Can the EU's Act safeguard employment while still allowing for innovation?

      While the United States has largely pursued AI development with little regulatory supervision, Europe has adopted a distinctly different strategy. The Data Protection Act, GDPR, and the newly introduced AI Act — which are more closely aligned with local labor laws and unions — have set the continent on a unique trajectory.

      A recent joint research study by the International Labour Organisation (ILO) and Poland’s National Research Institute (NASK) discovered that Europe, alongside Asia, is among the regions most vulnerable to AI, significantly outpacing the Americas. With research indicating that approximately one in four jobs globally could be altered by AI, the situation in Europe — a region facing a notable shortage of skilled labor — has become an urgent issue.

      “In many respects, it’s premature to determine where the AI revolution will lead us — we have only glimpsed a fraction of its potential so far, which is both thrilling and frightening,” stated Adam Maurer, COO at Connecting Software, a tech entity operating across Europe, in an interview with TNW.

      In recent years, major technology firms have frequently engaged in large-scale layoffs, motivated by both concerns about revenue and the belief that AI can assume many tasks typically performed by entry to mid-level employees, Maurer noted.

      Some of these AI-driven reductions have predominantly targeted low performers, although other strategies have proven problematic. For instance, Klarna, a Swedish financial technology firm that let go of 700 employees in favor of AI, has recently announced plans to rehire human workers. The CEO of the company acknowledged the error made in swapping out workers for AI.

      “It’s evident that AI will indeed displace certain jobs,” Maurer remarked. “Conversely, it may enhance the value of other positions.”

      In the EU, labor laws and regulations will dictate the consequences for employment. Tech leaders are optimistic that these frameworks could pave the way for an AI future that is advantageous for both employees and businesses.

      The executive perspective

      Maurer indicated that there might be an expectation for the EU to intervene and regulate job displacement. However, he contended that such action could hinder growth and deter startups from operating within the union.

      Not all industry leaders share this view. Volodymyr Kubytskyi, head of AI at MacPaw, a Ukrainian software company developing solutions for Apple devices, stated that displacement will occur, but not solely due to AI.

      “AI disrupts traditional work logic and processes,” Kubytskyi told TNW. “The key question is, ‘Can we redesign work systems before this outdated approach collapses?’” To avert such a collapse, leaders should refrain from viewing AI as merely a quick-fix or cost-cutting solution.

      Kubytskyi asserted that while the AI Act was essential to establish a foundational standard for the sector, it fails to consider potential job disruptions, indicating a regulatory gap.

      “To address this, the AI Act requires updates, though it’s unlikely that will happen in the near future,” he pointed out.

      Roman Eloshvili, founder of ComplyControl, a UK compliance firm, mentioned to TNW that the AI Act emphasizes safety, transparency, and ethics, but overlooks socio-economic implications, especially regarding employment. “Thus, amendments are needed,” he noted.

      “I anticipate that, over time, certain mandates, such as employer-led upskilling requirements or safeguards for displaced workers, will emerge to better address workforce impacts.”

      Will the AI Act become obsolete or counterproductive, particularly if its stringent compliance measures exacerbate inequalities in access to the benefits of AI? Or is it too early to amend the legislation?

      Kris Jones, who leads the engineering team in Belfast for iVerify, believes that now is not the right time for changes. He remarked that the AI Act’s risk-based framework already balances the need to protect fundamental rights while allowing innovators the necessary freedom to operate.

      Amending the regulation is just one of the policy proposals being considered by executives. Jones noted that member states have alternative options available. “One idea being discussed is an ‘AI token’ tax,” he stated.

      An AI token tax would enable governments to generate revenue from AI activities that produce income, with proceeds redistributed for initiatives like reskilling programs or support for affected sectors.

      Dario Amodei, CEO of Anthropic, recently told Axios that such measures could mitigate the inevitable loss of millions of entry-level white-collar jobs due to AI.

      “Such initiatives can cushion any employment shocks while still allowing innovation to thrive,” Amodei remarked.

      Are conflicts with European labor and trade unions unavoidable?

      European labor and trade unions have frequently been sidelined in discussions regarding AI-induced job displacement. However, many have already issued public statements voicing concerns about AI.

      In anticipation of the Paris AI Summit set for February 2025, the ETUC, representing over 45 million European workers, released an open letter warning of AI’s dangers. It cautioned that any attempts to ensure AI’s positive influence on workers