Gen Z Face Growing Jobs Drought As SMEs Ramp Up AI In 2026

A poll of 1,024 small and medium sized (SME) founders, owners, and senior executives for Rathbones found that 29% are already using AI in their business, with a further 28% planning to adopt it in the future. Among those already using AI, one third have reduced hiring of graduates or entry-level staff, although 62% say AI has had no impact on hiring so far.

The biggest impact however lies ahead, with almost half (46%) of executives of SMEs expecting to cut back on hiring as they make greater use of AI, and 16% predicting a significant reduction. The roles most at risk from further AI adoption include data analysis and reporting (50%), customer service and support (48%), and IT and software development (41%).

Rathbones’ findings comes as recent employment data reveals almost a million (946,000) young people (aged 16 to 24 years) are out of work, education or training.

Stephanie Ebner, a Financial Planning Lead at Rathbones, says: “AI adoption isn’t just a big business trend – it is increasingly filtering down to SMEs, and that could create a vacancy black hole for young jobseekers. Many employers now face a brutal choice: hire and train a graduate or deploy AI that can do most of the job instantly."

“With 5.68 million people employed by UK SMEs, these businesses have a pivotal role in shaping the future of work."

"But there’s a fine balance to strike: boosting efficiencies, productivity and profits must not come at the expense of building the UK’s skills pipeline or giving young talent a fair start."

“The business owners across the country we speak to want to create opportunities for young adults yet cost pressures - from tax changes such as increase in employer national insurance to broader inflation - are the biggest blockers. Tackling these challenges is essential if we’re to avoid widening generational inequality,” she added.

Other Key Findings:

• Around a quarter (25%) of SMEs believe greater adoption of AI will complement rather than replace roles, while a further 20% are unsure of the impact.

• Around one in eight (13%) say AI is not applicable to their business, while 30% are not considering using it.