AI isn’t taking your job: the post-Covid hiring boom has simply run out of steam
Much of the current debate about unemployment, particularly among graduates and early-career workers, has focused on the idea that artificial intelligence is “taking jobs.”
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While AI is undoubtedly changing how work is done, this focus risks missing the more immediate and significant driver of today’s labour market slowdown: the cooling of the post-COVID hiring boom combined with high levels of global economic uncertainty.
There is no doubt that we have seen a rebalancing of staffing levels, particularly in the tech sector, following the massive surge in employment during the COVID-19 pandemic. This can best be understood as boom-and-bust hiring. Firms sought to maximise opportunity during boom times, COVID being a clear example for tech companies, resulting in significant expansion.
Illustratively, several tech firms increased their headcount by as much as 100% during the pandemic. Once these firms encountered market or economic headwinds, the easiest way to reduce costs was through headcount reduction, and this is now very evident in global staffing trends.
That said, some headcount reduction is linked to AI, as some companies use the productivity benefits of AI to cut costs. However, this appears to be driven less by technological inevitability and more by the significant uncertainty in the current macroeconomic environment, with firms hedging their costs until the global economic climate stabilises.
Labour market data reinforces this picture. We are seeing falling vacancies, weaker hiring and lower quit rates in both the US and the UK.
My sense is that this reflects deep concern about the volatility of the global economy. Organisations are taking a conservative stance on hiring as they monitor uncertainty around tariffs, global economic conditions and, most recently, emerging policy on H-1B visas in the US. Employees, too, are aware of this uncertainty and are less mobile.
For longer-tenured staff, this may involve a wait-and-see approach around redundancy payments, while for less experienced workers staying put is perceived as the lower-risk option.
It is also important to recognise that the post-COVID hiring surge was a short-lived anomaly. COVID created an artificial economic climate, driving massive growth in sectors such as technology as companies were forced to digitalise at pace.
Government supports also underpinned employment in many countries by reducing staffing costs. Once these conditions stabilised, combined with global conflicts and wider uncertainty, we saw a rebalancing of global labour markets.
Looking ahead, AI’s real impact is likely to play out over the longer-term. All evidence from past technological breakthroughs suggests AI will lead to job growth rather than net job losses. Some roles will disappear, but new ones will emerge, with the overall effect likely positive.
What is certain is that skills profiles will change. Even highly skilled professionals will need AI and technology capabilities, while transversal skills such as critical thinking, analytical ability and teamwork will remain highly valued.
The key challenge now is planning for these emerging skills demands and investing in upskilling and reskilling to meet them.
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Professor David Collings is the Chair of Sustainable Business at Trinity Business School
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