AI will cause more layoffs but jobs will not disappear completely

According to research platform layoffs.fyi, the number of global tech workers laid off last year reached 240,000. In the context of 2024 still full of uncertainty, Anna Tavis, professor of human resource management at New York University believes that all industries will continue to “right-size” human resources to pursue efficiency. efficiency, cut costs and streamline skills portfolios.

AI greatly affects the job market

Last week, UPS announced that it would lay off 12,000 workers this year, to save $1 billion in operating costs in 2024. This is the largest layoff in the 116-year history of the American express delivery company. CEO Carol Tomé said that UPS can do this thanks to AI. As an example, she points out, machine learning, for example, allows salespeople to provide quotes without having to ask a pricing expert for guidance.

A UPS spokesperson later said AI will not replace workers. Executives also did not make a clear link between AI and permanent layoffs during UPS’s earnings call.

Last month, BlackRock announced it would lay off about 600 employees. In an email to employees, CEO Larry Fink and President Rob Kapito pointed to new technology bringing about dramatic changes in the industry and beyond. Although Fink boldly expressed that AI helps increase productivity, this new technology is not considered the reason for the cuts. The asset management group still expects to have a larger headcount later this year as it expands certain departments, the email said.

Experts are working to paint an accurate picture of how many jobs are disappearing as AI rapidly develops. According to job provider Challenger, Gray & Christmas, since May 2023, US companies have announced more than 4,600 job cuts to free up resources. The purpose of this is to hire new people with experience in AI or this technology has done some work. But sharing with Bloomberg recently, Senior Vice President Andrew Challenger said that that estimate completely reflects reality.

Meanwhile, the International Monetary Fund (IMF) says AI affects 40% of global jobs.

Only a few companies specifically cited AI as a reason for layoffs

“There are probably more jobs in the economy being cut because of AI than is being announced. Any business that mentions AI as a reason for layoffs will have the company’s name appear in all the news, all month long. Most people like to hide, don’t want to be called names,” Challenger emphasized.

Last spring, IBM attracted worldwide attention when CEO Arvind Krishna told Bloomberg that the company planned to pause hiring because it thought AI could soon replace many workers. Afterwards, an IBM spokesperson said the company does not apply a recruitment policy and plans to maintain the number of employees this year.

CEO Johnny Taylor of the Society for Human Resource Management (SHRM) predicts that many layoffs like IBM’s will happen quietly. IBM has been a public leader on that, and the corporation has been heavily criticized, Taylor said. Therefore, the remaining businesses will not announce directly but may follow the trend of reducing the number of employees without specifying the reason.

“Many companies could do that by significantly reducing hiring. Three years later, we woke up one morning and saw much leaner organizations. They will replace you or another person without making a noticeable announcement,” Taylor said.

According to Challenger statistics, so far most of the AI-related layoffs have been in the technology industry. Some companies, such as homework help site Chegg and developer help site Stack Overflow, have cut staff after business declined directly because of AI products. Other companies, like file storage service Dropbox, raced to refocus on new technology, laying off employees to make way for new hires with AI skills.

After IBM, only a handful of companies have explicitly said AI was the cause of job cuts or hiring freezes.

In December, Swedish credit company Klarma, buy now and pay later (BNPL), announced it would stop recruiting new employees. The company says tools like OpenAI’s ChatGPT have cut the time it takes to perform certain tasks. “We need fewer people working. The right thing now is for us to just say stop hiring,” CEO Sebastian Siemiatkowski told the Telegraph.

In January 2024, language learning app Duolingo decided not to renew about 10% of its contractors. A Duolingo spokesperson said that part of the contractor’s work will likely be taken over by AI. This person added that the business has no regulations on temporary suspension of recruitment and is actively recruiting for many different positions. Duolingo said no full-time employees were affected and that the job cuts were not a “direct replacement” of workers with AI. Because many full-time employees and their contractors use this technology in their work.

Billionaire Elon Musk went further to say that with current technological advances “there will come a time when there will be no need for jobs anymore.” Musk unveiled his own artificial intelligence chatbot, named Grok, last year. Photo: Bloomberg

Doing “transformation” according to the law of conservation of energy?

Companies like Duolingo are not alone in thinking this way, even if they don’t say so outright. Three out of four Fortune 500 HR executives surveyed by Gallup last year said they see AI replacing jobs at their companies in the next three years.

“Don’t avoid it,” said Bob Toohey, chief human resources officer at insurer Allstate Corp. Jobs will disappear because of AI.” But Toohey said he was referring to the overall labor market, not just Allstate. Perhaps, Toohey speaks in terms of the law of conservation of energy, like “Jobs are not naturally created and destroyed, but only transformed from one form to another”.

In Allstate’s human resources department, Toohey said AI will transform the work of the learning and development team, which trains Allstate employees in a new approach to claims handling. A content creation process that once took three weeks can now take less than a day.

In the tech industry, some top executives have warned AI could eliminate certain jobs. Elon Musk even went further, saying: “There will come a time when people will no longer be needed for jobs.” For companies that are introducing AI to workers, the impact will often be more positive.

“The key thing you’ll hear companies say is that they’re not focusing on elimination but on enhancement – ​​trying to help people be more efficient and productive. But clearly there are a lot of situations now where one person can do the work of four or five people with the help of AI in a way that they couldn’t do a year ago. That’s happening even when we don’t hear anyone mention AI, in business announcements or CEO statements,” Challenger emphasized.