Companies are not significantly laying off workers due to artificial intelligence (AI) but rather due to “more traditional drivers,” according to a recent study by Oxford Economics. The report suggests that the evidence linking AI to job losses is “patchy,” casting doubt on claims that AI will lead to a surge in unemployment.
“Early claims of AI’s current impact on the job market are exaggerated,” the study states, noting that while major companies have cut jobs in recent years, they have often attributed these layoffs to AI, describing them as “restructuring” to focus on “key strategic” areas. Ben May, director of global macro research at Oxford Economics, acknowledged some “anecdotal evidence” indicating job losses in sectors vulnerable to AI and automation. However, the overall concerns regarding mass job losses attributed to AI appear overblown.
The study emphasizes that firms do not seem to be replacing workers with AI on a significant scale and expresses skepticism that unemployment rates will rise sharply due to AI in the coming years. “While a rising number of firms are pinning job losses on AI, other more traditional drivers of job layoffs are far more commonly cited,” it adds. The report suggests that some companies may be framing layoffs as a positive move rather than a negative one, potentially to recover from past over-hiring.
In the UK, a third of tech leaders indicated they had cut staff citing AI but expressed regret over those decisions. Research indicates that job losses attributed to AI are being offset by rehiring, often at lower wages or offshore. According to the report, in the first 11 months of 2025, 55,000 job losses were attributed to AI, accounting for just 4.5% of overall job losses, with the majority linked to economic conditions. For instance, Amazon attributed a headcount reduction of 14,000 to efforts to eliminate bureaucracy, while Atlassian denied that its customer service job cuts were related to AI.
Oxford Economics posits that even the small number of job losses attributed to AI may be overstated, noting that linking layoffs to increased AI usage rather than economic challenges such as weak demand or excessive past hiring conveys a more favorable narrative to investors. The report asserts that while AI adoption is indeed occurring, it is primarily aimed at funding experiments rather than replacing workers outright.
When examining productivity, the report observes that if AI were genuinely replacing workers, one would expect a clear productivity boost. Instead, much of the enterprise AI adoption remains experimental. “Productivity growth rates in other major advanced economies have also been largely unexceptional,” it states, suggesting that the current integration of AI is more about exploration than revolution.
Despite some sectors experiencing disruption, the report anticipates that any significant shifts related to AI will be “evolutionary rather than revolutionary,” with macro-level impacts remaining limited. Graduate jobs and early-career roles are highlighted as particularly vulnerable to AI, with a survey by IDC revealing that two-thirds of companies have slowed entry-level hiring. The unemployment rate among graduates in the U.S. has risen from 3.9% to 5.5% since the launch of OpenAI’s ChatGPT, which is often cited as evidence of AI’s negative impact on job availability.
While firms like PwC have announced cuts to graduate roles, the report suggests that the recent rise in graduate unemployment is not particularly extreme and corresponds to historical trends where graduate unemployment tends to rise more sharply than the overall rate. The widening gap between professional and technical services and other roles predates the introduction of generative AI. The study concludes that the challenges facing younger job seekers are more a result of cyclical economic factors rather than the impact of AI.
Overall, while AI plays a role in the evolving job market, the narrative surrounding mass job losses appears to be more complex than initially suggested. Firms may need to reassess how they communicate about layoffs and their implications in the context of rapid technological advancements.
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