Australian CEOs favour AI reskilling over job cuts

Australian chief executives are prioritising reskilling and role redesign over hiring cuts as they adopt artificial intelligence. An EY-Parthenon survey found only one in five Australian business leaders ranked reducing hiring among their top workforce priorities for the next three years.

The findings suggest a more measured labour response to AI than some forecasts of broad job losses. Among the 60 Australian business leaders surveyed, 44 per cent ranked large-scale reskilling and upskilling as their first or second workforce priority, while 41 per cent prioritised redesigning roles to combine human and AI work.

By contrast, 20 per cent ranked reducing hiring in certain roles among their top priorities. At the same time, 30 per cent put increasing hiring for AI, data and digital roles among their leading workforce priorities.

Shannon Cotter, EY-Parthenon Leader for Oceania, said the results suggest many employers see AI as a prompt to reshape work rather than shrink headcount.

"Most Australian CEOs are not treating AI as a workforce cost-out. Their focus is on building capability and redesigning work so staff can use AI effectively to achieve business objectives, rather than making job cuts the default response," she said.

Specialist hiring is also part of that shift.

"Thirty per cent of CEOs rank increasing hiring for AI, data and digital roles among their top priorities, which shows AI is opening up new opportunities as organisations build specialist capability to scale," Cotter said.

Measured impact

Australian chief executives are already seeing results from AI across several parts of their organisations. More than half, 53 per cent, said the technology is making the biggest difference in core operations and productivity.

Another 43 per cent pointed to strategy and decision-making, while the same share cited product or service innovation. Customer service and experience was named by 40 per cent of respondents, while 33 per cent identified supply chain and procurement and 32 per cent pointed to sales and marketing.

None of the Australian CEOs surveyed said they had yet to see measurable results from AI. The finding comes as companies continue to look for practical uses of generative AI and automation tools after an initial wave of experimentation.

Investment plans also remain firm. Eighty per cent of leaders said their organisation's planned AI investment for 2026 would increase compared with 2025, while the remaining 20 per cent said spending would stay the same.

Cotter said the spending plans show companies are backing a range of business aims rather than a single use case.

"CEOs are increasing AI investment and spreading capital across multiple objectives. They are allocating 28 per cent of AI investment to quality uplift, 25 per cent to reshaping the cost base, 24 per cent to incremental cost-out and 23 per cent to using AI as a commercial engine to redefine the business model," she said.

Culture challenge

The research suggests talent and organisational culture may be a bigger barrier than access to the technology itself. When asked about the main talent constraint on generating value from AI, 32 per cent of Australian CEOs cited maintaining an entrepreneurial culture during AI-driven change.

Cultural resistance to change came next at 18 per cent. The results indicate implementation is not only a technical exercise, but also one that depends on management, staff support and organisational design.

"When CEOs are asked about the main talent constraint on generating value from AI, 32 per cent cite maintaining an entrepreneurial culture during AI-driven change, followed by cultural resistance to change at 18 per cent," Cotter said.

She added that boards and executive teams are under pressure to show returns on rising AI budgets.

"CEOs are investing more, and they want a return. That means redesigning work, supporting people through change and measuring outcomes, not just running pilots," she said.

Rules and risk

Regulation has emerged as another source of concern as organisations move from small trials to wider deployment. Only 13 per cent of Australian CEOs surveyed said current AI regulatory frameworks provide clear guidance that supports strategy and innovation.

A further 41 per cent said the regulatory landscape offers some clarity but remains fragmented or is still evolving. Another 33 per cent said it is increasing compliance requirements and operational complexity.

The figures reflect a broader debate over how companies can expand AI use while managing privacy, risk and accountability. For business leaders, uncertain rules can complicate spending decisions and slow adoption.

"Clearer rules help businesses invest with confidence and deploy AI responsibly. When guidance is fragmented, compliance costs rise and decision-making slows," Cotter said.

She said business leaders want policy settings that can adapt as the technology changes.

"CEOs want regulation to evolve with AI, with flexible frameworks anchored in real-world use and ongoing engagement with industry to ensure policy works in practice," she said.

"Leaders can keep moving by strengthening governance and setting clear accountability so innovation can continue as privacy, risk and compliance expectations progress," she said.