AI-Driven Layoffs Expected by CEOs

CEOs Brace for Widespread AI-Driven Layoffs in the Next Two Years

Technology & AIMay 25, 20264 min read732 words21 sources

Summary

A staggering 99% of CEOs anticipate AI will lead to workforce reductions within the next two years, signaling a dramatic shift in corporate strategy from AI as a productivity enhancer to a tool for headcount reduction. This expectation is particularly impacting early-career professionals, with many executives prioritizing automation over traditional talent development. The rapid adoption of AI is creating significant anxiety among employees, leading to a proposed new term, "AI replacement dysfunction" or AIRD.

The Inevitable Shift: AI as a Headcount Strategy

A recent survey reveals that an overwhelming 99% of CEOs expect AI initiatives to result in layoffs within the next two years. This figure, from consulting firm Mercer's Global Talent Trends report, indicates a significant hardening of executive intent, moving beyond earlier discussions of AI solely as a productivity tool to a clear strategy for workforce restructuring. While most executives believe that redesigning work to incorporate automation will yield the greatest return on investment, only 32% are confident that humans and machines can optimally coexist in the workforce.

This sentiment is not merely a passing executive soundbite; Mercer's broader study gathered responses from nearly 12,000 C-suite executives, HR leaders, investors, and employees across 16 geographies and industries between September and October 2025. The consensus among CEOs is that the next phase of AI adoption will fundamentally alter the size and shape of their workforces. This means companies are not just implementing software; they are actively rethinking how work is performed, which roles remain relevant, and where automation can eliminate layers of cost.

The Disproportionate Impact on Early-Career Professionals

The brunt of these anticipated AI-driven layoffs is expected to fall heavily on early-career positions. A recent survey found that most of the headcount reduction CEOs are bracing for will focus on these roles. The reasoning behind this trend is that AI excels at automating simpler tasks typically performed by early-career workers who are also undergoing on-the-job training to advance to higher-level positions.

This focus on automating entry-level work is creating a challenging job market for young professionals, particularly those aged 22 to 27, marking the grimest job market for this demographic since the height of the pandemic. The share of CEOs planning to reduce junior roles has more than doubled to 43%, up from 17% in the previous year, according to an Oliver Wyman global survey. This strategy, while potentially offering short-term margin improvements, raises concerns about creating a future skills problem by weakening the talent pipeline. Some experts, like Anthropic CEO Dario Amodei, have even predicted that AI could eliminate half of all entry-level white-collar jobs within five years, potentially pushing unemployment into double digits.

White-Collar Work Under Threat and the Rise of "AI Replacement Dysfunction"

The impact of AI is already being felt across various white-collar sectors, including technology, knowledge, and creative industries. Roles in accounting, legal work, marketing, and project management are particularly in the crosshairs, with Microsoft AI CEO Mustafa Suleyman predicting that AI will achieve human-level performance on most professional tasks within 12 to 18 months. This shift is not merely about direct job replacement but also about reduced hiring, especially for junior and entry-level roles.

The psychological toll on workers is significant. Only 44% of employees reported thriving at work in 2026, a notable decrease from 66% in 2024, with anxiety over AI-driven job displacement cited as a primary cause. This pervasive distress has led researchers to propose the term "AI replacement dysfunction" or AIRD to describe the existential anxiety experienced by workers. While some economists and CEOs, such as Goldman Sachs CEO David Solomon, believe concerns about a "job apocalypse" are "overblown" and that AI will ultimately create new jobs and augment existing ones, the immediate reality for many workers is one of uncertainty and fear.

The Broader Economic and Societal Implications

The rapid integration of AI into the workforce presents a complex picture of both job displacement and creation. While some reports, like the World Economic Forum's Future of Jobs Report 2025, project a net gain of 78 million jobs globally by 2030, with 170 million new roles created against 92 million displaced, the transition period is proving disruptive. The jobs of the future will demand a blend of technical skills, creativity, and adaptability, emphasizing the critical need for upskilling and reskilling programs.

However, the current focus on cost reduction through AI automation, particularly in entry-level roles, could have long-term consequences for talent development and economic stability. The impact of AI on the labor market may also disproportionately affect vulnerable demographic groups, potentially exacerbating existing inequalities. The growing pressure on CEOs to demonstrate AI-driven outcomes and ROI is intense, with 80% of global CEOs believing their job is at risk if their AI strategies fail by 2026. This executive anxiety further fuels the drive towards rapid AI adoption and workforce restructuring.

CEOs Brace for Widespread AI-Driven Layoffs in the Next Two Years

The Inevitable Shift: AI as a Headcount Strategy

The Disproportionate Impact on Early-Career Professionals

White-Collar Work Under Threat and the Rise of "AI Replacement Dysfunction"

The Broader Economic and Societal Implications

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The Inevitable Shift: AI as a Headcount Strategy

The Disproportionate Impact on Early-Career Professionals

White-Collar Work Under Threat and the Rise of "AI Replacement Dysfunction"

The Broader Economic and Societal Implications

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