Former Prime Minister Rishi Sunak has issued a pointed warning about artificial intelligence’s impact on the labour market, telling BBC News that graduates’ fears about AI eliminating entry-level jobs are “justified,” and that business leaders are already quietly scaling back their hiring of young people in response to the rapid deployment of AI tools.

Sunak, who now serves as an adviser to AI safety company Anthropic and to Microsoft, said he had been told privately by company CEOs that recruitment of young workers is being suppressed as businesses find they can grow without adding to headcount, with AI handling functions that would previously have required entry-level staff.

The sectors he identified as becoming increasingly difficult for young people to break into include law, accountancy, and the creative industries, all of which have traditionally offered structured graduate entry pathways that are now being compressed as AI tools take on work previously assigned to junior employees.

His comments come at a moment when the UK’s labour market data is already showing signs of strain, with job vacancies falling, business confidence softening, and the Bank of England signalling a possible rate rise later in 2026 that could further dampen hiring appetite across the economy.

Sunak proposed a structural tax reform as part of the solution, arguing that eliminating National Insurance contributions over time, offset by a shift toward taxing corporate profits, would incentivise businesses to hire more young workers by reducing the cost of employment relative to the cost of deploying AI tools.

“By shifting towards taxing corporate profits instead, we can stimulate job creation,” Sunak argued, framing the proposal as a way to tip the economic balance in favour of human employment at a time when many businesses rationally prefer technology-driven productivity gains over expanded payrolls.

He was careful to avoid technological pessimism, calling instead for policy frameworks that encourage AI to be deployed in ways that enhance human jobs rather than replace them, and arguing that “we should be thinking about how to tip the balance in favour of AI being used in a positive way.”

During his tenure as Prime Minister, Sunak established the UK’s AI Safety Institute and hosted the world’s first major government-level AI safety summit at Bletchley Park in November 2023, positioning Britain as a thought leader in AI governance at a time when the technology was beginning to attract serious regulatory attention from governments globally.

He also popularised the terms “Londonmaxxing” and “Britmaxxing” to describe the wave of multi-billion pound AI and technology investments the UK attracted during his premiership, arguing that the country has the institutional and talent infrastructure to become a global leader in AI if its policy environment keeps pace with the technology’s evolution.

The warning lands at a significant moment for AI labour market debates, with global employer surveys consistently showing that white-collar job functions are being restructured faster than entry-level hiring is recovering, creating a structural employment gap for young workers entering professions that are being fundamentally changed by tools like the ones Sunak now advises on.