Fresh warnings from two major central banks are painting a more nuanced picture of artificial intelligence and labour markets. On October 13, European Central Bank Executive Board member Philip Lane cautioned that AI could erode workers' bargaining power even before mass job losses appear, and the Federal Reserve's Beige Book on October 14 linked AI adoption to slower hiring in five districts.
ECB: Weaker pay power before weaker payrolls. Lane said the ability to substitute workers may strengthen employers' advantage, while wage growth and labour income share can deteriorate before employment data shifts. ECB research shows AI use among euro-area employees doubled from 26% in 2024 to 52% in 2026, with typical users saving up to three hours per week. Lane stressed those time savings do not automatically translate into productivity gains.
Fed districts see hiring cool without layoffs. The Beige Book said some firms reduced staff through attrition, paused hiring, or posted fewer openings, while overall employment was little changed. The report highlighted AI-related data centre demand as a construction offset, quoting a Chicago Fed contact: "without data centers, construction would be in a recession."
Wider evidence remains mixed. PwC's survey of nearly 50,000 workers found twice as many respondents said their bargaining position was less secure rather than improved, while 56% of "engine room" employees had limited AI access and trust in management fell 7%. Jobs requiring AI skills pay a 62% average premium. Stanford research covering 1.25 billion job ads and 154 million employment records across 41 countries found a shift in workforce composition rather than mass redundancies, with fewer junior roles and more senior hiring. US unemployment among AI-exposed workers rose 0.77 percentage points since 2022, slightly less than the 0.85-point rise for less-exposed workers. The jobless rate for recent graduates reached 5.6% in early 2026.
Investment and market risks. Gartner projects AI spending will reach $2.67 trillion in 2026 and $3.64 trillion in 2027, but the IMF warns disappointing AI returns could dampen asset values and create financial market instability. Lane also noted US investment grew nearly twice as fast as euro-area investment over the past two years, adding that European companies relying on AI are turning more to market financing while bank borrowing costs remain elevated.
