Why AI is being blamed for layoffs that were coming anyway

Artificial intelligence is being blamed for a raft of recent redundancies, but is it really to blame, or is this AI-washing?

Can two things be true at once? Silicon Valley is paying AI savants like star athletes while using the same technology to rationalise mass lay-offs.

Meta has been handing out NBA-sized packages to assemble its AI dream team - reportedly including US$250 million ($359 million) for AI wunderkind Matt Deitke - even as it cut roughly 600 roles.

Amazon followed suit with 14,000 cuts, its biggest redundancy round in three years.

How AI is being used to justify job cuts

By February this year, Block, the parent of Afterpay and Square, said it would shed more than 4000 jobs to "move faster with smaller, highly talented teams" using AI.

The same week, Australian software group WiseTech said it would cut about 2000 roles over two years across product, development and customer service as it leans harder into automation.

"Individually, people can do far more work with AI than they could have done nine months ago," WiseTech executive chairman Richard White said in March.

The Australian Financial Review reported that White also said most software coding could now be written autonomously and simply overseen by a single developer.

The market lapped up the efficiency story. WiseTech shares rose 11%. Block gained 24%.

But not everyone is buying it.

Is AI being used as a cover for planned redundancies?

OpenAI's Sam Altman says some firms are "AI-washing" - blaming artificial intelligence for layoffs they were going to make anyway.

Lochlan Halloway, market strategist at Morningstar, says management teams across white-collar industries keep talking up productivity gains, but the hard evidence remains thin.

"When WiseTech acquired e2open last year, it effectively doubled its workforce to around 8000 people," he says.

"The company has made some 50 acquisitions, and each time the pattern repeats: the acquired technology gets rewritten into CargoWise, redundant sales teams are consolidated, and some developers are let go."

Morningstar tech analyst Roy Van Keulen sees that as WiseTech's standard post-acquisition playbook, rather than a pure AI story.

Halloway agrees. "If AI is genuinely making employees more productive and implicitly more valuable, why is the first instinct to cut rather than redeploy?" he says.

What the dotcom crash tells us about today's AI job fears

Halloway sees similarities to the dotcom bubble of 2001.

"I cannot imagine many investors sitting on the rubble of that crash could foresee the job creation that would follow," he says. "An entire business model, software-as-a-service, emerged, ultimately becoming one of the most productive industries of our time."

That is the difficulty with new technology: the jobs it destroys are easy to count, while the jobs it creates usually do not exist yet.

The lesson for the AI era is not to fear the tool: it's to contest its use, share its gains and pace the transition.

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