Klarna is a Swedish company specialising in financial technology (also known as ‘fintech’ in industry jargon) which provides technology solutions for e-commerce businesses. It is known for its payment services, particularly one called “buy now, pay later”, which allows customers to purchase a product and pay for it in instalments without interest.
As well as its financial services, it is also renowned for being a leading company in the adoption of new technologies. It is so innovative that it has managed to to replace thousands of workers in recent years, with the effective and successful implementation of AI in their workplaces, both in Sweden and the United Kingdom.
These drastic staff cuts have caused its profits to soar. Let us remember that Staff are the biggest item of expenditure for any business, which is why companies such as Klarna are seeking, at all costs, to cut back on human staff as much as possible using the ‘magic wand’ of AI.
We can see this in his LinkedIn profile: Over the last six months, its workforce has shrunk by 8%, and this is just a blip in its track record.
“It would be far too simplistic to say that new jobs will continue to be created in the future”
These are the statements that Sebastian Semiatkowski has categorically stated in a interview with the BBC. Klarna’s CEO founded the company 20 years ago, in 2005, alongside two friends from university. Under his leadership, Klarna expanded steadily but surely across the Nordic countries, and subsequently throughout Europe. The company was set up to revolutionise the payment gateway system for e-commerce, which is why innovation is one of its cornerstones.
With this simple sentence, Semiatkowski has expressed his views on the current and future impact of artificial intelligence in companies. Whilst some are hopeful that AI and new technologies will create more jobs, this executive is more pessimistic. For the time being, we have been witnessing for a couple of years waves of redundancies in tech companies in tandem with the proliferation of artificial intelligence.
To soften the blow somewhat following his company’s dismissal of thousands of workers, he chooses to say that “these staff cuts could result in higher pay for the remaining staff”. That is, of course, if there are any left.
In fact, Semiatkowski has opted for the most cost-effective method of dismissal: that of the resignation at the employee’s own request with no alternative. This cost-cutting business strategy has enabled them to increase their profits by 27% compared with last year, bringing their annual earnings to 13 trillion Swedish kronor.
How has Klarna used artificial intelligence to replace thousands of workers?
The first round of redundancies at Klarna took place when the Nordic fintech company partnered with OpenAI to incorporate the large language models developed by the leading AI technology company into their work processes. In total, around 2,000 workers lost their jobs. A large proportion of this workforce was employed in customer service.
Over time, this integration proved to be a great success for the company. According to Klarna, its AI assistant does the work of around 700 people, and with less room for error. This company has therefore managed to to automate a large proportion of enquiries and complaints from its customers, and with more satisfactory results. The number of repeat enquiries fell by 25%, and it was shown that customer interactions were resolved more quickly using AI.
The human workers who remained in this department merely to resolve the most complex enquiries and queries.
Furthermore, Klarna maintains that its intentions in implementing AI are not to make as many people redundant as possible, but rather streamline work processes and improve the customer experience. However, given the figures for redundancies and corporate profits, it seems that one thing does lead to the other.
Klarna’s upcoming staff cuts: 1,800 fewer employees
Klarna continues to grow, though not in terms of staff numbers. However, it is not actively making redundancies either. As we have mentioned, its CEO’s strategy is as follows:
“In the long term, we anticipate that the workers will eventually leave due to burnout, which is very common in the tech sector. They’ll leave of their own accord because they’ll find better-paid jobs or simply because they fancy a change.”.
It appears that the only roles for which Klarna is still actively recruiting are for engineering and programming. The rest of the workers, it seems, are more dispensable.
But let there be no doubt about it: many companies would sack their entire workforce in one go if AI were capable of doing their jobs, regardless of the sector.
In somewhat dramatic terms, Klarna’s CEO has called on governments to get to grips with the issue of AI, as he predicts that It will have a huge impact on society and the labour market.
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