Lagarde: The European Central Bank is closely monitoring the impact of AI on the labor market, and there is currently no sign of a wave of layoffs.

European Central Bank President Christine Lagarde stated that the ECB will closely monitor whether the widespread adoption of artificial intelligence triggers job losses, but she also pointed out that “there are currently no signs of large-scale layoffs.”

On Thursday in Brussels, Lagarde told European Parliament members that both Europe and the United States have seen significant AI investments, which have already resulted in some productivity improvements. However, the impact on the labor market “is not yet visible.” She explicitly stated that the ECB will remain “extremely vigilant” regarding the potential employment consequences of AI.

This statement echoes concerns from U.S. Federal Reserve officials. Fed Governor Lisa Cook warned this Wednesday that “AI-driven increases in unemployment could exceed the Fed’s policy response capacity”; JPMorgan Chase CEO Jamie Dimon also reiterated this week that AI technology could threaten jobs such as truck drivers.

Productivity has improved, but employment impacts are not yet apparent

Lagarde said that current academic literature shows that large-scale AI investments are bringing some productivity gains, but the consequences for the labor market have not yet materialized.

“Current literature indicates that large investments are driving some productivity improvements,” she said, “but we have not yet seen the effects on the labor market or the large-scale layoffs feared by many. We will remain extremely vigilant in the future.”

She added that ECB data and surveys show that Europe is not falling behind the U.S., and the benefits of productivity improvements are even extending to small and medium-sized enterprises (SMEs).

European investments are keeping pace

In assessing AI’s impact on economic growth and inflation, Lagarde noted that the “large-scale investment wave” in the U.S. has triggered “significant follow-up investments” in Europe, which is progressing in tandem and benefiting equally.

“We are beginning to see some identifiable results and data,” she said. “Europe is not lagging behind; it is advancing and benefiting from productivity gains, including at the SME level, as our data and surveys reveal.”

Policy makers face unprecedented uncertainty

Lagarde also pointed out that the rapid evolution of AI presents new challenges for policymakers, as structural economic changes are occurring at a pace far beyond previous experience.

“These technologies only appeared three years ago, and the speed at which they evolve and iterate is, in my view, unprecedented,” she said. “This is a combination of uncertainty, economic shocks, and transformative factors happening at an incredible speed.”

This statement indicates that the ECB, when assessing AI’s impact on inflation and employment prospects, is “facing new challenges that are difficult to fully address within traditional policy frameworks.”

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