Lao Gan Ma's "AI layoffs" controversy: a public lesson on employment in the AI era

In the past two days, Lao Gan Ma has been caught in a whirlwind of public opinion over rumors that it "used AI (artificial intelligence) to cut 600 workers down to 48." Although the company denied it immediately, because the public reports with specific figures—not round numbers—are right there for all to see, netizens did not buy the company's explanation; some even spoke out fiercely: "If you lay off workers, we'll take you off the shelves."

The reason netizens reacted so fiercely is that they believe Lao Gan Ma really did "use AI to lay off workers," and laid off several hundred of them. This gave the long-running narrative of "AI disrupting employment" a real-world case, and turned the hidden worries buried deep in the public mind into a real sting. Under these circumstances, Lao Gan Ma naturally became the embodiment of "cold-blooded capital" and was condemned by all.

Frankly speaking, even if Lao Gan Ma really did "use AI to lay off workers," it would not necessarily deserve blame. Because pursuing profit is an enterprise's nature; if the returns on technological investment exceed those on human investment, an enterprise can absolutely choose to "use more machines (technology) and fewer people," as long as the layoff operation is legal and compliant.

But as a member of the social structure, an enterprise cannot merely play the role of a cold money-making machine; while pursuing profit, it should also take into account comprehensive economic, social and environmental value—that is, assume corporate social responsibility. From this perspective, assuming Lao Gan Ma really did "use AI to lay off workers," its conduct cannot be measured solely by the yardstick of law. At a time when the issue of "AI disrupting employment" attracts much attention, it also needs to face public scrutiny.

The public hopes to see that an enterprise with a certain social influence like Lao Gan Ma, when responding to the issue of "AI disrupting employment," does not put profit above all else but puts people first, comes up with a warm and responsible plan, and sets a good example for other enterprises. This "harsh demand" from the public has pushed Lao Gan Ma to the forefront, making it a teaching case for a public lesson on "how to employ people in the AI era."

First, is reducing staff necessary? Technological improvement does not inevitably lead to the result of "machines replacing people." Before deciding to cut employees, an enterprise needs to ask itself: Has it conducted sufficient assessment and argumentation? Has it considered "internal absorption" options such as adjusting the pace of production, reassigning workers to other posts, or creating new positions? While pursuing economic efficiency, an enterprise should also take into account the protection of workers' rights and interests, and may even give the latter a higher priority.

Second, are the procedures legal? If reducing staff is imperative, then whether the termination procedures strictly comply with the Labor Contract Law and other relevant laws and regulations is the core question the enterprise must face directly. Legality and compliance are the bottom line of business operations; any procedural flaw may cast a shadow of illegality over an enterprise's legitimate decision and thus trigger a crisis of trust.

Third, is responsibility fulfilled? In the process of transitioning from the labor dividend to the technology dividend, an enterprise cannot burn the bridge after crossing the river and simply push laid-off workers onto society. Even if the layoff operation is fully legal and compliant, the enterprise should also shoulder corporate responsibility for easing the social impact by providing reemployment support and contributing to social security undertakings, and promote the sharing of the technology dividend by society through appropriate channels.

Academia calls the phenomenon in which leaps in productivity coexist with workers' difficulties during periods of technological change the "Engels' pause." Experts believe that the rapid promotion and application of artificial intelligence faces the possibility of causing this phenomenon. The Lao Gan Ma incident reminds us that responding to challenges in this regard requires planning ahead. The General Office of the State Council recently issued the Opinions on Adapting to the Development of Artificial Intelligence Technology and Helping to Build an Employment-Friendly Development Model, which provides important guidance for this.

The core idea of the document is to balance technological innovation and employment promotion. For example, it requires "steadily and prudently grasping the scope, intensity and pace of applying artificial intelligence in labor-intensive industries, and minimizing the impact on workers"; it encourages enterprises to "explore the establishment of an unemployment buffer period system," notify affected workers in advance and provide "support for transition, job changes and employment."

In addition to using artificial intelligence to "make the cake bigger," the document also focuses on how to "divide the cake well." The document proposes to "improve the income distribution mechanism that adapts to the development of artificial intelligence technology" and "encourage enterprises to increase investment in public-interest artificial intelligence technologies, services and open-source communities, help workers expand the boundaries of their capabilities and enhance the value of their labor, and promote more workers to actively participate in technological progress and benefit from it."

These targeted opinions are expected to both give play to artificial intelligence's advantages in expanding new space for employment and mitigate the impact of AI application in replacing jobs, ensuring that technological progress serves people.

The accelerated application of artificial intelligence is the general trend. In the process of promoting the application of artificial intelligence, we should neither allow the technological divide to create rifts nor cling to the old and reject the new out of fear of impact. The correct attitude is undoubtedly to actively embrace new technologies and new changes while properly handling new problems arising in the process of exploration. Only with such a philosophy and approach can enterprises shed unnecessary moral burdens, boldly advance innovation, create dividends, and ultimately let good technology benefit more people.

(The author is an editor at Yicai)