London Employers Report Widening AI Skills Gap as Automation Reshapes Work

Major employers in London are sounding the alarm over a rapidly expanding skills gap as artificial intelligence reshapes what jobs require and which capabilities companies value most.

A survey of more than 2,000 business leaders conducted by BusinessLDN found that only half of their existing workforce now possesses the skills their organizations need—a sharp decline from 63% just one year earlier. More than three-quarters of respondents expect significant demand for AI and advanced digital skills over the next five years, up from 66% in 2025.

The findings were first reported by the BBC and come as part of a comprehensive plan developed by an AI steering committee convened by BusinessLDN and Deloitte. The committee includes representatives from Microsoft, Lloyds Bank, NatWest, Sky, and law firm Linklaters.

Why it matters

London faces a more acute AI transformation than the rest of the UK. Research for City Hall estimates that 46% of the capital's workers—approximately 2.4 million people—hold roles where AI could automate portions of their job, compared to a 38% national average. This concentration makes London both a testing ground and potential model for how cities can proactively manage workforce transitions driven by automation.

What's Driving the Skills Shortage

AI systems can increasingly handle routine administrative work and text-heavy tasks, fundamentally changing what jobs entail. This shift is creating dual demand: companies need workers with technical AI and digital capabilities, but also distinctly human skills like communication and critical thinking that resist automation.

Muniya Barua, deputy chief executive of BusinessLDN, said London sits "at the sharp end of the AI revolution," creating both significant opportunity and responsibility to ensure residents gain necessary skills.

Proposed Solutions

The steering committee submitted recommendations to Mayor Sadiq Khan's AI and Jobs Taskforce, chaired by Baroness Martha Lane-Fox. Khan has now accepted the taskforce's proposals, which include:

• An early-warning system to detect AI-driven job market changes before they reach crisis levels
• A partnership model bringing together employers, workers, and educators to redesign roles rather than simply automate them
• A program pairing young Londoners with employers to help shape future career pathways

The committee also calls for City Hall to establish a pan-London careers and skills service, create a real-time dashboard tracking AI's employment impact, and give employers input into training design. At the national level, the plan urges government reform of the growth and skills levy alongside expanded adult-learning funding.

Khan announced £18 million in new funding to help young Londoners access work, training, or education, including £10.5 million to extend a program serving approximately 6,000 people not currently in education, employment, or training.

Avoiding Extremes

Khan said the AI debate has "become too polarised," with some claiming the technology will solve everything while others predict mass unemployment. "Neither view helps Londoners prepare for the future," he stated.

Lane-Fox warned that without early action, the city risks "a quieter drift" toward fewer entry-level positions, weaker career advancement pathways, and growing inequality. For many Londoners, she noted, AI "still feels like something happening to them, not with them."

Adam Cantwell-Corn of the Trades Union Congress, a taskforce member, emphasized that AI's workplace impact will be "shaped by choices and who gets to make them," stressing that workers must participate in those decisions.

The taskforce also recommended that Khan pursue talks with the national government about devolving greater control over skills policy to London.

These details were first reported by BBC London.