Artificial intelligence has advanced a lot over the past year, but concerns of the rapidly growing technology replacing human workers continue to mount.
A Citrini Research report added to those fears and has been a big topic of discussion this week. The report imagined a scenario set in 2028, in which the unemployment rate crossed 10% as a result of AI.
“AI capabilities improved, companies needed fewer workers, white collar layoffs increased, displaced workers spent less, margin pressure pushed firms to invest more in AI, AI capabilities improved… It was a negative feedback loop with no natural brake,” it stated.
Granted, the scenario hasn’t materialized yet, but investors are already seeing some of AI’s impact on the labor market.
On Thursday, fintech firm Block (XYZ) said it would slash its headcount to just under 6,000 from 10,000, with its CEO Jack Dorsey attributing the drastic change to AI.
Other notable names that laid off employees due to AI include Klarna (KLAR) and HP (HPQ). Salesforce (CRM) also rebalanced its workforce as AI agents took over customer support work.
Amazon (AMZN) said its latest layoffs aimed to eliminate duplicate layers, and were not AI-driven. But last year, its CEO Andy Jassy said he expected generative AI to lead to a reduced headcount.
On the other hand, IBM (IBM) said it would triple entry-level hiring “across the board” in the U.S. in 2026 by recasting many roles, Bloomberg News reported this month.
For now, AI has mostly complemented employees’ workflow, enhanced productivity in certain industries, and taken over some routine work otherwise performed by junior staff.
Kristalina Georgieva, IMF managing director, last month noted that nearly 40% of global jobs are exposed to AI-driven change. “For workers, finding or keeping a job will increasingly depend on the ability to update skills or learn new ones.”
Besides concerns of job losses, the Citrini report touched upon the so-called SaaSpocalypse – new AI tools threatening established software providers.
“SaaS companies might be forced to rethink their business model from pay-per-user to pay-per-outcome, but this transition might take years,” said SA analyst Eugenio Catone.
“Innovation is nothing without profit. Believing that Anthropic and OpenAI (or whatever AI company is on the rise) will replace many established SaaS companies while still remaining widely unprofitable is something that is very unlikely,” he added.