Mass layoffs amid economic uncertainty and the rise of AI

Global markets are witnessing a significant increase in workforce layoffs amid weak consumer confidence and the growing role of Artificial Intelligence (AI) in automating jobs.  Even when it comes to hiring, companies have opted to limit new work to merely few specific roles.

The concern is therefore real: AI is disrupting the global workforce dynamics. This pioneering technology is transforming not only consumers’ lifestyle, but also employees’ livelihoods.

Global companies announce a wave of mass layoffs

The bulk of these layoffs are taking place in the United States.

On the one hand, Washinton previously initiated a consequential cut (by the thousands) in civilian federal jobs due to Elon Musk’s DOGE plan to shrink government spending and workforce. This policy has affected over 2 million federal workers that make up around 20% of the country’s civilian population. Additionally, just in recent weeks, a critical government shutdown has been initiated due to failure in achieving bipartisan agreement, jeopardizing millions of American’s livelihoods (including vital paychecks).

On the other hand, numerous massive companies have resorted to mass layoffs for various distinct purposes. Some claimed rising operational costs as the driving cause behind their new policy (due to the US-imposed tariffs and the ongoing trade war), while others cited corporate restructuring. Regarding the latter category particularly, companies are reportedly redirecting their funding to heavily invest in a thriving field: AI. This is the case with Amazon, which is currently spearheading the aforementioned layoffs. It has cut around 14,000 corporate jobs (almost 4% of its total workforce) in order to ramp up spending with regards to AI (especially generative AI). Other companies fall in the first category, such as United Parcel Service (UPS), Target, Nestlé, Intel, Microsoft, Novo Nordisk, among many. Each of them has announced thousands of layoffs, signaling the intensity and complexity of the current situation.

Therefore, over 25,000 layoffs have been reported in the US (with Amazon being the principal initiator), while a similar number has been attributed to Europe as well (Nestlé being the leading one).

Is AI taking over the job market?

Despite the redirection of major fundings to AI, such as with Amazon, many analysts believe that it is not AI in itself directly impacting human’s employment, since the latter’s input still plays a vital role in various tasks and jobs. However, it is “AI’s appetite for cash that might be taking jobs,” according to Jason Schloetzer, professor business administration at Georgetown University’s McDonough School. Additionally, former Google CEO Eric Schmidt reassured at the Future Investment Initiative in Saudi Arabia that although some jobs will be lost, AI will also create more jobs than it replaces. He claimed that “more money creates more wealth in the system. At least in democracies with progressive taxation, that money gets recycled into the entire system.” Therefore, he believed that “for every job loss, there is probably more than once job created.” He backs his viewpoint by saying that “because the system is smart, but the human get smarter, too. Most people make more money when they use AI tools than when they don’t.”

Nevertheless, the continuous rise of technology incorporation in most jobs, coupled with the enhanced investment and evolution of AI instead of initiating a renewed “winter” phase (which is a period of reduced funding and interest in AI research), concerns regarding human employment will remain dominant for the foreseeable future.