Why High Interest Rates, Not AI, Are Driving the Global Hiring Decline

LinkedIn, the world’s largest professional network with over a billion members, used its Economic Graph data to examine global hiring trends. The analysis shows a roughly 20% decline in hiring since 2022, and contrary to popular belief, the primary driver is higher interest rates rather than AI disruption.

Hiring slowdown not driven by AI

Blake Lawit, LinkedIn’s Global Head of Legal and Public Policy, told the Semafor World Economy Summit that AI has not produced a noticeably harsher hiring contraction in sectors such as customer service, administration, or sales. The data also indicate that recent graduates are not experiencing a disproportionately larger decline compared with mid‑career or senior workers.

While some technology‑sector reports note a shrinkage in entry‑level tech roles, Lawit argues that these cases reflect sector‑specific adjustments and tighter corporate budgets caused by monetary tightening, not a structural shift in the overall labor market.

Interest rates are the main driver

Since 2022 the U.S. Federal Reserve has raised the federal funds rate from near zero to above 5%, dramatically increasing corporate financing costs. Companies have responded by scaling back long‑term hiring plans and reprioritising investments, making recruitment the first casualty.

The hiring dip aligns with broader employment cooling in advanced economies. The World Economic Forum’s 2026 labor‑market report notes a 20‑35% reduction in hiring relative to pre‑pandemic levels in these regions, while emerging markets such as India (+40%) and the UAE (+37%) continue to grow, underscoring the influence of monetary policy rather than AI.

Skill gap accelerating

Lawit cautions that AI’s impact is a matter of timing: it has not yet caused a mass‑layoff wave, but it is rapidly reshaping skill requirements. Over the past few years, the skill composition of a typical job has changed by about 25%; LinkedIn projects this will rise to 70% by 2030 as AI tools permeate more industries.

Anthropic co‑founder Jack Clark, speaking at the same summit, echoed this view and expressed reservations about predictions that AI could push unemployment to 20% within five years, emphasizing that policy choices will shape the pace and scale of any disruption.

In summary, the current labor‑market strain is best understood as a “high‑interest‑rate after‑effect,” while the faster‑evolving skill demands driven by AI represent the longer‑term challenge for workers and employers alike.