Can Europe's AI rules turn worker protections into a competitive edge?

Europe is carving a distinct path in artificial intelligence development, prioritizing robust regulatory frameworks and worker protections, a stark contrast to the largely laissez-faire approach seen in the United States. This strategy, built upon existing legislation like the Data Protection Act and GDPR, and solidified by the recent AI Act, aims to align AI adoption with local labor laws and union interests.

The continent’s susceptibility to AI’s transformative impact on employment is significant. A joint study by the International Labour Organisation (ILO) and Poland’s National Research Institute (NASK) identified Europe, alongside Asia, as the regions most exposed to AI, far surpassing the Americas. With global estimates suggesting one in four jobs are at risk of AI-driven transformation, the implications for Europe – a region already grappling with a shortage of skilled workers – are a pressing concern.

“It’s too early to tell where the AI wave will take us,” commented Adam Maurer, COO at Connecting Software, a European tech company. He noted that while AI promises exciting capabilities, its full impact remains to be seen. In recent years, major tech companies have undertaken mass layoffs, often citing revenue concerns or the belief that AI can automate many entry to mid-level functions. While some of these AI-driven workforce reductions have targeted underperformers, others have proven problematic. Swedish fintech Klarna, for instance, famously laid off 700 workers to integrate AI, only to later rehire human staff, with its CEO admitting the move was a “mistake.”

Maurer believes that while AI will undoubtedly replace some jobs, it will simultaneously elevate the value of others. In Europe, labor laws and regulations are poised to significantly shape this evolution, with many tech leaders optimistic that they can foster an AI future beneficial to both employees and businesses.

The Executive Dialogue on Regulation

The debate among executives regarding AI regulation is nuanced. Maurer expressed concern that excessive regulation of job displacement could stifle growth and deter startups from establishing themselves in the EU. However, not all business leaders concur. Volodymyr Kubytskyi, head of AI at MacPaw, a Ukrainian software company, argues that displacement is inevitable, not solely due to AI, but because AI fundamentally disrupts traditional work processes. He stressed the need for leaders to redesign work rather than viewing AI merely as a quick-win or cost-saving tool.

Kubytskyi acknowledged the AI Act’s necessity in establishing a baseline for the industry but pointed out its perceived gap in addressing potential job disruption. He suggested updates are needed, though he believes they are unlikely in the near future. Roman Eloshvili, founder of UK compliance firm ComplyControl, echoed this, stating that while the AI Act addresses safety, transparency, and ethics, it falls short on socio-economic impact, particularly concerning jobs. He anticipates future amendments will mandate employer-led upskilling and protections for displaced workers.

Conversely, Kris Jones, who leads the engineering team in Belfast for iVerify, believes it is premature to amend the AI Act. He asserts that its risk-based framework already strikes a delicate balance between protecting fundamental rights and fostering innovation. Jones also highlighted alternative policy ideas circulating among member states, such as an “AI token tax.” This concept, also championed by Anthropic CEO Dario Amodei, proposes taxing AI usage that generates income, with the revenue then redistributed through reskilling programs or support for affected industries. Such measures, Amodei noted, could cushion job shocks without impeding innovation.

Navigating Labour Relations

European labor and trade unions, often overlooked in the broader AI job displacement discourse, have vocally expressed their concerns. Ahead of the Paris AI Summit in February 2025, the ETUC (European Trade Union Confederation), representing over 45 million European workers, issued an open letter warning that AI’s positive impact on workers and society could be nullified if the technology becomes monopolized by a few tech giants. Similarly, UK unions like Accord and Unite have called for regulations to protect workers from AI, advocating for reskilling programs, corporate transparency obligations, and mandatory union consultations, particularly concerning AI-driven hiring and firing, and the protection of intellectual property rights for creative professionals.

Tech firms anticipate challenges in navigating these robust labor laws and active unions in Europe. Eloshvili from ComplyControl confirmed this, stating that European worker protections present both a safeguard and a challenge for AI integration. He expects unions to demand transparency and worker involvement as automation threatens jobs, cautioning that firms attempting to impose AI solutions without dialogue risk conflict. However, he believes it’s not a zero-sum game; collaboration, such as joint upskilling initiatives, can transform AI into a tool for improving working conditions.

Kubytskyi of MacPaw agreed that pushback from unions is understandable. He emphasized the critical role of clarity, structure, and communication. “If you integrate new [AI] agents into existing workflows without involving people, you’ll get pushback, and for a good reason,” he stated, stressing the need to demonstrate AI’s purpose, its safeguards, and its benefits to the team. Jorge Rieto, CEO of big data and AI consultancy Dataco, concurred, highlighting that effective AI deployments are strategic and require careful analysis of which tasks are best suited for AI offloading.

Developing AI the ‘European Way’

Kris Jones from iVerify argued that Europe’s stringent regulations, powerful trade unions, and strong workers’ rights are not necessarily impediments but could, in fact, be advantageous. He suggested that by embedding responsible AI practices – including bias checks, explainability, and human oversight – into every product cycle, companies can transform the AI Act from a mere compliance hurdle into a market differentiator.

Europe faces significant competition in the global AI landscape, lagging behind the US (which accounts for roughly half of the world’s AI unicorns and 80% of GenAI funding) as well as emerging tech hubs in Asia and Latin America. Mahesh Raja, CEO of Ness Digital Engineering, noted that the lack of comparable investment in Europe is hurting businesses, with 53% of SMEs finding AI implementation costs higher than anticipated and struggling with legacy IT infrastructure.

However, Europe’s stringent regulatory environment could become a “premium brand” for sectors where trust and data privacy are paramount, such as banking and healthcare. Jones believes Europe should not simply imitate Silicon Valley. Instead, the continent should leverage its unique strengths: a high number of STEM PhD graduates per capita, a commitment to privacy-first and safe AI solidified in regulation, ethical governance, deep industrial know-how, and cross-border talent pipelines.

“Overall, Europe should push hard on AI augmentation and skill-building, or we’ll fall further behind,” Jones concluded. “But do it Europe’s way, leveraging our ethical governance, deep industrial know-how, and cross-border talent pipelines instead of importing the Valley’s blitz-and-break culture wholesale.” By embracing its distinct values, Europe aims to turn worker protections and robust regulation into a competitive edge, fostering a human-centric AI ecosystem.