The Layoff Illusion - Issue #542 Thursday, June 12th 2025 12:00AM
The Focus
Klarna’s workforce dropped by nearly half in two years, much of it replaced by AI. It looked like a success story—costs down, margins up. But now even the CEO admits: they cut too deep.
What Klarna reveals isn’t about AI replacing workers. It’s about the false signal companies get when headcount drops, but complexity doesn’t. Automation fixes cost lines, not trust. Not product nuance. Not resilience.
As AI gets embedded deeper into operations, many companies are confusing staff reductions with strategic clarity. They’re not the same. The first wave of AI removed surface inefficiencies. The second wave will expose structural gaps—in oversight, in user experience, in risk management.
Executives should be asking:
- What functions are we automating without knowing how they break?
- Where are we assuming AI is making us stronger—but it’s just making us faster?
- Do we have the right people in place to audit what’s now invisible?
Key takeaway:
Removing headcount is not the same as improving the business. If you're not re-investing in design, judgment, and human oversight—you're not scaling. You're just trimming. And that works... until it doesn't.
Read more: Klarna CEO Warns AI Job Losses May Trigger Recession
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