Sunak Warns AI Is Flattening Youth Job Market, Urges National Insurance Overhaul

Former Prime Minister Rishi Sunak states that artificial intelligence (AI) is impacting entry-level job growth for young people, proposing a tax overhaul to abolish National Insurance and shift the burden to corporate profits.

Rishi Sunak, now an adviser to AI firm Anthropic and Microsoft, highlights a significant shift in the employment landscape. He notes that companies are increasingly deploying advanced AI, leading to reduced reliance on new hires, particularly for younger workers seeking entry-level positions. This observation comes amidst growing capabilities of AI models.

Sunak warns, "AI is flattening the jobs market for young people." He indicates that chief executives privately acknowledge growing their businesses without significantly increasing employment due to AI deployment. To counter this trend and make hiring more attractive, Sunak proposed a substantial tax system rebalance: gradually abolishing National Insurance (a tax on earnings for employees and employers) and replacing it with taxes on corporate profits. He suggests these profits would be boosted by AI-driven productivity gains.

This proposal arrives as AI capabilities advance rapidly; for instance, Anthropic’s Claude Mythos AI model has demonstrated an ability to outperform human experts in certain hacking and cyber-security tasks, underscoring AI’s growing impact across sectors.

This proposed tax shift aims to incentivize employment by reducing direct costs associated with hiring staff. Governments globally may face reduced revenue from employment taxes as AI reshapes workforces, requiring new approaches to fiscal policy. Sunak's suggestion outlines a path for the UK to adapt its economic structure to the evolving AI landscape. The debate now focuses on the feasibility and broader economic impact of such a significant tax system reform. What measures will governments next consider to manage AI's effects on employment and national revenue?