Wave of Layoffs Grows Under the Shadow of Artificial Intelligence
Tehran - BORNA - The global trend of workforce reduction has accelerated. According to Reuters, U.S. companies have announced over 25,000 job cuts this month alone, a figure that excludes the 48,000 UPS positions announced since the start of 2025. In Europe, the total number of announced reductions exceeds 20,000 jobs, with the bulk attributed to Nestlé's 16,000 layoffs last week.
With official comprehensive U.S. layoff statistics unavailable due to the government's second-longest shutdown in history, investors are paying close attention to these localized reports. While end-of-year cuts are often customary and many reductions occur over time, the sentiment remains cautious. Adam Sarhan, CEO of 50 Park Investments in New York, noted: "Investors are asking what this means and what the overall situation is because we can’t see it. Layoffs like Amazon's tell me the economy is slowing down, not growing."
CEO Focus: Justifying AI Investment Returns
Amazon has announced plans to eliminate up to 14,000 white-collar jobs. Companies such as Target and Procter & Gamble have also cut thousands of positions. Reuters reports that the total number of cuts at Amazon could reach 30,000. The reasons for these reductions are varied; some, like Target and Nestlé, are restructuring under new CEOs, while Carter's reduced its administrative staff by 15% citing heavy import tariffs.
Significantly, the focus of cuts at companies like Amazon and Target is on administrative and white-collar roles, which are often most vulnerable to replacement by Artificial Intelligence, rather than production line or store workers. This structural shift suggests corporations are keen to justify the billions of dollars already invested in AI technology.
The cuts at Target amount to 8% of its administrative workforce, though Amazon’s 14,000 layoffs are a smaller fraction of its 1.5 million-strong global workforce. According to the latest KPMG survey, forecasted investment in AI has increased by 14% compared to the first quarter of the year, with an estimated average of $130 million expected to be spent next year. Moreover, 78% of executives admitted they are under pressure from boards and investors to demonstrate that AI is leading to direct savings and profit increases.
The Low-Churn Labor Market
Despite the structural shift, some economists argue that a strong, overarching impact of AI on the broader labor market is not yet fully visible. Due to the U.S. government shutdown, data remains limited. Weekly state unemployment figures do not show a noticeable surge in layoffs, but job growth is also sluggish. ADP estimates that only 14,250 jobs were created in the four-week period ending October 11th.
Economists characterize the labor market as being in a "low-hire, low-fire" phase, where companies are slowly reducing staff and avoiding replacements. If the layoff trend intensifies, it could further undermine consumer confidence and the overall U.S. economy. Alison Shrivastava, an economist at Indeed Hiring Lab, described the situation as a "holding-breath environment," where companies are essentially waiting to understand the direction of the market before committing to major hiring or firing decisions.
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