Artificial intelligence is back in the headlines again, and for all the wrong reasons. We had hoped that the focus with AI by now would be its productivity-enhancing capabilities, which we desperately need. Instead, its job-destroying effects are garnering more attention. You could say that these are two sides of the same coin, but they do not have to be.

A few days ago, Adzuna, the job search site, said that entry-level job openings had fallen by almost a third since the launch of AI’s standard bearer, ChatGPT, in November 2022. The implication was that AI is taking those jobs.

A rival job firm, Indeed, said that UK graduates were facing the worst job market since 2018 as employers use AI to cut costs. I don’t want to be unkind to them, but it would be ironic if graduates, having used ChatGPT to help them through their studies and essays, now find that it is sitting at the desk they had hoped to occupy.

Let me, before coming on to the more general question of AI and jobs, deconstruct a couple of these things before people get really worried.

A drop of 32 per cent in entry-level job vacancies since November 2022 sounds very dramatic and does suggest that the robots are indeed taking over. The context, however, is one in which all job vacancies have fallen by 35 per cent since November 2022, according to official figures. So the drop in entry-level job vacancies is very close to the general trend.

The job market has softened but there are many reasons for that. We have moved out of the exceptional tightness of the post-pandemic period and, more recently, into higher employer national insurance (NI) contributions, a big increase in the national living wage, which most people will know as the minimum wage, and the prospect of enhanced employment rights. These all play a part, possibly a significant one.

As for graduates, it is quite likely that all the above factors have featured in a softer recruitment market this year. But it is worth saying that the bell has apparently been tolling for graduate employment ever since Tony Blair ushered in the expansion of university education around the turn of the century. People have long warned that too many graduates would hit graduate employment.

Mostly, though, while some degree courses have poorer employment outcomes than others, the bell has not tolled. Graduate jobs have held up, in spite of the expansion. The latest official annual graduate labour market statistics were published last month. They showed that the employment rate for those with degrees — the proportion of working-age graduates in work — was 87.6 per cent last year, while the postgraduate employment rate was 90 per cent. Both were much higher than the non-graduate employment rate, which was 68 per cent.

The graduate and postgraduate rates are slightly higher than they were in 2007, when the official data series begins. Graduates and postgraduates are between three and four times more likely to work in high-skilled jobs than non-graduates. Graduates also enjoyed a 38 per cent average salary premium over non-graduates last year, while for postgraduates it was a 54 per cent premium.

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All of this suggests that if there is to be a big AI impact on the job market — including in sectors most vulnerable to its use, which could number professional and business services, as well as retailing — it is mainly yet to come. Except, that is, in one particular area: among technology firms themselves.

A few days ago, Microsoft announced plans to reduce its workforce by 9,000, about 4 per cent, in addition to the 6,000 job cuts it announced in May. The company said it was investing more heavily in AI infrastructure, and AI appears to the main explanation for the cuts.

It is not alone. Two years ago, BT announced plans to eliminate 55,000 jobs by the end of the decade, and last month its chief executive, Allison Kirkby, said in an interview that the original target “did not factor in the full potential of AI” — and that the company may go further with its job reductions. Amazon has cut 27,000 jobs over the past three years, as have other tech companies.

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In a new report for Capital Economics, Vicky Redwood, an economist with the consultancy, noted the recent round of technology sector job cuts and a rise in the unemployment rate for recent college graduates in America. Both had raised fears of a surge in AI-related unemployment.

But, as in the UK, there are many moving parts in the US labour market.

“For some firms, AI is a way to spin job losses driven by poor financial performance in a more positive light,” she wrote. “Meanwhile, there are other factors affecting the US labour market — for example, uncertainty may be slowing hiring intentions.”

There has, though, been a disconnect between the tech sector in America, where employment has been falling for the past two years, and the wider economy, where it has been rising.

We are where we thought we would be in terms of artificial intelligence and jobs. It is being adopted but, as Redwood pointed out, “the deployment of AI across the economy is proceeding at a relatively gradual pace”. It will certainly replace some jobs, but there is as yet no good evidence that it will replace employment more generally, and lead to a big rise in unemployment.

It is not just the majority of economists who are saying that. Amazon’s chief executive, Andy Jassy, put it well in an interview with CNBC a few days ago. “Like with every technical transformation, there will be fewer people doing some of the jobs that the technology actually starts to automate,” he said. “But there’s going to be other jobs.” AI will free people from what he described as “rote work” and “make all our jobs more interesting”, he added.

That is how it should be, and in doing so there is scope for AI to raise productivity significantly — something that the UK needs particularly badly. Some of the displacement of jobs will be painful, though nothing like the massive hit to manufacturing work in the 1980s.

There will be plenty of scary headlines about the robots generating mass unemployment, some of them emanating from the comments of the tech bros in California. We should mainly treat them with a pinch of salt.

PS

Many people will have sympathised with Rachel Reeves and her tears in the House of Commons a few days ago — though not, apparently, the leader of the opposition, who saw it as an opportunity for political point-scoring.

What struck me, apart from the chancellor’s obvious distress and the puzzle of why she did not stay away from the Commons chamber, is how rare such shows of emotion from politicians are. I have known chancellors and other politicians who were going through difficult private circumstances, including the loss of family members, but always had to maintain a stiff upper lip in public. They knew people would immediately conclude that the problem was political, not personal. Is that the right thing to do? Some would say not.

We expect our politicians to be superhuman — immune to the kind of criticism, however personal, that would floor most of us. They must get used to being described as stupid and lazy by columnists who would not last in their jobs — those of the politicians — for a day. Senior politicians are hard-working and dedicated and have schedules that most of us would regard as impossible. For the few years they are at the top, they can never relax.

They should, of course, be scrutinised and occasionally criticised, and made fun of when they do something silly. But it should not be incessant, and I think many voters realise that.

At the end of a talk I did recently, a man asked me a question about “Rachel from accounts”. I said I was happy to talk about how the chancellor was doing but that I thought this description was disrespectful. After the talk, I was surprised at how many of the female guests, none of them obviously Labour supporters, thanked me for saying that.

While I am on personal matters, I must pay tribute to David Lipsey, Lord Lipsey, who held my slot as economics editor of this newspaper from 1982 to 1986 and who sadly passed away last Tuesday at the age of 77.

Apart from being a successful economics journalist, and Labour peer, he was an adviser in Downing Street in the 1970s when James Callaghan was prime minister. During that period, he came up with the description of “the winter of discontent” — adapted from Shakespeare — for the industrial disruption that helped sink Labour and paved the way for Margaret Thatcher.

david.smith@sunday-times.co.uk