Should it brag? Klarna says hundreds of jobs have been cut thanks to AI chatbots

The powerful impact of artificial intelligence (AI) on the job market was revealed this week by Klarna.

Reuters reported that the Swedish payments firm cut hundreds of jobs on Tuesday and expects more job cuts as it introduces artificial intelligence to handle customer requests.

Klarna reportedly said AI chatbots could significantly reduce the time it takes to resolve issues. The announcement came ahead of the company’s widely anticipated IPO next year.

AI chatbots

According to Reuters, Klarna posted adjusted profit of 673 million Swedish kronor ($66 million) in the first half of the year and announced that its AI assistant was taking over the work of 700 employees, reducing average resolution time from 11 minutes to just two.

“About 12 months ago we had about 5,000 active positions in the company, now there are only about 3,800,” CEO Sebastian Siemiatkowski was quoted as saying in an interview, adding that the job cuts were achieved almost exclusively through staff reductions and not through layoffs.

“By simply not hiring, which we haven’t done since September, the company is, in a sense, getting smaller and smaller,” he added.

“We will continue to not hire anyone other than engineers for a considerable period of time,” he reportedly said, adding that the workforce could ultimately fall to 2,000, but did not give a timeframe.

At the time of its peak valuation of $46 billion in 2021 – based on a capital raising at the time – Klarna was unprofitable, had significantly lower revenue and employed about 7,000 people.

Impact on jobs

Although Klarna’s management stated that it had not made any layoffs, the fact that 1,200 positions could no longer be filled shows the potential that AI has for the entire labor market and recruitment.

In January 2024, the International Monetary Fund (IMF) warned that nearly 40 percent of jobs worldwide could be affected by AI, leading to job losses and worsening inequalities.

In March, the left-wing think tank Institute for Public Policy Research (IPPR) warned in a report that almost eight million jobs in the UK could be lost to artificial intelligence in a “job apocalypse”.

But in June, a study by digital services consultancy Nash Squared found that almost three-quarters of UK technology leaders said they had used generative AI on at least some of their staff, but 99 percent said it was not yet replacing jobs.

However, BT announced in 2023 that it would cut 55,000 jobs by 2030 and replace a fifth of those jobs with AI.