The skills shortage tsunami is coming. Is Wales ready?

Gareth Jones – Founder & CEO, TownSq

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On the eve of the pre-election period, a well-known payment management company in California made a seismic announcement that ought to influence the approach to the economic and employment policies of all political parties vying to be in power in May.

Block, Inc., a company that you might more familiarly recognise as Square whenever you pay at one of those iPad-style tills in a coffee shop or boutique, powers hundreds of thousands of SMEs by managing their payments.

In late February, Jack Dorsey (you might recognise him as the founder of Twitter) announced that Block is to lay off 40% of its 10,000 employees due to the increased productivity gained by using AI.

Whether that’s the whole truth is debatable, but it’s rare to hear a CEO speak so candidly about the impact of AI on headcount.

Meanwhile, in Texas, Oracle, the nearly 50-year-old tech behemoth, has reportedly set aside over $2bn to fund layoffs in the immediate future. There are 30,000 roles speculated to be at risk.

Skills in focus

For the last fifteen years, the main skills development focus has been on training digital skills, and quite rightly so, but all of a sudden, the growth in vibe coding and AI-augmented development (sometimes known as intentional coding) has put this progress in check, and seemingly in reverse.

There’s a lot of criticism of this approach. People are seeing it as AI-washing — using AI as an excuse to reduce headcount and drive profitability.

There are doubts that AI implementation is as sophisticated as those companies carrying out cuts claim. But it seems to be emboldening them, and the stock market is responding positively, which will likely only encourage others.

The Welsh economy seems particularly at risk of falling foul of this trend. Whoever is sitting in the First Minister’s seat come May has a set of thorny issues to tackle, but I’d put this pretty near the top of the list.

One of the criticisms about how the Port Talbot steel crisis was handled was that these problems were entirely predictable.

The skills development and redeployment work should have started years earlier, and there’s plenty of evidence that shows how long it takes from the start of skills programmes to when people feel confident and competent enough to take advantage of them.

Whether the AI-washing starts replacing jobs tomorrow, or in two years, there is seemingly an inevitability that it will come — and for white-collar jobs that have previously felt among the safest of all.

Until now, automation has hit those who already have low job security. AI now threatens the livelihood of people who have trained for decades to achieve their career goals.

The broader context here is that, in one forecast, the removal of higher-paid jobs will lead to economic ripples more painful than just losing those jobs alone.

In mid-March, the Office for National Statistics (ONS) reported that the flat economy has particularly hit hospitality, as people have cut down on eating out.

These treats and splurges will be the first to go if people feel less job security, and there’s an anticipation that we all tighten our belts and stop treating ourselves, creating a secondary squeeze on top of the job losses themselves.

The opportunity

But in all of this, as always, there’s an opportunity.

We’re already seeing a golden era of recreational fishing, board game sales surging in popularity, and the continued growth of things like craft events.

There’s a chance that this next level of AI-powered automation makes us seek more traditional, offline community activities.

We know there are other skills shortages, and there are plenty of roles that are at lower risk of replacement through AI, or can benefit from augmentation.

We know care will need countless more workers in the coming years, and as we understand it today, it’s hard to see AI as a substitute, though there are plenty of tech solutions designed to augment care.

We have a larger-scale, and globally unique, opportunity to build our defence through natural resources. We also have a thriving creative sector, which needs continued support to navigate this uncertain period.

Closing the skills gap — while we can

If we can see this trend continuing, then we must act now. The next government has to look at the threats facing the roles that the last decade’s economy has been built on, and look for the opportunities to build the next era.

We have fantastic colleges and universities across Wales, and there is plenty of engagement from industry to support this work.

Levelling the playing field

We also need to have an awkward conversation about the need to move faster than ever before with policies and market restrictions when it comes to the level of disruption that AI will create in our established economy.

In Silicon Valley, the “move fast and break things” culture is normally related to the idea of disruption arbitrage — the idea that the business model depends, in the early phase, on not being subject to the same rules as incumbents and, as a result, being able to move faster and at a lower cost base than the established order.

If our insurance companies and comparison sites have to go head-to-head with an AI disruptor that creates products based on its AI instincts, but with none of the regulatory shackles, and has a decade to build a competitive advantage, our more established companies, and significant employers, could have a fight on their hands.

As consumers, we might welcome that competition if it leads to better products and prices, Uber, Deliveroo, and Airbnb are popular for a reason, but what if we end up with AI-designed policies that aren’t worth the code they’re written on?

Our next government has battles on every front, but ensuring that Wales comes out of the next technological revolution ahead of the game means we need to prepare our people with the skills to compete, and prepare laws that enable innovation in an uncertain future.

Just as we should have reacted quicker to the decline of the steel industry, we need to act early on AI displacement. We need to provide FE and HE with the means and resources to reskill the workforce at a breakneck pace.

But it’s not just the reskilling. We need to see politicians who ensure that Welsh businesses aren’t competing on an uneven playing field against AI disruptors who write their own rules while incumbents carry the full compliance cost.

I want to see a Welsh government that recognises the tsunami approaching, not missing the signal in the noise.

As of writing this article, none of the main political parties’ manifestos even come close to highlighting this priority, but many non-political organisations are calling it out, including strong contributions from CBI Wales, CIPD Wales, and ColegauCymru.

The complete and total omission from the political parties’ manifestos just further highlights that the needs of business are, once again, being neglected.