Business · Economy · 5 hrs ago
ECB economist says AI could slow wage growth
ECB chief economist Philip Lane warned that AI could slow wage growth if it reduces demand for workers and weakens their bargaining power.
AI may increase hiring in sectors that build or support the technology, while reducing demand in jobs more easily replaced by it.
The European Central Bank has not yet observed major changes in employment trends, but companies’ hiring plans have fallen in recent months, with new graduates particularly affected.
Workers in sectors benefiting from AI infrastructure are more optimistic than those in knowledge-intensive industries facing greater replacement risks.
The shift could affect workers differently across industries and reduce wages’ share of total income.
Lane said digital investment in the United States grew twice as fast as in the euro area over the past two years, and US workers spend two to three times more of their workday using AI than workers in major euro-area economies.
Europe is using and developing AI more slowly than the United States and China, according to figures cited by Lane.
The ECB says it will support AI’s transformation while protecting price and financial stability.
ECB chief economist Philip Lane said wider use of AI could weaken workers’ bargaining power and slow wage growth.
He said muted hiring plans are limiting workers’ ability to seek compensation for high inflation, although ECB analyses have not found major changes in employment trends.
Lane also said global borrowing to fund AI investment is pushing up borrowing costs and tightening financial conditions in the euro area.
He said AI could raise potential output and help offset the effects of Europe’s shrinking working-age population.
- Who
- Philip Lane, the European Central Bank’s chief economist.
- What
- He said AI could weaken workers’ bargaining power and moderate wage growth, while AI investment may tighten financial conditions.
- When
- October 13, 2026.
- Where
- Dublin, Ireland.
- Why
- AI may reduce demand for some workers and mute hiring plans, limiting workers’ ability to demand higher wages.
This story does not have two clearly opposing sides.
Digital investment in the United States grew twice as fast as in the euro area over the previous two years.
Hiring plans have declined, with a greater impact on new graduates entering the labour market.
Lane discussed AI, wages and financial conditions in Dublin.
- Speaker
- Philip Lane
- Role
- ECB chief economist
- Speech location
- Dublin, Ireland
- Inflation target
- 2%
- US digital investment
- Grew twice as fast as in the euro area over the previous two years
3 sources
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What people are saying
The potential for AI to replace some types of workers may also weaken the bargaining power of workers, moderating wage growth and reducing the labour share in total income
The spillover to the euro area bond market means that the increase in long-term interest rates constitutes a material tightening of financial conditions for the euro area
El impacto neto sobre el empleo dependerá también de la evolución de los costes laborales frente a los precios de los tokens