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Hiring in the capital is down 32 per cent from January 2019, a steeper fall than in any other region tracked by LinkedIn, as higher interest rates and corporate cost-cutting weigh on firms that dominate London’s labour market.

Across the UK, hiring has slowed by 24 per cent on pre-pandemic levels and 10 per cent year on year, according to new LinkedIn data, while business confidence remains under pressure. Economists have also warned that unemployment could rise further this year.

But, speaking to City PM, Janine Chamberlin, head of LinkedIn UK, said the figures do not support the popular view that AI is chiefly to blame for the slowdown.

“The headlines would suggest that AI is coming for everyone’s jobs”, she explained. “But actually, the roles that are most exposed to AI are not the roles that are falling or declining the fastest.”

This doesn’t mean AI has had no effect on employment. Indeed, across the tech sector, a growing number of firms have linked workforce reductions to AI-driven productivity gains or broader AI-fuelled restructuring.

Tech layoffs have already topped 100,000 globally this calendar year, according to tracker Layoffs.fyi, while big names like Meta, Block and Cloudflare have all announced major cuts as they pour copious amounts of capital into the technology.

She said the hiring slump was driven more by the economic aftershock of the past four years than the rise of automation, with London especially exposed due to the concentration of rate-sensitive sectors.

“If you look at London, hiring is down 32 per cent since 2019”, she said. “That really started after that sort of peak in 2022. It’s much more to do with the last four years of macroeconomic impact than it is to do with AI.”

The CBI recently warned unemployment could rise to 5.5 per cent this year, equivalent to almost two million people.

Meanwhile, official ONS figures show the jobless rate has climbed to five per cent.

Tech firms across the globe have also continued to shed staff, fuelling fears that AI is beginning to completely hollow out white-collar work.

LinkedIn itself reportedly moved to cut around five per cent of its workforce this year, though the layoffs were not attributed to AI replacing jobs.

Chamberlin said we should focus on the effects of AI in widening the gap between employees who use it well and those who don’t.

“The ones that are more resilient are roles where human skills and AI skills are actually combined,” she said.

Economists increasingly believe AI’s impact is likely to be uneven rather than universal, with routine administrative tasks widely viewed as among the most vulnerable to automation, while jobs requiring judgement or creativity appear more insulated.

Separate research released this week by the Taylor Bennett Foundation found two-thirds of working-age adults expect AI to reduce entry-level opportunities, highlighting growing concern about whether younger workers will be able to gain the experience traditionally needed to progress into senior roles.

Employers, she argued, are increasingly looking for staff who can pair AI fluency with softer skills, be it judgement or creativity.

“That’s exactly what companies are looking for right now,” Chamberlin added.

The UK has created more than 95,000 AI-related jobs since 2023, with London remaining the country’s largest AI jobs market despite its wider hiring slump.

“These are new jobs,” Chamberlin said. “Probably a lot of jobs that people have never even really heard about. It’s not just the AI engineer; it’s data annotators and other AI-related jobs.”

But the UK faces a fight to keep the talent it creates, with LinkedIn data showing AI engineers are eight times more likely than the average professional to move countries.

“If I am somebody with a very specific skill, I’m going to go where I see the biggest opportunity,” Chamberlin said.

There is, however, one corner of the labour market which is moving in the opposite direction.

Hiring at companies with between one and ten employees is up 44 per cent since 2019, with entrepreneurship up 36 per cent year on year.

Chamberlin argued that AI tools were making it easier for young people to start and grow businesses without hiring large teams from day one.

“It’s taking control of your career in a different way,” she said, “because you have access to the technology that can help you do that.”

Small firms also have an advantage in adoption over larger firms, which face the bureaucratic task of changing decades-old workflows.

“Where you’re a small company, you can experiment on Monday, and you can have that adoption by Thursday,” Chamberlin added.

Separate YouGov research for the Taylor Bennett Foundation has found that two-thirds of working-age UK adults expect AI to reduce the number of entry-level jobs, while 84 per cent of full-time students believe it will mean fewer opportunities for young people starting out.

Koray Camgöz, chief executive of the Taylor Bennett Foundation, said: “Entry-level roles are the front door to our industry. When the door starts to close, the people who already face the steepest climb get pushed furthest back.”

LinkedIn’s data suggests entry-level hiring is down broadly in line with the wider market rather than collapsing faster, but Chamberlin said grads should focus on building experience.

“Younger people are not only digitally native, but they’re also going to be largely AI native, and that’s exactly the skill set that employers are looking for,” she said. “But employers are looking to see AI fluency combined with human skills.”

That could look like grads taking adjacent roles, or looking outside their original field to build the communication skills employers still prize.