AI Won't Replace Human Jobs, But Why Are There So Many Layoffs?

KOMPAS.com – Waves of layoffs continue to sweep through the global technology industry. In recent months, major companies such as Meta and Microsoft have collectively cut thousands of employees, even as they ramp up investments in artificial intelligence (AI). This phenomenon raises a major question: if AI is said not to fully replace humans yet, why are layoffs becoming increasingly prevalent? AI is indeed beginning to transform the way work is done in technology companies. However, the current layoffs more accurately reflect an industrial transition phase rather than simply the direct impact of automation. At Meta, for example, the company has reduced its workforce by around 10 per cent. This step was taken alongside a surge in AI spending reaching hundreds of billions of US dollars. CEO Mark Zuckerberg himself has emphasised that AI is not intended to replace humans but to enhance productivity. He even stated that in the future, “people will become more important, not the other way around.” Yet, behind this narrative, analysts see a massive reallocation of resources from labour to AI infrastructure. A Reuters report notes that Meta has increased its AI capital expenditure to 125–145 billion US dollars, while cutting staff to maintain operational cost efficiency. Although it appears closely linked, several experts assess that AI is not the sole cause of this wave of layoffs. Cognizant’s Chief AI Officer, Babak Hodjat, said that AI is often used as a “scapegoat” in corporate restructurings. “Sometimes AI becomes a scapegoat from a financial perspective. This can happen when companies have hired too many people or want to streamline the organisation,” Hodjat told TechSpot. This view aligns with the phenomenon known as “AI Washing,” where companies use AI narratives to wrap up old business decisions such as cost efficiencies. Indeed, a survey of hiring managers showed that around 59 per cent of companies admit to emphasising AI in layoff announcements because it “looks better to stakeholders.” In addition to AI Washing, the context of the era in which these layoffs and AI developments are occurring is also important.