The Overcapacity Era: AI, Layoffs and the Culture Recession

AI is sold as a job creator. The reality is shrinking headcount, fewer entry routes, and fragile trust. This week’s Paper Cut cuts through hype and offers a clear playbook for HR, TA, and employer brand leaders hiring and redeploying in the overcapacity era.

By EBN 10 min read
Rows of glowing computer screens in a purple tinted open plan office, with most chairs empty and a small group of workers standing together among the desks.
Productivity lights stay on while headcount quietly drains away in the overcapacity era.

This was the week the labour story stopped being a collection of anecdotes and started to look like a strategy.

On one side, leaders keep promising "efficiency" and "productivity gains." On the other, employees hear "fewer colleagues, more tools, good luck." Stock analysts still want per seat software growth at the same time as those seats are quietly disappearing. Workers are told to "embrace AI." Many are not convinced. Monitoring software is back. So are open letters and revenge resignations.

For employer brand and people leaders, the signal is sharp: talent strategy will be defined less by what you say about AI in a slide, and more by how you:

  • Talk honestly about productivity and overcapacity.
  • Deploy AI agents inside the organisation without turning employees into data exhaust.
  • Repair culture and trust after a year of cuts and policy zigzags.
  • Localise your EVP as governments redraw lines on remote work, dress codes, and benefits.
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This week’s edition maps those shifts across four fronts: layoffs and overcapacity, internal agents, the culture recession, and policy whiplash. Each section ends with specific moves you can start next week, not just slogans for the next town hall.

This Week’s Paper Cut's

Paper Cut

EBN