The bank’s experts analyzed the biggest technological shifts – from the industrial era with its electrification and mechanization to the digital revolution and automation. In all cases, society expected a massive displacement of workers. However, this did not happen.
The economy is creating new occupations
Employment did not disappear: it was redistributed across sectors and tasks. Moreover, in periods of profound change, overall labor demand tended to rise along with productivity.
The report emphasizes that the economy is creating new industries and occupations that can absorb the released labor. In the long run, new technologies do not replace people entirely, but complement their labor.
The current wave of AI development is spreading faster than previous technological changes. This increases anxiety in labor markets.
Nevertheless, analysts warn: the positive effect on employment is rarely instantaneous.
What’s in store for the labor market
Morgan Stanley suggests to consider AI not as a choice between mass layoffs and productivity growth, but as a transitional stage.
The most likely scenario is a gradual redistribution of tasks within existing professions, rather than their mass disappearance.
As productivity grows, the economy will create new roles with higher added value – similar to how it happened in previous technological eras.
“Optimistic Tragedy.”
However, as Bloomberg reported, citing an earlier Morgan Stanley report, things didn’t seem so optimistic in 2025.
Researchers surveyed global companies in consumer goods, retail, real estate, automotive and medical device (that have been using AI assistants for at least one year) about staff reductions.
It found that in the UK, 23% of employees were laid off in 2025. At the same time, only 15% of new jobs were created, resulting in a net reduction in staff. The average labor productivity growth in the country was 11.5%.
In the US, AI adoption was accompanied by comparable productivity growth, but companies created 19% of new jobs after cutting 17% during optimization. The US market was thus the only one in the study where the number of positions increased – by 2%. New vacancies are usually related to the management of AI systems, development and maintenance of digital solutions.
Among other countries, Japan had the second largest scale of layoffs with a net decrease in employment of 7%. Germany and Australia shared the third and fourth positions – both countries saw a 4% decrease in jobs.
