Klarna: AI lets us cut thousands of jobs – but pay more

Klarna, the prominent buy-now-pay-later firm, is set to significantly cut its workforce over the coming years, attributing these reductions to its substantial investment in artificial intelligence (AI). The company, which has already reduced its workforce from 5,000 to 3,800 in the past year, plans to further cut its employee count to 2,000 by deploying AI technologies in areas like marketing and customer service.

Sebastian Siemiatkowski, Klarna’s CEO, revealed that these job cuts would enable the company to increase wages for its remaining employees. He also emphasized the need for governments to address the broader implications of AI on jobs and society. In a discussion, Siemiatkowski stressed the importance of considering alternative support mechanisms for workers displaced by technological advancements.

Siemiatkowski argued against the notion that new jobs will automatically emerge to replace those lost to AI. He highlighted the challenges faced by older workers in adapting to new roles, citing the difficulty a 55-year-old might have in becoming a social media influencer. This viewpoint reflects broader concerns about AI’s potential to exacerbate existing inequalities and disrupt job markets.

The conversation around AI’s impact on employment is increasingly urgent. The International Monetary Fund (IMF) has projected that AI could affect up to 40% of jobs and potentially deepen economic disparities. This concern is echoed in various sectors, including the gaming industry, where developers are already facing job losses due to AI.

Klarna, headquartered in Sweden with two offices in the UK, announced its job-cutting plans alongside a report showing a 27% increase in revenue, reaching 13.3 billion Swedish krona (approximately £990 million). The company attributed this growth to its investments in AI, which have improved operational efficiencies and gross profits.

The rise of AI has led to growing concerns among labor unions, which are advocating for legislative measures to safeguard workers from widespread job losses. In response, Siemiatkowski described Klarna’s strategy as one of “natural attrition”—a practice where vacancies are not filled as employees leave, leading to a gradual reduction in staff. While this approach often results in increased workloads for remaining employees, Siemiatkowski suggested that AI would alleviate some of this pressure, potentially offering higher compensation for those who remain.

Despite these advancements, Siemiatkowski acknowledged the need for governmental action to support those who lose their jobs due to AI. He emphasized the inevitability of technological progress but argued that it is crucial for Europe and democratic nations to lead in the development and regulation of AI technologies.

Klarna’s strategic reductions come as the company prepares for a potential stock exchange listing. As AI continues to shape the tech industry, with major players like Nvidia and Microsoft heavily investing in the technology, Klarna’s strong commitment to AI could enhance its attractiveness to investors once it goes public.

In summary, Klarna’s use of AI to streamline operations and reduce its workforce highlights the broader implications of technological advancements on employment. While the company anticipates that AI will drive efficiency and potentially increase wages for remaining employees, it also underscores the need for proactive measures to address the challenges posed by AI in the labor market.