So you lost your job at Klarna to AI – at least your former coworkers get a pay rise

While claims of a wave of AI-related job losses haven’t quite materialized over the last two years, it’s still too early to claim critics have jumped the gun. Some organizations are showing why workers should begin worrying.

With the advent of generative AI in late 2022, hysteria set in among critics of the technology. Goldman Sachs famously claimed that more than 300 million jobs could be lost to automation within a decade. It’s not difficult to see why these claims took off, either.

Major industry players such as IBM, for example, made moves that sent shivers down the spines of workers across a range of business functions. In May last year, CEO Arvind Krishna announced plans to pause hiring for non-customer-facing roles in a bid to eventually automate them.

Human resources, in this instance, was in the crosshairs as the company looked to AI while spitting out quintessential corporate jargon like ‘streamlining’, ‘optimizing’, and other greatest hits.

BT also unveiled similar plans to cut tens of thousands of workers as part of a widespread shift toward automating roles in a move that was described at the time as ‘brutal’.

For many, these were the first big indications that the technology would ultimately render many roles obsolete. They’re not wrong, but it’s not quite been the onslaught that some would’ve had you believe was right around the corner.

What is concerning right now, however, is that more than a year on from these incidents businesses are delivering tangible examples of how AI can be used to eliminate jobs. Klarna appears to be leading the charge here and setting a disturbing precedent.

In an interview with the Financial Times at the end of August, CEO Sebastian Siemiatkowski revealed the company plans to halve its workforce in the coming years, taking the headcount down from 3,800 people to a goal of around 2,000.

The ‘buy now pay later’ startup boasted a 5,000-strong workforce just over a year ago, before implementing an AI-inspired hiring freeze. In the time since then and now, it’s cut roles across the board.

Siemiatkowski has been highly vocal about the potential of AI at the startup, and more broadly across the enterprise landscape. In February, the company revealed its AI assistant was doing the work of around 700 customer service employees.

This, Siemiatkowski said at the time, underscored the ‘profound impact’ the technology will have on society. The impact will indeed be profound, both on the bottom line for businesses and the droves of workers who find themselves surplus to requirements.

It was always going to be this way, unfortunately. For all the talk of ‘enhancing worker productivity’ and using this technology to lighten workloads, enterprises seeing these use cases unfold will be rubbing their hands at the thought of shedding yet more staff and automating various aspects of their operations.

The only solace workers can take – if Siemiatkowski’s comments are anything to go by, is that those who remain may be in for an easier ride and better pay.

In an interview with BBC Radio 4, Siemiatkowski suggested that AI should be viewed as a “positive development” for workers in some business verticals as their importance grows and pay rises to compensate for that.

For everyone else, the outlook is bleak. The early claims that AI will create as many jobs as it renders obsolete are beginning to look like empty gestures intended to prevent widespread panic.

A report from the International Monetary Fund (IMF) earlier this year suggested AI will impact around 40% of all jobs globally, and has the potential to “worsen overall inequality”.

Siemiatkowski, like other industry execs, is merely saying the quiet part out loud with regard to AI job losses. The only difference now is that while IBM’s Krishna backtracked on his comments in mid-2023, this tactic no longer seems taboo.