Lagarde: The European Central Bank is closely monitoring the impact of AI on the job market; so far, there has been no wave of layoffs.

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

Lagarde told European Parliament members in Brussels on Thursday that both Europe and the United States are seeing large-scale AI investments and have already observed some productivity gains, but the impact on the labor market is "not yet visible." She made it clear that the ECB will remain "extremely vigilant" regarding the potential employment consequences of AI.

This statement echoes the concerns of Federal Reserve officials. Fed Governor Lisa Cook warned on Wednesday that AI-driven increases in unemployment may exceed the capacity of monetary policy to address, and JPMorgan CEO Jamie Dimon also reiterated this week that AI technology could put jobs like truck driving at risk of being eliminated.

Productivity Improvements Visible While Job Market Impact Not Yet Apparent

Lagarde said that current academic literature shows that large-scale AI investment is bringing some productivity improvements, but the consequences for the job market have not yet appeared.

"The literature currently tells us that large-scale investment is driving some productivity improvement," she said, "but we have not yet seen consequences for the labor market or the wave of layoffs that people are worried about. We will remain extremely vigilant going forward."

She added that ECB data and surveys show Europe is not lagging behind the U.S., and the benefits of productivity improvement have even extended to the small and medium-sized enterprise (SME) sector.

Europe Keeping Pace with Investments, Not Falling Behind

When assessing AI’s impact on economic growth and inflation, Lagarde noted that the “large-scale investment wave” in the U.S. has triggered a “substantial follow-up investment” in Europe, and Europe is advancing in parallel and benefiting in equal measure.

“We are starting to see some identifiable results and data,” she said, “Europe is not lagging behind; Europe is also advancing and likewise benefiting from increased productivity, including at the SME level, as revealed by our data and surveys.”

Policymakers Face Unprecedented Uncertainty

Lagarde also pointed out that the rapid evolution of AI poses new challenges for policymakers because the speed of structural economic change has far exceeded past experience.

"These technologies only emerged three years ago; the speed at which they are replacing each other and iterating is, in my opinion, unprecedented," she said. "This is an overlap of uncertainty, economic shocks, and transformative factors, the speed of which is incredible."

This statement indicates that when assessing the impact of AI on inflation and employment prospects, the ECB is facing new challenges that the traditional policy framework cannot fully address.

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