Artificial intelligence is increasingly being viewed as a driver of workforce reduction, with more than 99% of executives expecting AI to lead to at least some layoffs within the next two years, according to Mercer's latest Global Talent Trends report.
The findings point to a significant shift in how business leaders view AI's impact on jobs. While companies continue to invest heavily in automation and generative AI technologies, concerns are growing that younger employees and entry-level talent could bear the brunt of the disruption.
The survey also highlights a widening gap between ambition and preparedness. While executives are rapidly integrating AI into business strategies, far fewer believe their organisations are equipped to effectively combine human and machine capabilities.
Executives prepare for workforce reductions
Mercer's Global Talent Trends report surveyed approximately 12,000 executives, HR leaders and employees worldwide.
According to findings highlighted by Mashable, more than 99% of executives expect AI to result in some level of headcount reduction over the next two years.
The report also found that many organisations are planning broader changes to workforce structures as AI adoption accelerates, with senior leaders prioritising automation and AI integration as key strategic initiatives.
However, despite the confidence around AI deployment, only about one-third of respondents said their organisations are capable of effectively blending human and machine work.
The contrast suggests many companies are moving ahead with AI transformation before fully developing the workforce models needed to support it.
Entry-level talent faces mounting pressure
The survey findings come amid growing concerns about the future of junior and early-career roles.
According to reporting cited by Tom's Hardware, entry-level positions are increasingly vulnerable because AI is capable of performing many routine and repeatable tasks that have traditionally served as training grounds for new employees.
The trend is already affecting hiring decisions.
Research referenced in the report shows the proportion of companies reducing junior positions rose from 17% to 43% within a year, reflecting a sharp shift in workforce planning.
Young professionals aged 22 to 27 are considered particularly exposed as organisations reassess hiring needs and automate administrative, analytical and operational tasks that were previously handled by early-career employees.
Key workforce trends highlighted across reports include:
- More than 99% of executives expect AI-related layoffs within two years
- Only around one-third of organisations believe they can effectively combine human and machine capabilities
- Companies reducing junior positions increased from 17% to 43% in one year
- Employees aged 22-27 face heightened displacement risks
- Employee thriving levels reportedly fell from 66% in 2024 to 44% in 2026
Questions emerge over the business case for AI layoffs
While workforce reductions are becoming more common, evidence that AI-related layoffs consistently improve business performance remains limited.
According to studies cited by Tom's Hardware, AI has become the most frequently cited reason for layoffs in 2026. However, research from Gartner suggests that reducing headcount does not automatically translate into stronger financial returns or productivity gains.
The research found similar workforce reduction rates among organisations reporting strong AI returns and those reporting weaker outcomes.
The findings challenge a growing assumption that replacing workers with AI is necessarily the fastest route to improved efficiency.
Several experts cited in the reports suggested organisations often achieve better outcomes when AI is used to augment employee capabilities rather than replace them outright.
AI-linked job cuts continue to rise
The debate is unfolding against a backdrop of rising AI-related workforce reductions.
According to figures cited in the reports, AI was referenced in 21,490 job cuts in the United States during April 2026 alone, accounting for approximately 26% of all layoffs recorded during the month.
Year-to-date AI-related layoffs reached 49,135, nearly matching the total number reported during all of 2025.
Several major technology companies, including Meta, Oracle, Salesforce and Block, have announced job reductions linked to AI-driven restructuring and automation initiatives.
The growing numbers suggest AI is no longer a future workforce challenge but an active factor shaping hiring, restructuring and talent strategies today.
Workforce strategy may determine the next phase of AI adoption
As AI adoption accelerates, organisations face a choice between using technology primarily as a cost-reduction tool or as a means of enhancing workforce productivity.
The Mercer findings suggest many executives anticipate workforce reductions, but questions remain about whether layoffs alone can deliver the value companies expect.
For employers, the challenge will be balancing automation with talent development. For employees, particularly those at the start of their careers, the focus is increasingly shifting towards skills that complement AI rather than compete with it.
How organisations manage that transition could determine whether AI becomes primarily a workforce disruption story or a workforce transformation opportunity.