The latest UK labour market figures, released on 17 February, showed unemployment climbing amid softer hiring conditions. While multiple factors sit behind the shift, new research from entrepreneur network Helm indicates that artificial intelligence is already influencing workforce strategy inside high-growth companies.
In a survey of 400 Helm members — founders of businesses with an average annual turnover of £21m — 93% said they do not believe the UK workforce is adequately prepared for widespread AI adoption. Just 3.5% said yes, with 3.5% unsure.
When asked whether AI adoption would lead to job cuts in their own business within the next 12 months, 33% said yes, while 64% said no. However, 58% said they were delaying or reducing new hires as a result of increased AI adoption.
That distinction between active job cuts and hiring restraint is significant. Scale-ups have traditionally been net job creators within the UK economy. A slowdown in recruitment across growth-stage businesses may suppress vacancy creation over time, even if immediate redundancies remain limited.
Andreas Adamides, CEO of Helm — formerly The Supper Club — said: “Businesses are facing a perfect storm as the rapid rise of AI collides with sharp increases in employment costs. It is therefore no surprise that unemployment figures are now alarmingly high.
“If the Government is serious about reversing this trend, it must focus on restoring business confidence while accelerating investment in AI upskilling.
“A clear, business-first strategy would give companies the confidence to invest, expand, and create the jobs people need.”
Rising employer costs, including wage pressures and increased National Insurance contributions, have sharpened boardroom focus on productivity. In that environment, AI tools can appear as an alternative to incremental headcount growth — particularly in administrative, marketing, and operational functions where generative systems are already being deployed.
Yet the survey also points to a deeper concern: preparedness. If founders believe the workforce lacks the skills to work effectively alongside AI, companies may default to cost-saving automation rather than augmentation strategies designed to enhance human productivity.
Automation versus augmentation —
Joshua Wöhle, founder and CEO of AI training company Mindstone, said: “AI has the potential to be transformational for British business, but the skills gap is making people focus on automation, which is where technology has historically made a difference, instead of augmentation, where generative AI really can make a difference.
“Automation leads to job losses versus augmentation that moves the top line. Ultimately, this comes down to training.”
The distinction carries material implications for employment trends. Automation typically concentrates on cost reduction — replacing repetitive or process-driven roles. Augmentation, by contrast, centres on improving employee output, enabling companies to expand revenue without necessarily shrinking teams.
If businesses emphasise automation in the short term, employment growth may stall even in sectors experiencing demand. If they invest in skills and integration, productivity gains could support longer-term expansion.
For policymakers, the question becomes whether current unemployment figures reflect a cyclical slowdown, structural adjustment linked to technology, or a combination of both. The Helm data does not prove that AI is directly causing rising unemployment. However, it suggests that founder behaviour is shifting in anticipation of AI-driven change.
Reduced hiring pipelines, particularly among high-growth enterprises, can have a measurable impact on labour market flows. Fewer new roles entering the system mean less opportunity for jobseekers to transition between positions, increasing the risk of longer unemployment spells.
At the same time, AI investment is accelerating across sectors, from professional services to retail and logistics. Early deployment often targets internal efficiency rather than external market expansion, reinforcing the short-term focus on cost control.
Whether that dynamic persists will depend on skills investment and business confidence. The survey indicates that founders see opportunity in AI, but also risk in workforce readiness.
As companies reassess workforce models, the interplay between technology adoption, employment costs, and labour market resilience is likely to remain under scrutiny. For now, the data points to caution rather than collapse — a hiring pause shaped by rapid technological change and economic pressure, rather than a wholesale displacement of jobs.
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