With concerns growing over the impact of AI on jobs, the Chartered Institute of Personnel and Development (CIPD) has warned the Chancellor ahead of this month’s Budget that urgent action is needed to safeguard those roles most exposed to the advancing technology.

Polling more than 2,000 UK employers for its latest Labour Market Outlook, the CIPD found that one in six (17%) expect AI to shrink their workforce over the next year, with enterprise firms most at risk of layoffs.

Of those, almost two-thirds (62%) said that clerical, junior managerial, professional or administrative roles are the most likely to be lost as AI becomes more widely deployed. 

The CIPD found that the risk is highest for staff at large private sector firms, where 26% of employers expect to see a drop in headcount, compared with 17% in the private sector overall and 20% in the public sector. 

Among those who expect to lose staff because of AI in the next twelve months, more than a quarter (26%) forecast they will be forced to cut more than 10% of their workforce.

The data shows early-career and lower-level workers across service industries, such as finance, insurance, IT, and admin, will bear the brunt of these AI-driven cutbacks, with the CIPD calling on the Government to take urgent action and avoid measures that will dampen recruitment or limit opportunities for those displaced by AI.    

“Junior roles stand to be most affected by AI, but we need a national drive to retrain and upskill people of all ages and career stages,” said James Cockett, senior labour market economist at the CIPD.

“It’s crucial that we see rapid progress on the development of the Growth and Skills Levy, informed by genuine consultation with employers, to ensure workers are equipped with the skills for an AI-driven economy. 

“We need to see a stronger focus by the Government and employers on longer-term workforce planning and investment in skills to help people use AI effectively in their roles or transition into different jobs or occupations as AI use grows.”

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The CIPD’s findings echo new figures from McKinsey’s State of AI in 2025 report, which revealed that almost a third (32%) of global firms expect to see a reduction in workforce due to AI in 2026, though by a more modest 3%.

While McKinsey likewise found that large firms are more likely to replace some staff with AI, they’re doubling down on AI talent, hiring specialists in data science, machine learning, and AI compliance at more than twice the rate of smaller firms.

For those who make it through the looming swathe of AI layoffs, there is no real reward either, with the CIPD finding that UK employers expect wages to stagnate at a measly 3% gain in 2026.