The government should move towards scrapping national insurance contributions to help young people whose jobs are being wiped out as a result of artificial intelligence, Rishi Sunak has suggested.
The former prime minister - who was appointed as an adviser to both AI firm Anthropic and Microsoft last year - has warned that concerns from graduates looking for entry level jobs are justified, despite him being an AI enthusiast.
Mr Sunak said that bosses are privately acknowledging to him that recruitment of young people is flattening because of the rapid advancement of the technology.
"There are reasons to be worried and think about the future. But we are able to do something about this," he told BBC Newsnight.
In order to combat this, Mr Sunak suggested gradually abolishing national insurance and replacing it with taxes on corporate profits, which he said would be boosted by productivity and efficiencies in deploying AI.
He explained: “When you employ a person you end up having, as a business or an organisation, you end up having to not just pay them their wages but having to pay them a significant incremental cost in all the National Insurance contributions and other employment costs that we put on the bill...
“If that same business is thinking about taking on an AI agent and just paying the cost of the software, it doesn’t have to bear any of those costs. So that to me seems like an obvious area...we should look at.”
National insurance is a tax on paid earnings by employees, the self-employed, and employers to fund state benefits.
Mr Sunak argued it is becoming increasingly difficult for young people to find employment in service sectors such as law, accountancy and the creative industries, adding that many chief executives are saying that "flat is the new up".
"They're talking about this concept that they think they can continue to grow their businesses without having to significantly increase employment because they're starting to see how they can deploy AI,” he explained.
"That's why I think we do have to look at this issue very seriously and with purpose… We should be thinking about, well, how do we tip the balance in favour of AI being used in that positive way… to help people do their jobs better [rather than replacing them].”
He said that AI's impact on employment "may be different to previous technology cycles, and we want to do what we can to tip the scales in a more positive direction”.
Mr Sunak also warned that you are “more likely to lose your job to someone who is using AI than you are likely to lose your job to AI itself”, arguing that the “best protection for people” is to “make sure that they have the confidence to use these new AI tools well”.
“This is a concept called AI literacy or AI fluency... You can see the fastest growing skill that employers are demanding on LinkedIn is AI literacy and so that to me is almost the equivalent of the driving licence for the modern workforce.”
The former PM - who set up an AI safety summit in 2023 - talked up the UK’s potential in using the technology, as well as revealing he had joined forces with Labour's deputy prime minister David Lammy to promote investment in the UK tech sector.
"I know people like to talk us down...or say that things aren't working but in this area there are huge reasons for us to feel confident and proud," he said. "We are an AI superpower any which way you look at it."
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