Replacing staff with AI could be an expensive mistake

[SINGAPORE] From quiet quitting to job hugging – and now conscious unbossing, a term to describe Gen Z’s rejection of management roles in favour of better work-life balance – the lexicon for workplace trends just keeps growing.

But at the heart of these catchphrases, the underlying sentiment seems clear: Many employees are disengaged.

And this could weigh on productivity and come at a cost to organisations, as innovation levels stagnate or fall.

Part of the disengagement stems from an overall sense of economic uncertainty, punctuated by high-profile layoffs – some driven by artificial intelligence (AI) – that have hogged the headlines. A study by the Massachusetts Institute of Technology (MIT) found that AI can replace 11.7 per cent of the US labour market.

In its 2026 predictions on the future of work, market researcher Forrester expects a “deepening culture energy chasm” to drive employees to disengage and “coast”.

“That divide will continue in 2026 as leaders envision AI-fuelled success, feeding their optimistic outlook, while the workforce’s culture energy drains away in the face of continuing macroeconomic turbulence and revenue misses,” the firm said in a report.

Yet, perhaps what one should take away from the MIT report is that almost nine in 10 jobs in the US, at least, cannot be replaced by AI currently.

And this is also what some companies have found out – the hard way.

Enter the “layoff boomerangs”. People analytics firm Visier found that organisations end up rehiring about 5.3 per cent of their laid-off employees, a trend that has persisted and is “even ticking upward” despite AI-driven layoffs.

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Forrester goes on to predict that half of AI-attributed layoffs in 2026 will be quietly rehired, possibly offshore or at a lower salary, once companies realise their output quality has declined.

That may offer comfort, albeit cold at best, to some workers who have been unnerved by the possibility of being replaced by AI, especially given the current job market gloom.

Yet, for companies, this would represent an expensive mistake: the cost of retrenchment packages added to investments in new technologies and further hiring costs.

Visier suggests that companies take a more conservative approach, given that establishing a “talent buffer” is crucial in a volatile market. They could consider reducing the proposed percentage of planned layoffs by at least 5 per cent.

To be sure, companies should invest in technology and AI to stay ahead. But rather than cutting jobs in favour of AI, perhaps companies need to accept that what the workplace needs is some form of hybrid: human-AI collaboration, where soft skills become increasingly valued even as technical know-how remains necessary.

In the meantime, some human employees may need more help to ensure that the collaboration is a complementary one. Instead of severance packages, a company would likely reap greater benefits from investing the money on boosting its workforce’s AI readiness.

Investing in human capital would also send a far more positive message to the quiet quitters and job huggers that they are valued and not merely dispensable labour units, which would go some way in re-engaging them.