Artificial intelligence is reshaping the UK labor market into two distinct tracks, according to new data from job search platform Indeed shared with Bloomberg. British employers are increasingly hiring experienced workers with AI skills while scaling back vacancies elsewhere.

UK firms posted approximately 10% fewer job openings this month compared with January 2025. However, that overall decline masks significant divergence across sectors as companies adopt AI to reduce costs and improve productivity — a pressing concern for an economy that has lagged behind peers such as the United States, France, and Germany in productivity growth since the 2008 financial crisis.

Software developers — a profession upended by AI tools and hit by sharp job losses since 2022 — are seeing renewed demand, with postings climbing 14%. The bulk of that growth stems from senior positions and roles directly tied to AI development.

Occupations in IT and engineering, fields where AI augments the value of seasoned professionals by automating routine tasks, rank among the few categories that have remained stable since last summer.

By contrast, vacancies have dropped by double digits across retail, manufacturing, and white-collar roles considered more susceptible to AI substitution, including accounting and marketing. Employers in these areas are cutting hiring to manage rising employment costs — including increases to employer National Insurance contributions and the National Living Wage that took effect in April — and navigate a more volatile economic environment.

"The UK labor market is increasingly splitting into two speeds," said Jack Kennedy, senior economist at Indeed. "Demand is concentrating around experienced workers and roles directly connected to AI, rather than flowing evenly through the profession."

The jobs being created tend to favor senior staff with specialized technical skills, placing them out of reach for many workers seeking to change roles, re-enter the workforce, or secure their first position. The pattern aligns with labour economics research suggesting that AI's impact is most pronounced in roles heavy on routine cognitive tasks, while roles requiring complex physical skills or high-level strategic judgment have proven more resilient.

This trend raises questions about Prime Minister Andy Burnham's push to encourage more young people to pursue technical qualifications as a means of future-proofing their careers. In a social media video, Burnham argued that while AI may be able to write an essay, it cannot build a train.

Nevertheless, hiring has declined steeply for blue-collar occupations. Manufacturing job postings have fallen 58% since June 2022 and remain 18% below levels seen last summer. Roles in installation and maintenance, loading and stocking, and construction have similarly failed to recover.

Youth unemployment in Britain has reached its highest level in more than a decade, a situation Bank of England Governor Andrew Bailey attributes to a "low hire, low fire" economy. Policymakers and industry groups have flagged workforce retraining and AI literacy as critical priorities, though large-scale reskilling programs have yet to materially shift the employment data.

"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," Kennedy said.

This story was originally featured on Fortune.com.