a 21 per cent drop – over the same period.
This week, economists were quick to cite the rise in national insurance contributions (NICs) for employers, along with rising inflation, as being responsible for the uptick in unemployment. Bank of England governor Andrew Bailey has said that the NICs increase is hitting employee headcount and wages harder than expected. Certainly, closer analysis shows that pubs, bars and supermarkets are where the axe has fallen since the chancellor made her shock move last autumn.
So, phew, not AI then? No – but steady on. Hospitality and retail are the two sectors that provide flexible working and first-time jobs for young people. If you can't immediately secure a place on the career ladder, you can always fall back on bar, restaurant or shop work. The lower rungs of the ladder are occupied by positions in customer services, admin, research and logistical support – which happen to be the areas that AI, still in its infancy, is beginning to hammer.
It's grim, and AI is emerging as a principal worry. Fewer jobs means lower tax receipts, which means less income for the government and little buying power to revive a flagging economy. The increasing use of AI – especially in white-collar sectors, as predicted – could lead to rising unemployment, particularly among recent graduates and those who hold routine professional roles. This, in turn, could mean fewer people being able to afford rent or mortgages, which would have a knock-on effect on the rental and housing market.
This is not a future scenario that might apply in, say, five to 10 years; the rapid pace at which AI is replacing entry-level jobs is only going one way, and it won't be long before the effect is felt higher up the ladder, too.
The rollcall of companies being affected by this is lengthening. BT is blaming AI for further job cuts, having announced plans to lose 55,000 employees two years ago. Some of those were the result of automation; now, there are to be more. Amazon, Ocado, Microsoft are all saying similar. They're tech giants, so they know a thing or two about what is coming. We ignore them at our peril. Even ChatGPT agrees: 'Yes, AI is contributing to job losses in the UK, but its impact is nuanced and varies by industry, skill level, and job function.'
We would also be unwise to ignore a warning from Boston Consulting Group, whose research revealed that half of UK companies are planning on redirecting investment from staff to AI. Or the International Monetary Fund, which reckoned that 60 per cent of jobs in advanced economies, such as the UK and the US, are exposed to AI, and that half could be negatively affected (which is a polite way of saying drastically reduced or cut completely). No advanced calculator is needed for this sum: that is 30 per cent of the workforce.
Sitting in an Uber Tesla on the way back from the E2E evening, and marvelling at the dashboard screen displaying apps galore, I was reminded of Elon Musk's forecast that the threat pertaining to AI was its potential effect on jobs. At the VivaTech conference in Paris in May 2024, Musk predicted that AI and robots would eventually perform every role in the supply of goods and services, making traditional jobs obsolete. He described work becoming more of a hobby than a necessity, and predicted that governments would be forced into providing a system of UBI (universal basic income). How this would be funded in a world of dwindling tax receipts is something that remains to be seen.
Meanwhile, the government carries on oblivious, holding AI summits and pushing Britain forwards in the great global AI arms race. It is right to – our businesses must compete, and we desire foreign investment – but we must also begin urgently addressing the cost to society, and start game-planning solutions. 'Net positive' is not good enough.