AI Disrupting Job Market for Young Graduates, Sunak Warns — Proposes National Insurance Overhaul

Former Prime Minister Rishi Sunak has cautioned that artificial intelligence is fundamentally reshaping employment opportunities for young people, with business leaders privately confirming a slowdown in youth recruitment. He advocates for sweeping tax reforms to counteract the trend.

Speaking to the BBC, Sunak, who now serves as an adviser to AI firm Anthropic and Microsoft, acknowledged that despite his optimism about AI's transformative potential, the concerns raised by recent graduates seeking entry-level positions are legitimate. According to his conversations with corporate executives, companies are deliberately restraining their hiring of young workers as they increasingly rely on artificial intelligence to handle traditional roles.

Tax System Restructuring Proposed

Sunak recommended a comprehensive restructuring of Britain's tax framework, advocating for the gradual elimination of National Insurance contributions and their replacement with levies on corporate profits. He contends that these profit-based taxes would expand significantly as companies achieve productivity gains and operational efficiencies through AI deployment.

"There are reasons to be worried and think about the future. But we are able to do something about this," Sunak stated during his remarks to BBC Newsnight.

Employment Growth Without Hiring

The former chancellor highlighted an emerging trend among chief executives, which he described using the phrase "flat is the new up." Business leaders are increasingly confident they can expand their operations and boost profitability without significantly expanding their workforce, leveraging AI capabilities to replace traditional employment.

Employment challenges are particularly acute in service-oriented sectors, Sunak noted, including law, accountancy, and the creative industries—fields traditionally viewed as entry points for university graduates.

"They're talking about this concept that they think they can continue to grow their businesses without having to significantly increase employment because they're starting to see how they can deploy AI," Sunak explained. "That's why I think we do have to look at this issue very seriously and with purpose."

Steering AI Toward Human Enhancement

Sunak emphasized the importance of policy frameworks that encourage AI adoption for improving worker productivity rather than eliminating jobs entirely. He suggested that governments must actively shape how artificial intelligence is integrated into the workplace to achieve more favorable outcomes for employment.

The former prime minister acknowledged that multiple nations will likely confront similar challenges as employment-related tax revenues decline, necessitating the discovery of alternative funding sources. He characterized the current moment as potentially distinct from previous technological shifts, requiring deliberate action to guide AI's societal impact in a constructive direction.

Regulatory Oversight and Recent Developments

Sunak, who was appointed to advisory positions at both Anthropic and Microsoft last year, pointed to recent developments in AI capability assessment. Anthropic recently unveiled Claude Mythos, an advanced AI model that demonstrated superior performance compared to human experts in certain cybersecurity and hacking domains. These developments have prompted serious discussions among regulators, lawmakers, and financial sector leaders regarding potential threats to digital infrastructure.

Sunak stressed that independent evaluation of AI systems remains essential, stating that "we shouldn't rely on companies to mark their own homework." He commended Anthropic for allowing Britain's AI Security Institute—established during his premiership—to conduct the first comprehensive testing of Mythos' capabilities, describing this cooperation as advantageous for both the company and the nation.

Cross-Party Support for UK Tech Investment

In a development demonstrating bipartisan support, Sunak revealed that he has collaborated with Labour's deputy prime minister David Lammy to advance investment in Britain's technology sector at a recent AI summit.

Sunak expressed strong conviction in what technology industry observers term "Londonmaxxing" and "Britmaxxing"—phrases describing substantial, multi-billion-pound capital injections into the sector. He urged greater confidence in Britain's technological capabilities, stating: "I know people like to talk us down...or say that things aren't working but in this area there are huge reasons for us to feel confident and proud. We are an AI superpower any which way you look at it."

The former chancellor identified a significant opportunity for the UK to emerge as the world's leading productive user of artificial intelligence, particularly given the substantial presence of major companies such as Deepmind, Anthropic, and OpenAI operating within British borders.