Allianz: Unemployment Rates Could Be Shaken by Immigration, Iran War, and AI

Why It Matters

Policymakers and employers must address potential skill gaps and sectoral shortages before AI‑driven displacement outweighs new job creation, or unemployment could rise sharply.

Key Takeaways

• Immigration contributed >50% U.S. job growth 2024, dropping 2025
• AI may impact 23% of jobs in next 1‑3 years
• U.S. jobs most exposed: 28.7% affected by AI
• Youth and mid‑level white‑collar workers face highest AI risk
• Policy upskilling and tax design crucial to mitigate AI disruption

Pulse Analysis

The current low‑unemployment backdrop in the United States and Europe masks deeper structural shifts. Recent tightening of immigration rules in the U.S., United Kingdom and Germany has already reduced the flow of foreign workers, a factor that previously supplied more than half of new jobs in the U.S. during 2024. As these inflows dwindle, labor‑supply constraints could emerge, especially in sectors reliant on migrant labor, creating a short‑term buffer against rising unemployment but setting the stage for longer‑term shortages.

Artificial intelligence is rapidly moving from a niche tool to a mainstream productivity driver, and its labor impact is already measurable. Allianz estimates that 23.3% of jobs across major economies will be reshaped within the next three years, with the United States facing the steepest exposure at 28.7%. The technology is generating a K‑shaped labor market: routine cognitive roles held by younger and mid‑level white‑collar workers are most vulnerable, while high‑skill, AI‑complementary positions see wage gains. Early data link higher AI adoption since late 2022 to rising youth unemployment, suggesting that the first sign of disruption will be fewer entry‑level opportunities rather than outright layoffs.

The ultimate trajectory will hinge on policy decisions rather than the technology itself. Proactive labor‑market policies—such as targeted upskilling programs, active job‑matching services, and robust social safety nets—can smooth the transition and capture productivity gains. Tax regimes that balance the treatment of labor and AI capital, alongside competition rules that discourage monopolistic AI deployment, will influence whether firms use AI to augment workers or replace them. By aligning incentives with inclusive growth, governments can turn a potential wave of displacement into an opportunity for higher‑value employment and sustained economic resilience.