The rapid advancement of artificial intelligence is transforming the global workforce at an unprecedented pace. While AI offers incredible potential to boost productivity and innovation, it also raises concerns about job security.

This fear is fueled by a wave of recent layoffs attributed to AI adoption, leaving many wondering: are these job losses inevitable, or can companies integrate AI while retaining their workforce?

The World Economic Forum's Future of Jobs Report 2023 reveals that over 85 million jobs may be displaced by AI and automation by 2025. However, the report also predicts that 97 million new roles will emerge, requiring skills in AI, machine learning, and data analysis.

This highlights the critical need for continuous learning and upskilling to navigate the changing job market.

Also Read: How much is AI really changing the need for skills?

Why companies choose layoffs

Companies are driven to layoffs when adopting AI for a variety of reasons. Primarily, AI offers the potential for significant cost reduction by automating tasks previously performed by human employees.

Automation also leads to increased efficiency, as AI can often perform tasks faster and more accurately, boosting overall productivity. Moreover, by offloading routine tasks to AI, companies can free up their existing workforce to focus on more strategic initiatives and creative problem-solving, ultimately driving innovation.

However, some companies cut people based on the flawed assumption that AI can replace most human workers. This oversimplification fails to recognize the nuances of human skills and the limitations of current AI capabilities. One common misconception is that AI can replicate the full spectrum of human intelligence, including critical thinking, emotional intelligence, and complex decision-making.

While AI excels at automating repetitive tasks and analysing large datasets, it still struggles with tasks requiring creativity, empathy, and nuanced judgement. This often leads to companies prematurely eliminating roles that are, in fact, still crucial for success, overlooking the valuable contributions of their human workforce.

Furthermore, the pressure to adopt AI quickly and demonstrate a commitment to innovation can push companies toward hasty decisions. Fearful of falling behind competitors, they may resort to layoffs as a quick fix to streamline operations and reduce costs, without fully considering the long-term implications.

This short-sighted approach can result in a loss of valuable expertise, damage employee morale, and ultimately hinder the company's ability to adapt and thrive in the evolving landscape.

AI-driven layoffs in 2024

Despite the potential for AI to create new jobs, numerous companies are opting for layoffs as part of their AI adoption strategy. According to People Matters Global, major players across various sectors have announced job cuts attributed to AI in 2024. These include:

Tech giants. Google, Microsoft, and IBM have all announced layoffs, citing AI as a factor in their decisions. These companies are investing heavily in AI research and development, and some experts suggest that they are streamlining their workforce to accommodate these new technologies.

Financial institutions. Banks like Goldman Sachs and J.P. Morgan are using AI to automate tasks previously performed by human employees, leading to job losses in areas like customer service and back-office operations.

Media and entertainment. Companies like Duolingo have reduced their reliance on human contractors for content creation, opting for AI-powered tools to generate translations and language learning materials.

Also Read: Setting the stage for the AI-employee alliance

Avoiding layoffs: A proactive approach

Before resorting to layoffs, companies should seriously consider the multitude of benefits associated with retaining and upskilling their existing workforce in the face of AI adoption. Firstly, preserving experienced employees safeguards invaluable institutional knowledge and expertise that has been accumulated over time.

This knowledge base is crucial for navigating the complexities of implementing and integrating AI systems effectively. Secondly, investing in training and development fosters a highly engaged and motivated workforce. Employees who feel valued and supported through this technological transition are more likely to embrace AI tools and contribute to their successful implementation.

Thirdly, reskilling initiatives can lead to a more versatile and adaptable workforce, capable of handling the evolving demands of an AI-powered workplace. This enhanced adaptability strengthens the company's resilience in the face of future technological advancements.

Finally, prioritising employee retention fosters a positive work environment and strengthens company culture, which is essential for attracting and retaining top talent in a competitive market. By focusing on upskilling and empowering their workforce, companies can unlock the full potential of AI while fostering a thriving and adaptable organisation.

AI-driven layoffs are a reality. But they are not inevitable. Companies can take proactive steps to mitigate job losses and ensure a smooth transition to an AI-powered workforce:

Continuous learning. Invest in employee training and development programs to equip them with the skills needed to work alongside AI. This includes providing opportunities to learn about AI technologies, data analysis, and other relevant skills.

Skills inventories. Conduct comprehensive skills inventories to identify existing employee capabilities and potential skill gaps. This information can be used to develop targeted training programs and identify opportunities for employees to transition into new roles.

Reskilling and upskilling. Provide employees with opportunities to reskill or upskill into roles that are complementary to AI technologies. This may involve offering training in areas like AI development, data science, or cybersecurity.

Internal mobility. Encourage internal mobility by creating opportunities for employees to move into different roles within the company. This can help to retain valuable employees and prevent layoffs.

Transparent communication. Maintain open and honest communication with employees about the company's AI adoption strategy and its potential impact on the workforce. This can help to build trust and reduce anxiety about job security.

When layoffs may be unavoidable

While proactive measures can help to minimise job losses, there may be situations where layoffs are unavoidable. These include:

Significant automation. When AI can completely automate a specific job or function, eliminating the need for human intervention.

Economic downturn. During economic downturns, companies may be forced to make difficult decisions about their workforce, and AI-powered automation can provide a way to reduce costs.

Company restructuring. Companies undergoing major restructuring may need to eliminate certain roles or departments, and AI can be used to streamline operations and reduce the need for human labour.

The adoption of AI is transforming the workforce, and while layoffs are a concern, they are not an inevitable consequence. By investing in continuous learning, reskilling, and transparent communication, companies can successfully integrate AI while retaining their valuable employees.