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Workforce Reduction

AI impacting labor market ‘like a tsunami’ as layoff fears mount

Sawdah Bhaimiya

January 21, 2026

Workforce Reduction

AI impacting labor market ‘like a tsunami’ as layoff fears mount

Sawdah Bhaimiya

January 21, 2026

Photo by Matt Paul Catalano on Unsplash

After a year marked by AI-driven layoffs, influential leaders and top executives are now warning that we can expect to see a huge ramp up in anxiety around the technology in 2026.

Kristalina Georgieva, managing director at the International Monetary Fund, said Tuesday that AI is “a major factor for economic growth,” in a conversation with CNBC’s Karen Tso and Steve Sedgwick at the World Economic Forum’s flagship conference in Davos, Switzerland.

“We see potential to up of 0.8% boost to growth over the next years, but it is hitting the labor market like a tsunami, and most countries and most businesses are not prepared for it,” Georgieva explained.

“What do they [countries and companies] have to do? They need to think about the new skills that are already necessary and how they’re going to have these new skills,” she added.

AI was seen as a significant contributing factor to nearly 55,000 layoffs in the U.S. in 2025, according to December data from consulting firm Challenger, Gray & Christmas. Major firms were citing AI as part of the reason for laying off workers.

Amazon announced 15,000 jobs cuts last year, while Salesforce’s CEO Marc Benioff said 4,000 customer support workers had been let go because AI was already doing 50% of the work at the company.

Other companies that cited AI in restructuring were tech consultancy firm Accenture and airline group Lufthansa.

Worker sentiment around AI is shifting as AI layoffs continue to dominate headlines. In fact, employee concerns about job loss due to AI have skyrocketed from 28% in 2024 to 40% in 2026, according to preliminary findings from consultancy firm Mercer’s Global Talent Trends 2026 report, which surveyed 12,000 people worldwide.

Mercer’s research shows that 62% of employees feel leaders underestimate AI’s emotional and psychological impact.

“Anxiety about AI will go from a low hum to a loud roar this year,” Deutsche Bank analysts wrote in a note on Tuesday. “This will be reflected in lawsuits over everything from copyright to privacy, data centre location and protection of young people from chatbots encouraging self-harm or worse.”

The note cited a Stanford study in November, which referenced a 16% relative decline in employment for graduates in roles exposed to AI, as opposed to jobs for experienced employees remaining stable since the launch of ChatGPT in November 2022.

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Read full article here

Experts and CEOs say that firms need to create systematic upskilling opportunities and education around AI.
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