AI has yet to trigger mass job losses, says Economic Survey 2025-26

The Economic Survey 2025-26 has struck a more measured tone on artificial intelligence and job losses, suggesting that fears of large-scale displacement have not materialised so far, even as it cautions policymakers against underestimating longer-term risks.

Tabled in Parliament on January 29, the Survey notes that emerging evidence has begun to moderate earlier, more extreme predictions about AI’s near-term impact on labour markets. Studies reviewed in the report indicate that widespread disruption has yet to take hold, particularly in advanced economies where AI adoption is more visible.

Citing research from Yale’s Budget Lab, the Survey points out that the overall labour market in the United States has not shown clear signs of AI-driven upheaval. Another study by economists Erik Brynjolfsson, Danielle Li Chandar and Lindsey Chen (2025) found only marginal differences in job prospects between occupations that are highly exposed to AI and those with lower exposure.

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This evidence offers some reassurance for labour-rich economies such as India, the Survey said. However, it stressed that the absence of immediate disruption should not be mistaken for long-term safety. “Caution is still warranted as India attempts to solve the puzzle of AI and labour,” the Survey observed, calling it one of the most significant uncertainties surrounding the technology.

The report noted that, in the near term, AI is more likely to complement human labour as organisations integrate new tools into existing workflows. However, it warned that productivity gains from this phase of augmentation are not limitless and may eventually plateau.

The assessment marks a subtle shift from the tone adopted in last year’s Economic Survey, which had raised concerns that AI could surpass human performance in key decision-making tasks and lead to widespread job displacement, particularly among middle- and lower-income workers. At the time, much of the debate around AI was still driven by hypothetical scenarios rather than observed outcomes.

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Reflecting on that evolution, the latest Survey said that while AI was visible in isolated applications early last year, its broader economic effects remained largely speculative. One year on, AI is no longer considered a distant technology, with firms across sectors experimenting with its deployment, even if adoption remains uneven.

Greater visibility into AI use has also clarified its structural characteristics. According to the Survey, although AI tools are being used more widely, the cutting edge of development remains highly concentrated among a small number of firms and countries. As of April 2025, high-income nations accounted for 58.4 percent of global AI usage, while upper-middle and lower-middle income countries represented 22.5 percent and 18.7 percent respectively.

The Survey added that ongoing innovation and improvements in AI capabilities are encouraging both established companies and startups to find practical applications for the technology across real-world problems. How these developments ultimately reshape labour markets, it said, will depend on policy choices, institutional readiness and the pace at which AI capabilities continue to advance.