top of page

Klarna to Slash Workforce by Half, Citing AI Efficiencies

By D. W. G. Kalani Tharanga, JadeTimes News

 
Klarna to Slash Workforce by Half, Citing AI Efficiencies
Image Source : Tom Gerken

Klarna’s AI Driven Workforce Reduction: A Shift in Business Strategy


Klarna, the popular "buy now, pay later" firm, has revealed plans to reduce its workforce by nearly half in the coming years, attributing these cuts to efficiencies gained from its substantial investment in artificial intelligence (AI). The company, which has already downsized from 5,000 to 3,800 employees over the past year, aims to further cut its staff to around 2,000. This reduction will primarily affect roles in marketing and customer service, as AI takes over many of these functions.


Sebastian Siemiatkowski, Klarna’s CEO, explained that the job cuts would allow the company to offer higher wages to the remaining employees. However, he also issued a stark warning about the broader societal implications of AI, urging governments to consider the dramatic impact this technology could have on jobs. Siemiatkowski cautioned against the assumption that new jobs would naturally emerge to replace those lost, especially for older workers who might find it difficult to transition into new roles, such as becoming influencers or adapting to new tech driven professions.


AI's Broader Impact on Employment and Society


The rapid proliferation of AI has sparked intense debate about its benefits and risks, with concerns mounting about its potential to exacerbate job losses and inequality. The International Monetary Fund (IMF) recently highlighted that AI could impact nearly 40% of all jobs, with a likely worsening of overall inequality. In various sectors, including the gaming industry, workers are already feeling the effects as AI begins to replace traditional roles.


Klarna’s announcement comes amid growing fears from unions about mass job losses driven by AI. These concerns have led to calls for legislation to protect workers as companies increasingly turn to AI to cut costs and boost efficiency. Klarna, which is headquartered in Sweden and has two offices in the UK, disclosed its job cutting plans alongside interim results showing a 27% increase in revenue, reaching 13.3 billion Swedish krona (£990 million). The firm attributed its improved financial performance to scale efficiencies enhanced by AI, which have driven down operating expenses and bolstered gross profits.


Siemiatkowski stated that the reduction in headcount would be achieved through "natural attrition," essentially a hiring freeze where departing staff are not replaced. While this typically increases the workload for remaining employees, Siemiatkowski argued that AI would absorb much of this additional work, potentially leading to higher pay for those who stay. Despite acknowledging the critical need for government intervention to address job losses, he emphasized that there is no "stopping progress" when it comes to AI, urging Europe and other democracies to stay ahead in the evolution of this technology.


Klarna’s workforce reduction is understood to be part of its broader strategy as it prepares for a potential listing on the stock exchange. With firms like Nvidia and Microsoft, which are heavily invested in AI, dominating recent listings, Klarna’s strong embrace of AI could make it more attractive to investors when it eventually goes public.

More News

bottom of page