Klarna Plans Significant Workforce Reductions Amid AI Investment
Klarna, the prominent buy-now-pay-later (BNPL) company, is preparing to cut nearly half of its workforce over the next few years, citing efficiencies gained through investments in artificial intelligence (AI). The firm, which has already reduced its employee count from 5,000 to 3,800 in the past year, aims to scale down to approximately 2,000 employees as it increasingly leverages AI technologies in its marketing and customer service operations.
Sebastian Siemiatkowski, Klarna’s CEO, shared insights with BBC, indicating that the impending layoffs would provide an opportunity to increase pay for remaining employees. However, he also emphasized the urgent need for governments to consider the societal implications of AI, predicting that the technology would have a “dramatic impact” on the job market.
In an interview on BBC Radio 4’s Today programme, Siemiatkowski remarked, "Politicians should contemplate alternative approaches to support those who might be adversely affected." He expressed skepticism about the notion that new job opportunities would automatically emerge to replace those lost, noting, "It’s too simplistic to assume that future jobs will appear. Becoming an influencer, for instance, is a tough feat if you’re 55 years old."
The debate surrounding AI has intensified recently, with discussions focusing on its potential to reshape the workforce and exacerbate inequality. A report earlier this year from the International Monetary Fund (IMF) projected that AI could affect nearly 40% of jobs, potentially widening existing social disparities. In various fields, including the gaming industry, professionals have already voiced concerns about losing work to AI.
Klarna, headquartered in Sweden with two offices in the UK, revealed its job reduction strategy alongside interim results that indicated a 27% increase in revenue, totaling 13.3 billion Swedish krona (approximately £990 million). The company attributed this growth to efficiencies gained from its AI investments, which have allowed it to lower operating costs and enhance gross profits.
As concerns over widespread job losses mount, trade unions are advocating for legislative measures to protect workers in an era increasingly influenced by AI advancements. Siemiatkowski mentioned that Klarna plans to reduce its workforce through “natural attrition,” effectively implementing a hiring freeze where positions vacated will not be filled. This approach typically results in remaining employees facing heightened workloads; however, Siemiatkowski asserted that AI would alleviate some of this burden and could ultimately result in better compensation for certain employees.
While he acknowledged the critical role of government in addressing the needs of job displacees, he asserted that the progress of firms like Klarna in the AI space is unavoidable. "It’s crucial for Europe and democratic nations to be at the forefront of AI evolution," he noted.
Moreover, Klarna is believed to be downsizing in preparation for a future stock market listing, aiming to align itself with other tech giants heavily investing in AI, such as Nvidia and Microsoft. Positioning Klarna as a leader in AI solutions could enhance its attractiveness to investors when it finally goes public.
