UK employers are creating jobs for experienced staff with artificial intelligence skills and cutting back elsewhere, according to new figures showing how the technology is starting to create a two-track labor market. British firms posted about 10% fewer vacancies this month than in January 2025, data from job search platform Indeed shows, though that overall decline disguised wide disparities as firms increasingly adopt AI to cut costs and boost productivity. YourDailyAnalysis flags that gap between the aggregate 10% decline and the underlying divergence it obscures as the entire point of this report: a single headline vacancy number is actively misleading here, since it averages together occupations moving in sharply opposite directions.
The specific reversal in software development hiring is the most concrete evidence of AI’s two-sided effect on a single profession that has already been transformed once by the technology. Software developers, whose profession suffered dramatic job losses since 2022 as AI reshaped the field, are back in demand with postings rising 14%, with much of the increase coming from senior roles and those directly linked to AI. YourDailyAnalysis draws a distinction between this current 14% rise and the earlier post-2022 job losses in the same profession: the same technological shift that initially displaced software development roles has now created renewed demand for a narrower, more senior and more AI-specific subset of that same profession, rather than simply reversing the original disruption.
The occupations bearing the brunt of the decline are broad and span both blue-collar and white-collar work, which is what makes this genuinely a labor-market-wide split rather than a story confined to any single sector. From retail and manufacturing to white-collar roles more vulnerable to substitution like accounting or marketing, vacancies have fallen by double digits, while manufacturing postings specifically are down 58% since June 2022 and 18% below where they were last summer. YourDailyAnalysis isolates that 58% manufacturing decline as the more severe of the two blue-collar figures cited, since an 18% year-over-year drop on top of an already-58%-reduced base means manufacturing postings have now fallen for multiple consecutive years without the kind of stabilization seen in some other struggling categories.
An Indeed economist’s own framing of who gets shut out by this divergence describes a structural barrier facing new entrants specifically, not just declining opportunity broadly. “The UK labor market is increasingly splitting into two speeds,” said Jack Kennedy, senior economist at Indeed. “For jobseekers, particularly those at the start of their careers, the bar is therefore rising as the stronger areas of the market increasingly require either specialist AI capability or substantial experience.” Your Daily Analysis reads Kennedy’s “either…or” framing as identifying two entirely separate paths into the strong side of this labor market, specialist AI skill or years of accumulated experience, neither of which a typical first-time jobseeker or career-changer can access quickly, which explains why Britain’s youth unemployment has climbed to its highest level in over a decade even as headline job-market weakness looks relatively modest.
The political response to this dynamic, cited alongside the labor-market data, faces a specific credibility challenge given what the same data shows about entry-level opportunity. Prime Minister Andy Burnham’s plans to encourage more young people to pursue technical qualifications, framed around the argument that AI may be able to write an essay but can’t make a train, sit awkwardly against Kennedy’s finding that even technically skilled young entrants face a rising bar shaped as much by required experience as by specific AI capability alone.
Watch whether software-development postings continue climbing toward, or beyond, their pre-2022 levels, which would signal the AI-driven disruption to that specific profession has moved from displacement into a genuine, broader hiring recovery. The manufacturing and blue-collar vacancy trend is the more concerning indicator to track for UK policymakers specifically, since Bank of England Governor Andrew Bailey has already linked persistent youth unemployment to a broader “low hire, low fire” economy that shows no sign of reversing in this data.
