The party’s over. Or at least, that’s the vibe from a new report by Allianz, the French insurance giant. They’re out here, with their calculators and crystal balls, telling us that the party-like low unemployment rates we’re enjoying in the US and Europe might just be a brief interlude before a serious reckoning.
Because beneath that placid surface of near-historic lows, there’s a whole lot of churning. Three undercurrents, to be precise: immigration policy, energy-price shocks from a hypothetical Iran war, and the ever-looming specter of artificial intelligence.
And here’s the kicker: demand for workers was already starting to flag before any Middle East fireworks. Vacancies were easing, hiring was cooling. Blame it on uncertainty, trade wars – the usual suspects.
Then comes immigration. Suddenly, it’s not just a talking point. In the US, UK, and Germany, shrinking immigration inflows are translating directly into fewer hires. We’re talking about immigration going from the engine of job creation to a sputtering relic. The US, specifically, saw immigration contribute over half of job growth in 2024, a figure that’s practically vanished in 2025. This isn’t just a minor blip; it’s a drag on potential growth and a genuine risk of sectoral labor shortages, even as it offers a short-term reprieve from rising unemployment.
Is AI the Real Job Killer?
But let’s talk about the elephant in the room. AI. Allianz figures it’s the one with the biggest long-term impact. Forget mass layoffs for a second. The current signs point to a K-shaped labor market. That means youth and mid-level white-collar workers are staring down the barrel. Routine cognitive tasks? Yeah, those are prime targets for AI disruption. Meanwhile, the highly skilled, those who can dance with the algorithms, are poised to benefit. Since late 2022, we’ve seen a correlation: higher AI adoption, higher youth unemployment. It’s not always about jobs disappearing; sometimes, it’s about fewer entry points, stagnant wages, and a starker divide.
The Numbers Don’t Lie (Probably)
Over the next one to three years, Allianz projects AI will touch nearly a quarter of jobs across major economies. Most of this isn’t outright job loss, they claim. It’s more about reorganization (10.4% of jobs) and augmentation (5.3%), with outright displacement hovering around 7.6%. The US, predictably, leads the pack with 28.7% of jobs affected, while countries like Italy (9.2%) and Spain (12.4%) seem to be on the less exposed end. Germany and France sit somewhere in the middle.
Allianz said its analysis does not account for potential AI-related job growth, which is expected to at least partially offset adverse employment effects. However, job displacement is likely to outpace job creation in the medium term, as firms adjust faster than workers, creating a temporary gap.
So, will AI kill jobs? Maybe. Or maybe it’ll just rearrange the furniture. The report suggests displacement will likely outpace creation in the medium term. Firms, it seems, are quicker to adapt than we are. A temporary gap, indeed.
Policy or Technology: Who’s Driving the Bus?
Here’s the million-dollar question: will AI lead to job losses, reorgs, or new jobs? Allianz says it hinges less on the tech itself and more on policy choices. Think of it as a policy-proofing exercise for our labor markets. Re-skilling, upskilling, active labor programs, social safety nets – these will be critical. And let’s not forget taxation. How we tax labor versus AI capital, how we incentivize firms, and how we foster competition will all dictate whether AI becomes a partner or a replacement, and how those productivity gains are actually distributed.
It’s a sobering thought. The calm seas we’re experiencing might just be the quiet before the storm. And this storm, fueled by geopolitical instability, policy shifts, and the relentless march of artificial intelligence, looks set to reshape the employment landscape in ways we’re only beginning to grasp.
