Grim AI and Mass Layoff Predictions Cause Alarm — Reality on the Ground Contradicts Fears

Jakarta, VIVA – Advances in artificial intelligence (AI) have sparked concerns that the technology will eliminate millions of jobs, particularly for young people entering the workforce. However, several economists argue this scenario is not reflected in current labour market data.

Throughout 2025, rising unemployment among young workers raised fears that AI was beginning to take over entry-level roles, with mid- and late-career workers considered safer while the youth struggled to find their first jobs.

Nonetheless, analysts say this narrative remains unproven. Andrew Husby, a senior US economist at BNP Paribas, predicts the national unemployment rate will fall to 4.1% next year from the current 4.3%. He believes young workers will not be sidelined in the labour market.

Data from the Federal Reserve Bank of St. Louis shows youth unemployment (aged 24 and under) reached 9.5% in April 2026. While still high, this is lower than the second half of 2025 when youth unemployment exceeded 10%.

Husby attributes the previous surge in unemployment to fiscal tightening and economic uncertainty, not AI. He notes conditions are improving as the economy strengthens.

This is evident in US major stock indices hitting new highs, supporting job growth in economically sensitive sectors. Husby also highlighted that current youth unemployment remains historically low.

‘Youth unemployment is still very low historically, near the lower bound of ranges seen since the 1950s,’ he said, as quoted by Barron’s on Sunday, 31 May 2026.

He acknowledged the figure may rise slightly during summer and autumn due to seasonal factors, but overall job market prospects remain positive.

Another factor supporting the labour market is a shrinking pool of young workers. Baby boomer retirements and declining immigration have reduced new entrants to the workforce, keeping the labour market relatively tight.