ECB's Lane warns AI could weaken euro-area wage bargaining

Philip Lane, who serves as an Executive Board member of the European Central Bank (ECB), issued a warning on October 13 about the potential impact of artificial intelligence on the bargaining power of workers, even in times when workers do not experience mass job losses. Wage growth and labour income share will deteriorate before the employment numbers indicate that a shift has happened.

Lane sees weaker pay power before weaker payrolls

According to Lane, the option of substituting workers could actually work towards increasing the employers’ advantage. However, ECB does not see major changes in employment trends or precise productivity improvements across the economy.

The use of AI among employees in the euro zone rose from 26% in 2024 to 52% in 2026, and the usual AI user can save up to three hours a week, according to ECB’s research. However, savings made in time do not necessarily imply increases in productivity.

Who captures the productivity gains

Who gains from increased productivity? A survey conducted by PwC involving nearly 50,000 participants has revealed that nearly twice as many respondents indicated that their bargaining position was less secure than improved. The company’s “engine room”—56% of the interviewed professionals—has limited access to both AI and career advancement opportunities. As a result, the level of trust in management has dropped by 7%.

Still, jobs demanding AI skills are associated with higher salaries. According to PwC’s jobs study, AI-skilled jobs receive a 62% average premium, although logical causation is not established. As some jobs were “professionalised,” their growth in terms of numbers is twice as fast compared to the growth of “democratised” jobs, and their salaries increased since 2021 by 42%.

Evidence from the study in the European Economic Review proves that increased use of AI decreases the share of incomes going to labor.

Little sign of mass job losses, so far

There is limited evidence regarding mass layoffs. According to a Stanford study, unemployment in the US increased by 0.77 percentage points among workers most exposed to AI since 2022 compared to 0.85 percentage points for those least exposed to AI. This indicates a broader weakness of the labor market rather than a distinct shock produced by artificial intelligence.

Recent graduates face more challenges. Unemployment among them reached 5.6% in early 2026, a 1.6-point perspective increase over three years. According to Stanford, forecasts of AI accelerating mass layoffs, like the prediction made by Anthropic CEO Dario Amodei that AI would end up displacing half of all white-collar working positions and driving unemployment rate to 20% should be taken with caution.

Europe’s funding gap and the AI valuation risk

Financing hurdles are also present in Europe. According to Lane, investment in the US witnessed growth that was almost double that of euro zone investments in the last two years. An ECB analysis also indicates a trend in which companies that rely on AI for their operations are moving into market financing. The higher cost of borrowing, driven by bank interest rates, creates further pressure.

At the same time, the October report from the IMF indicates that disappointing benefits from AI investments may lead to a market correction, exacerbated by financial leverage and concentrated bets. In the words of the IMF’s Athanasios Vamvakidis, “resilience is not safety.”

Why the Kroger comparison is not proof

Cryptopolitan reported that Kroger plans to cut around 3,000 of its 8,200 corporate jobs—about 37%—over three years. CEO Greg Foran announced the cuts October 12, weeks after the retailer unveiled its AI strategy. He cited streamlining and investment in store staff, not AI.

The timing raises questions. It does not prove AI caused the cuts—or that a wider layoff wave has begun.

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