Nearly all executives expect AI-related job cuts within two years, Mercer survey finds

99% of Executives Expect AI-Related Layoffs Within Two Years

Nearly all executives surveyed by Mercer anticipate workforce reductions tied to artificial intelligence adoption over the next 24 months, according to the firm's Global Talent Trends 2026 report. The survey of roughly 12,000 executives, HR managers, investors, and employees reveals a disconnect between how leadership and HR departments plan to compete in an AI-driven workplace.

The Executive-HR Gap on AI Strategy

Executives and HR leaders prioritize different approaches to organizational performance. HR departments focus on strengthening employee value propositions, designing skills-centered development, and implementing new HR technologies. Executives instead emphasize redesigning operations around AI and automation, improving talent analytics, and training managers to lead integrated human-AI teams.

This gap shows up in the numbers. Sixty-three percent of executives believe redesigning operations for AI and automation is the most effective talent initiative. Only 32% of general employees feel they can optimally combine human and machine capabilities.

Talent Shortages and Skills Gaps Drive Planning

Fifty-four percent of executives cited talent shortages as the biggest factor influencing HR planning. Fifty-nine percent of HR leaders said securing workers with critical digital skills will be their largest challenge in 2026.

Macroeconomic priorities have shifted. In 2024, inflation and currency concerns topped executive concerns at 52%. By 2025, talent scarcity (54%), digital acceleration including AI (52%), and shifting economic interests (46%) became the leading factors.

Employee Morale Hits Eight-Year Low

Employee happiness reached 44% in 2026-the lowest level since Mercer began tracking the metric in 2018. Workers express concern about unequal access to AI tools and training, with many considering leaving their organizations over these gaps.

Ninety-eight percent of executives plan organizational restructuring within two years, intensifying pressure on retention and engagement.

Leadership Struggles to Balance Transformation and Operations

Fifty-seven percent of executives anticipate a turbulent decade ahead. Geopolitical conflict and misinformation add complexity to workforce planning. Yet 81% of leaders admitted they struggle to balance long-term strategic planning with immediate operational demands.

Fifty-six percent of HR leaders expect their departments to merge with IT in the near future, reflecting the centrality of technology to talent management.

For executives managing these transitions, understanding both the strategic and human dimensions of AI adoption is essential. Learn how to align your organization's approach with AI for Executives & Strategy and AI for Human Resources.