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

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.

“Anxiety around job displacement will also become far greater,” the analysts added, but noted that the Stanford study was “inconclusive and noisy.”

Companies attributing much of the blame for job cuts to AI should be taken “with a grain of salt,” as “AI redundancy washing will be a significant feature of 2026,” according to the Deutsche Bank analysts.

Indeed, some studies show that the impact of AI on the labor market has so far been muted. AI hasn’t yet caused widespread job losses, Yale University’s Budget Lab said in a report in October. The lab analyzed U.S. labor market data from 2022 to 2025 and found that the share of workers in different jobs hadn’t shifted massively since ChatGPT’s debut.

Sander van’t Noordende, the CEO of Randstad, the world’s largest staffing firm, told CNBC in Davos on Tuesday that the role of AI in job cuts is being overstated.

“I would argue that those 50,000 job losses are not driven by AI, but are just driven by the general uncertainty in the market. It’s too early to link those to AI,” Noordende said.

He added that “2026 is the year of the great adaptation,” where individuals and team leaders need to start thinking about how to integrate AI and lock in productivity gains.

“I see AI as a big opportunity for our industry to do a better job for talent. Reaching out to talent. Connecting with talent, evaluating talent, onboarding talents. Lots of those activities can be done by AI,” he said.

Mercer’s report additionally found that an overwhelming 97% of investors said funding decisions would be negatively impacted by firms that fail to systematically upskill workers on AI and bring them forward into the future.

Over three-quarters of investors said they’re more likely to invest in companies that provide AI education to employees.

“We’ve gone from a couple of years ago, even last year, everyone was AI-washing annual reports, if you stuck AI in, you got an immediate bump,” Ravin Jesuthasan, a future of work expert and senior partner at Mercer, told CNBC.

“Now you’ve got the opposite phenomenon where people are sort of running for the hills…I think what you’re seeing next is investors saying… ‘How are you combining your workforces with AI? How are you bringing your workforces along?'”

Jesuthasan stressed that investors are saying they’re going to “actively invest or disinvest in companies that aren’t getting to the optimal combinations of humans and machines,” because they see upskilling as critical to “sustaining the economic performance of the organization.”

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