AI layoffs could backfire as firms face rehiring

• Gartner predicts 30 per cent of workers displaced by AI will need to be rehired by 2029.
• Australian companies, including CBA, ANZ and WiseTech, are cutting thousands of roles.
• Experts say judgement, business knowledge and other human skills will become more valuable as AI adoption grows.

With Australia’s unemployment rate rising to 4.6 per cent in August and major companies shedding jobs as they chase savings and AI-driven productivity gains, could businesses be moving too quickly?

A September study by Gartner predicts that by 2029, 30 per cent of employees laid off because AI replaced them will need to be rehired, often at a significantly higher cost.

The study finds that while workforce cuts “may deliver short-term financial gains, they deplete talent pipelines and erode institutional knowledge.”

Co-founder of Workplace Chapters and HR specialist Kirsty Mastores told The Money Edition that some organisations risk putting the cart before the horse.

“We have seen a number of high-profile workforce reductions linked to productivity and AI, but so many businesses are still working out where AI genuinely creates value and where human expertise remains essential,” she said.

Over the past year, some of Australia’s leading companies have announced major redundancies and workforce restructures across banking, tech and retail.

Australian companies have already begun cutting thousands of jobs. Commonwealth Bank has cut about 1,000 jobs this year and is restructuring a further 232 roles, with more than 172 technology jobs expected to be axed.

ANZ has been carrying out a 3,500-job reduction program, while WiseTech Global has cut more than 500 roles and plans further substantial reductions as it redesigns its workforce around AI.

The drivers behind the moves include slowing economic conditions, rising labour costs and automation.

What it means for Aussie workers

For employees, the rise of AI means uniquely human skills will become increasingly important to future employment, Arj Bagga, VP analyst in the Gartner HR practice, told The Money Edition.

“Organisations are under immense pressure to generate returns from their AI investments and are increasingly identifying human capabilities that can help employees maximise the value of AI, while providing the judgement and oversight needed to quality check outputs, manage risk and ensure AI is used effectively,” he said.

Bagga added that human skills such as curiosity, learning agility, judgement, ethics and business acumen are becoming critical to accelerating transformation and driving greater business impact, not just embedding AI effectively.

“We’re already seeing some organisations reshape their workforces and, in some cases, let go and rehire employees for roles requiring different skills. Employees who can demonstrate these capabilities will increasingly be positioned to help organisations turn AI investment into growth and innovation.”

Keeping humans in the loop

For Mastores, the companies making the best use of AI are not necessarily those cutting the most jobs. Instead, she said, they are using the technology to automate repetitive tasks while shifting employees toward higher-value work.

That has made keeping a “human in the loop” increasingly important.

“AI can accelerate decision-making and generate outputs at an incredible speed, but organisations still need people providing that necessary judgment, particularly when dealing with complex decisions and risk,” she said.

Cutting too deeply can also create costs that are harder to quantify. Beyond redundancy payouts, recruitment and training, companies can lose institutional knowledge and experience that may be difficult to rebuild.

“When experienced employees leave, they take so much business context, relationships, historical organisational memory and practical experience with them,” Mastores said.

“That can be incredibly difficult to replace and is often only fully appreciated once workers are gone.”

There are also signs employers are placing greater emphasis on reskilling and redeployment.

In the Australian HR Institute (AHRI) June Quarter 2026 Australian Work Outlook report, employee turnover fell by 11.2 per cent in the past six months, from 15.2 per cent to 13.5 per cent, the lowest level recorded since the survey launched in May 2023.

AHRI CEO Sarah McCann-Bartlett told The Money Edition the key takeaway from the Gartner report was that reskilling, retraining and redeployment are being used as deliberate workforce strategies instead of layoffs.

“Many organisations report that they are planning to invest in reskilling or retraining, alongside reorganising teams and redeploying employees into different roles,” she said.

For workers, that shift means the safest path may not be trying to compete with AI, but learning how to use it while building the skills employers still struggle to automate.

Judgement, business knowledge, adaptability and the ability to work alongside AI are likely to become increasingly valuable as companies work out which roles can genuinely be replaced and which still require human oversight.

And if Gartner is right, some businesses may ultimately find that cutting experienced workers was the easy part. Replacing what they took with them could prove much harder.