For those concerned about AI’s impact on the job market, Amazon CEO Andy Jassy’s recent announcement may add even more fuel to the fire.
In a memo to Amazon employees on June 17, Jassy shared that the company plans to cut down their corporate workforce in the next few years due to “efficiency gains” from using AI.
“As we roll out more Generative AI and agents, it should change the way our work is done,” Jassy wrote. “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs.”
Earlier this year, a World Economic Forum report found that 48% of U.S. employers plan to reduce their workforce because of AI.
While not all recent job cuts have been directly linked to AI, several other major tech companies are also looking to reduce their headcount: in May, Microsoft announced that they plan to cut 3% of their workforce, and Google recently offered another round of buyouts through their “voluntary exit program” to employees across the company.
Klarna has reduced its workforce by about 40% due to AI, CEO Sebastian Siemiatkowski told CNBC in May, and Shopify CEO Tobi Lütke told employees in an April memo that they can’t make new hires unless they can prove artificial intelligence isn’t capable of doing the job.
Here’s what AI gains could mean for the job market, according to an expert.
“It’s going to hurt for certain parts of the population”
Kate Lister, president of consulting firm Global Workplace Analytics, says that she isn’t fully convinced that recent tech layoffs are wholly due to AI.
She poses a question: “Would you rather have your shareholders or potential investors read that you’re laying off people because things are going to get better as a result of your investments in AI, or would you rather say that business isn’t very good, and we’re going to lay people off?”
Many tech companies are still dealing with the aftermath of “explosive” hiring during the pandemic, which could be another possible reason for job cuts, according to Lister.
At the same time, Lister says that AI’s threat to certain jobs is “inevitable” in the long term.
“We’ve known this is coming for a very long time — not even specific to AI, but for the last 10 years we’ve been saying that we need a skills upgrade,” she says.
She lists administrative and customer service roles as two professions that may be particularly vulnerable to AI in the short term. For now, she says, blue collar workers might be “safer” from AI-related job cuts than white-collar workers.
“In recent months, job security has been stronger in the trades than in many traditional white collar jobs,” Nich Tremper, senior economist at business software company Gusto, told CNBC Make It in April.
Lister urges companies to consider “the real need to upgrade skills” and prepare their employees for the AI boom.
In Lister’s view, AI has the potential to streamline productivity, take over busywork and help workers avoid burnout.
“I think it will make us a whole lot more intelligent, a whole lot more efficient, and allow us to do the jobs that we as humans are good at,” she says.
However, she says, “unless we take a step backward and train people to make the most of it, it’s going to be hard,” adding that she foresees “a lot of unemployment.”
Still, according to Lister, it’s not yet time to panic: AI still has a long way to go before it can fully replace human employees.
“It’s not there yet by any means. It’s going to have to get a lot better before it starts taking jobs,” she says. “But the fact is, it’s going to hurt for certain parts of the population.”
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