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Picture Courtesy: Times of India

Context:

Companies like Google, Meta, Amazon, and Accenture are cutting thousands of jobs, even as they invest billions in artificial intelligence (AI). CEOs are simultaneously reducing staff while expanding teams focused on automation, data, and machine learning.

Current Status:

• According to expert economists from MIT and Yale, warn that most AI-related layoffs are overstated.
• Studies show that up to 95% of corporate AI investments haven’t yet produced measurable returns,
• According to the World Economic Forum, AI could replace 92 million jobs but create 170 million new ones—a net gain.
• A global report by PwC (2025 Global AI Jobs Barometer) finds that job availability has grown even in occupations “most exposed” to AI automation. Wages for jobs requiring AI-relevant skills are rising: on average a 56 % wage premium in 2024 for AI-skilled roles globally. 

Why major tech companies are laying off employees even while earning huge profits?

Shifting Priorities Toward AI and Automation: Big Tech firms are restructuring around artificial intelligence (AI). They’re not necessarily in financial trouble — they’re just reallocating resources. For example; Companies like Google, Meta, Amazon, and Microsoft are cutting traditional roles (like marketing, HR, or customer service) and hiring AI engineers, data scientists, and automation experts instead.

The Efficiency Mindset: Even profitable companies are under pressure to “do more with less.”
AI tools can automate parts of many jobs — data analysis, writing, coding, support — so executives see an opportunity to reduce labor costs without hurting productivity.

Investor and Market Pressure: Investor rewards companies that appear “lean” and “efficient.”
Announcing layoffs — even during record profits — signals to investors that management is disciplined and focused on margins.

Over-Hiring During the Pandemic: Between 2020 and 2022, tech companies went on a hiring spree to meet pandemic-driven demand for e-commerce, remote work, and online entertainment.

Skill Mismatch: The roles being eliminated often don’t align with where the business is heading.

• Routine administrative and customer support jobs are declining.
• AI-related technical and strategic jobs are increasing. 

Multi-dimensional implication of layoffs due to AI:

Economic Implications

• Job Displacement vs. Productivity Gains: AI automation can eliminate repetitive or analytical jobs (e.g., customer support, data entry) while boosting efficiency and lowering costs. However, productivity gains are not always evenly distributed—profits often concentrate among firms owning the AI technology.
• Wage Polarization: Middle-skill jobs shrink, leading to growth in high-skill (AI design, data science) and low-skill (manual labour, service) sectors, widening income inequality. 

Social and Psychological Implications

• Identity and Purpose: Work is a major source of identity. Large-scale layoffs can lead to loss of self-worth, depression, and social fragmentation.
• Cultural Shifts: Societies that equate employment with value may struggle to redefine “meaningful contribution” in an AI-driven world. 

Educational and Skill Implications

• Reskilling Imperative: Workers must adapt to roles emphasizing creativity, empathy, and critical thinking—skills harder for AI to replicate.
• Lifelong Learning: Education systems need to transition from one-time schooling to continuous learning ecosystems, often powered by AI itself. 

Ethical and Governance Implications

• Corporate Responsibility: Should companies that benefit from AI-driven layoffs be required to fund retraining or universal basic income (UBI) initiatives?
• Algorithmic Transparency: Workers deserve to understand when and how AI decisions affect their employment status. 

Environmental and Infrastructure Implications

• Energy Demand: AI infrastructure (e.g., data centers) consumes vast energy; layoffs in one sector may correspond with growth in high-energy digital industries.
• Urban vs. Rural Divide: Automation may intensify economic concentration in tech hubs while hollowing out industrial or service towns. 

Challenges in reversing the trend of AI-driven layoffs:

• Profit & Efficiency Imperative: AI systems drastically reduce costs and increase productivity. Once firms discover cost savings, there’s strong shareholder pressure to continue automating rather than rehiring humans. 

• Short-Term Financial Incentives: Many corporate decisions are driven by quarterly earnings and investor expectations, not long-term social considerations. 

• Irreversibility of Adoption: Once AI systems are integrated into workflows, reversing them means dismantling efficient, automated infrastructure and retraining staff — often economically unviable. 

• Skills Mismatch: Workers laid off due to AI often don’t have skills that align with new jobs being created (e.g., data engineering, AI oversight, or prompt design). Reskilling takes time, money, and institutional support that many regions lack. 

• Lack of Coordinated Global Policy: AI adoption is global but labor laws and social policies are national. No unified international framework governs AI’s impact on employment. 

• Public Acceptance of Automation: Society has largely accepted automation as “inevitable progress.” This narrative weakens resistance or alternative visions of tech-driven work. 

Government Measures:

• Industrial Disputes Act, 1947, industrial establishments in India (those employing 100 or more workers) must seek prior permission from the appropriate government before effecting closure, retrenchment or lay-off. 

• The government’s “Future Skills PRIME” programme (via the Ministry of Electronics & Information Technology (MeitY)) aims at up-skilling and re-skilling the IT manpower in emerging technologies including AI. For instance, over 18.56 lakh candidates have registered and 3.37 lakh have completed courses.
• In the 2024-25 budget, the government proposed employment-linked incentive schemes (via the Ministry of Labour & Employment) aimed at creating about 29 million formal jobs. 

• The government of India has constituted a taskforce to study the impact of AI on future of work. 

Way Forward:

Mass Reskilling & Upskilling

• Expand digital literacy and AI-skills training (e.g., FutureSkills PRIME).
• Encourage public–private partnerships for continuous learning.

Stronger Worker Protection

• Update labour codes to cover AI-related layoffs.
• Create AI Transition Funds and wage insurance for displaced workers.

Responsible Corporate AI Use

• Mandate Human Impact Assessments before automation-driven job cuts.
• Reward firms that use AI to augment, not replace, human jobs.

New Job Creation

• Promote AI-linked industries (green tech, healthcare, agri-tech, startups).
• Link Make in India & Digital India missions with AI employment goals.

Education Reform

• Focus on creativity, critical thinking, and human–AI collaboration.
• Introduce flexible lifelong learning programs.

Inclusive & Ethical Governance

• Set up a National Council on AI and Employment.
• Protect gig, informal, and rural workers through expanded safety nets. 

Conclusion:

AI is transforming India’s economy, bringing both opportunity and disruption. While automation can boost efficiency and growth, it also risks large-scale job displacement if left unchecked. The challenge, therefore, is not to resist AI, but to manage its impact responsibly — ensuring technology serves people, not replaces them. 

Source: Times of India