Klarna CEO Warns AI May Trigger Recession and Job Losses

Artificial intelligence (AI) poses a significant risk of causing a recession in the near future, particularly as more white-collar roles are replaced by technology, according to leading figures in the tech industry.

Sebastian Siemiatkowski, the CEO of the Stockholm-based fintech company Klarna, recently expressed concerns that the influence of AI on employment could be so substantial that it results in an economic downturn.

Siemiatkowski pointed out that the trend is already evident as companies begin to reduce their workforce, despite the absence of immediate effects on broader economic indicators.

“The impact on white-collar jobs will likely lead to short-term recessionary pressures. Unfortunately, given the technological advancements, it seems unavoidable,” he stated in an interview on The Times Tech Podcast.

His remarks resonate with those of Dario Amodei, CEO of Anthropic, who recently warned that AI technology might eliminate half of all entry-level white-collar positions within a few years.

AI integration is already occurring in sectors such as call centers, legal services, and accountancy firms, where it is being utilized to enhance operational efficiency. The UK government has recently employed its AI tool, Humphrey, to analyze responses from a public consultation for the first time, a process that traditionally required approximately £80 million annually and a team of 25 analysts over three months.

Founded in Sweden in 2005, Klarna has significantly transformed the e-commerce payment landscape with its “buy now, pay later” model, empowering consumers to procure goods and defer payments. Over the last two years, the company’s workforce has dwindled from 5,500 to 3,000 as part of a strategy to improve efficiency.

In the past year, Klarna implemented a hiring freeze and reported that its virtual assistant had replaced 700 of its 3,000 customer service jobs, yielding an estimated annual savings of $40 million. This development sharply impacted the stock prices of Teleperformance, a call center firm, due to fears of similar job reductions industry-wide.

Siemiatkowski indicated that other tech firms are engaged in workforce reductions but are not doing so as openly as Klarna. He remarked, “Many in tech, particularly CEOs, often downplay the impact of AI on jobs, especially in white-collar sectors, but I do not wish to minimize these consequences.”

While there were speculations concerning a reversal of Klarna’s policy on workforce adjustments, Siemiatkowski clarified that the focus has shifted towards valuing human interactions for complex inquiries requiring unique skills. However, he noted that blue-collar workers are less affected by these advances in AI due to the ongoing need for manual labor in sectors like manufacturing.

Siemiatkowski highlighted that the ramifications of AI extend well beyond the technology sector, stating, “I receive emails nearly every day from CEOs of large companies expressing interest in identifying efficiency opportunities. The cumulative job losses mentioned in those communications are notable.”

Robert Smith, CEO of Vista Equity Partners, mentioned during the SuperReturn International private capital conference in Berlin that a significant upheaval in the finance sector could happen as early as next year: “Forty percent of attendees will be employing an AI agent, while the remaining sixty percent might find themselves seeking new employment.”

Gita Gopinath, deputy managing director of the International Monetary Fund, has also raised alarms about AI’s economic repercussions, stating that its widespread application could exacerbate an ordinary downturn into a prolonged crisis by destabilizing labor markets, finance systems, and supply chains.