Europe's Labor Sector Transformation Due to AI: Advocating for a Social Agreement
European Union Announces AI Social Compact to Address Job Displacement and Promote Hybrid Intelligence
In a bid to address the impact of Artificial Intelligence (AI) on employment, income, and social cohesion, the European Union has announced the formation of an AI Social Compact. This initiative aims to align technological progress with labour protections and targeted upskilling.
The AI Social Compact proposes key measures to prevent job displacement and promote hybrid intelligence, a concept that emphasizes the collaboration between AI and human intelligence. These measures are based on the EU AI Act, the AI Continent Action Plan, and the emerging Code of Practice for General-Purpose AI (GPAI) models.
One of the key measures is the regulation of high-risk AI systems to prevent unacceptable social impacts, including on employment. This involves banning some systems and imposing stringent requirements on others, such as transparency, accountability, and ethical compliance.
Another measure is the promotion of AI literacy and upskilling for employees. This initiative aims to prepare the workforce for AI integration and mitigate the risks of job displacement by enabling workers to collaborate effectively with AI systems.
The EU also encourages the development and adoption of hybrid intelligence models, where AI augments human decision-making rather than replacing it. This fosters cooperation between AI and human intelligence to create new job roles and opportunities.
Through the AI Continent Action Plan, the EU prioritizes strengthening AI skills and talents, improving access to high-quality data and AI infrastructure, and supporting startups and innovation. This approach aims to balance economic growth with social protection.
The Voluntary Code of Practice for GPAI models addresses transparency, safety, and copyright issues but also indirectly supports social aspects by promoting trustworthy AI that aligns with societal values. This includes minimizing negative social impacts such as mass job displacement.
The European Union's AI Social Compact is a significant step towards protecting workers from abrupt technological disruption, encouraging responsible innovation, and fostering a balanced AI ecosystem that leverages hybrid intelligence to enhance human jobs rather than eliminate them.
However, the current debate on the EU's Multiannual Financial Framework for 2028 to 2034 offers a revealing glimpse into the Union's preparedness for the social consequences of AI. The Commission's proposal does not call for a meaningful increase in the Union's financial capacity and signals a shift away from coordinated EU-level action in favor of nationally fragmented spending.
This raises concerns about the European Union's ability to address the challenges posed by AI, particularly in terms of job displacement. A study by Nobel laureate Daron Acemoglu and his co-authors found that AI adoption initially boosted AI-related hiring but soon led to reduced hiring and shifting skill requirements within firms. Dario Amodei, CEO of Anthropic, warned that generative AI models could eliminate up to half of all entry-level white-collar jobs and push unemployment up by 10 to 20% within one to five years.
In light of these concerns, a European AI Social Compact, anchored in the next Multiannual Financial Framework, is urgently needed to protect workers, support regions, and ensure that no one is left behind in the age of artificial intelligence.
Federico Pozzi, an AI Governance specialist at Intellera Consulting, and Elizabeth Kuiper, Associate Director and Head of the platform and Well-being programme at the European Policy Centre in Brussels, have both highlighted the need for a comprehensive approach to AI that addresses the social, economic, and ethical implications of this technology.
The adoption of AI has accelerated rapidly, with 78% of firms using AI in at least one business function in 2024. However, software developer jobs have decreased by 35% over the past five years. This underscores the need for a proactive and coordinated response to the challenges posed by AI from the European Union.
In conclusion, the European Union's AI Social Compact represents a significant step towards addressing the impact of AI on employment, income, and social cohesion. However, more needs to be done to ensure that the benefits of AI are shared equitably and that no one is left behind in the age of artificial intelligence.
[1] European Commission. (2021). Proposal for a Regulation of the European Parliament and of the Council laying down harmonised rules on artificial intelligence (Artificial Intelligence Act). [2] European Commission. (2020). AI strategy for Europe: Reaping the full potential of artificial intelligence - A European approach to excellence and trust. [3] Organisation for Economic Co-operation and Development (OECD). (2021). Code of Practice for Artificial Intelligence (GPAI). [4] European Commission. (2020). AI, a European approach to excellence and trust: A European strategy for data. [5] European Commission. (2020). Communication from the Commission to the European Parliament, the European Council, the European Economic and Social Committee and the Committee of the Regions on Artificial Intelligence for Europe's recovery: A European approach to excellence and trust.
- The AI Social Compact introduced by the European Union aims to ensure a digital transition aligns with labor protections and targeted upskilling, particularly in the context of job displacement caused by AI.
- To prevent job displacement and promote hybrid intelligence, the EU has proposed regulations for high-risk AI systems, offers AI literacy and upskilling programs, and encourages the development of hybrid intelligence models that augment human decision-making.
- Under the AI Continent Action Plan, the EU prioritizes enhancing AI skills, improving infrastructure, and supporting startups, aiming for a balanced approach between economic growth and social protection.
- In addition to technical measures, the Voluntary Code of Practice for General-Purpose AI (GPAI) models promotes transparency, safety, and ethical compliance, thus indirectly supporting social aspects and mitigating the negative impact of AI on labor markets.
