As AI powers efficiency in the workplace, companies begin pulling the plug on hiring

At Shinsung Delta Tech, a home appliance parts manufacturer in Changwon, South Gyeongsang, more than 10 automated fastening robots now stand in a row on the first floor of the factory.

The robots assemble stainless steel tubs used to hold laundry inside washing machine drums.

Where a team of four workers once manually tightened all 17 screws on each machine, AI-equipped robots now adjust fastening strength according to temperature and humidity. AI cameras scan the production line continuously, checking for defects.

“We began introducing AI in our work process three years ago,” said CEO Lee Dong-han. “After installing AI-powered equipment, work that previously required 100 employees can now be handled by 60, improving operational efficiency. Even as labor costs increased, we were able to maintain our work force while paying greater attention to employee welfare.”

Shinsung Delta Tech is one of the many companies in Korea where AI adoption is becoming a reality, from factory floors to office workplaces. 

But while processes may be more efficient, the job market is already seeing signs of an AI-driven squeeze. Factories are running leaner, white-collar hiring is falling and workers are switching careers in anticipation of being replaced. The trend mirrors what major global employers are already acting on, and experts warn the disruption has only just begun.

A decline in hiring

The number of workers employed in professional, scientific and technical services fell by 115,000 in April compared with a year earlier, according to the Ministry of Data and Statistics. It was the largest decline since related statistics were first compiled in 2013.

The sector includes a large proportion of highly educated professionals in fields such as research and development, information technology services, law and accounting.

Industry observers say the spread of generative AI has automated much of the human intellectual work involved in document preparation, coding and accounting, leading companies to scale back hiring.

Some workers are already changing careers after experiencing these shifts firsthand.

A 33-year-old surnamed Park, who majored in computer engineering at a prestigious university in Seoul, worked as a developer for six years at large corporations and startups before resigning in February and enrolling in an aviation academy abroad.

“I was increasingly anxious that I could eventually lose my competitiveness because of the spread of AI,” Park said. “I made up my mind after seeing my company try to reduce entry-level hiring because of AI adoption.”

Major layoffs ahead

Major companies overseas have already announced work force reductions.

Amazon unveiled plans in January to cut 16,000 jobs this year, while Meta said it would reduce its workforce by 20 percent by 2028. HSBC Holdings is also reportedly considering cutting 20,000 positions.

These companies, which operate under relatively flexible hiring and firing systems, cited AI and automation-driven workforce efficiency as reasons for the layoffs.

Geoffrey Hinton, an emeritus professor at the University of Toronto and a Nobel Prize winner in physics, warned that an AI-driven “jobless boom” could begin as early as this year.

“We’re going to see AI get even better,” said Hinton, often referred to as "the Godfather of AI." “It’s already extremely good. We’re going to see it having the capabilities to replace many, many jobs.”

“In a few years’ time, it’ll be able to do software engineering projects that are months long, and then there’ll be very few people needed,” he added, saying it will significantly affect white-collar roles at a scale never seen before.

Redesigning jobs and systems

Experts say a fundamental shift in perceptions of employment is needed. They argue that industries should begin redesigning job roles for the AI era.

“The way people work and the structure of industries are changing,” said Lee Kyoung-jun, a professor at Kyung Hee University’s School of Management. “This is the time to discuss what kinds of businesses can be created by using AI as a tool for innovation.”

Practical training programs offered by major technology companies should be recognized for university credit, according to Song Young-hee, a visiting professor at Seoul School of Integrated Sciences and Technologies.

“Tax incentives and financial support for internships and job-training programs should be significantly expanded so companies can directly cultivate young talent,” Song said.

Experts also stress the need for systems that pass on practical skills and know-how to the next generation.

“If companies reduce new hiring, the transfer of experienced workers’ tacit knowledge could decline, potentially weakening corporate competitiveness,” said Seo Yong-seok, a professor at KAIST’s Moon Soul Graduate School of Future Strategy. “We need to rethink job training and work force planning while addressing the downsides of AI-driven innovation.”

BY KIM KYUNG-MI, KIM SU-MIN, LEE YOUNG-KEUN   [[email protected]]