In Silicon Valley, architects of the AI revolution like Sam Altman and Dario Amodei are already pushing ideas like universal basic income or a token tax to cushion the impact of artificial intelligence on American workers.
Europe has so far taken a different path, focusing squarely on regulation and AI-centric industrial policy to try to keep the bloc’s economy from falling behind, while assuming that its existing welfare structure will be strong enough to protect workers from the disruption to come.
That social model may prove to be one of Europe’s biggest advantages in the AI transition. But it also exposes a fundamental weakness: while Brussels leads on AI regulation, it controls neither the money nor the policy tools needed to coordinate a continent-wide response to a technological transformation that will play out across all 27 member states.
There’s also concern that without widespread diffusion, adoption and re-skilling in AI technologies, Europe could miss out on the productivity gains it so desperately needs to finance its overburdened welfare state.
“I haven’t seen huge proposals on the EU side, and I think it’s because we are less exposed overall than the U.S.,” said Pietro Valetto, a doctoral student at the University of Antwerp studying wealth inequality and the impacts of AI on the labor market. “We have a more comprehensive welfare state, hiring and firing is much slower here than in the U.S., and we have many institutions like labor unions that can slow down these crises.”
How AI will reshape jobs across Europe
European economies are almost certain to be reshaped by AI, but researchers still don’t know exactly how, or how quickly the transformation will unfold. With a dearth of concrete data, more AI researchers are using fictional scenarios — like the viral Europe 2031 — to explore the possible impacts on the European economy.
Some of those scenarios chart a doomsday path driven by mass job loss caused by increasingly capable AI agents. Others, like those laid out by the Centre for European Policy Studies, envision futures ranging from exponential economic growth leading to mass redistribution to a more gradual diffusion throughout society.
The uncertainty has frustrated researchers, who broadly agree that far more evidence is needed before drawing firm conclusions.
“It’s still very unclear,” said Catherine Schneider, senior policy researcher on the AI workforce and innovation for the tech think tank Interface. “I think there are areas of the economy where it’s easier to say that certain sectors are more exposed to the risks of automation, such as white collar workers, but across the board it’s still very hard to tell how this technology will change things.”
That said, while speculative predictions have dominated the discourse around AI’s impact on jobs, early data points to a few clear trends, according to Georgios Petropoulos, a professor at the University of Southern California Marshall School of Business who studies AI’s effects on European labor markets.
So far, there’s little data that supports the mass job-loss hypothesis — typically advanced by Silicon Valley tech leaders. In fact, according to Petropoulos and organizations including the European Training Foundation, there’s little evidence to suggest that AI is having any sizable impact on the total number of jobs available.
That doesn’t mean the labor market will remain unchanged. For example, Petropoulos said data shows young people early in their careers and those doing lower-skilled cognitive jobs, such as receptionists, are already especially exposed.
More broadly, the expert consensus is that a combination of AI replacing certain jobs and expanding others means employment largely stays stable across a single firm, according to the ETF’s report. The technology could even boost demand for vocational and other medium-skill occupations, as AI-powered research, data analysis and documentation tools make lower-skilled workers more productive.
A 2023 European Central Bank report found that around 25% of jobs in Europe are highly exposed to AI-enabled automation. But that exposure doesn’t necessarily mean displacement. By working with AI, workers and firms could be more productive and increase their employment share.
Within Europe, those transitions are unlikely to be uniform. For example, a recent study by OpenAI found that impacts varied widely from country to country. Highly digitized economies such as Luxembourg, Sweden and the Netherlands have higher shares of jobs that could grow under the influence of AI, while Germany, Greece and Italy had a higher automation potential. Those differences, OpenAI’s chief economist argued, mean there’s no “one size fits all” approach to adapting Europe’s workforce to AI.
Building an AI-ready workforce in Europe
European workers are already using AI, but at lower rates than their American counterparts, while adoption levels vary across the bloc. That gap could become a long-term problem for Europe's productivity, competitiveness and, ultimately, the sustainability of its social model.
According to the Centre for Economic Policy Research, 35.6% of workers in Sweden and the Netherlands used generative AI for work in early 2026. In Italy, the figure was 25.6%, while France stood at 28.1%. By comparison, a whopping 43% of U.S. workers used AI during the same period.
The ultimate economic value of AI — such as for past capital technological advancements like railroads — will likely be in the adoption of the technology across the economy, rather than benefits accruing only to the frontier companies. That’s why diffusion, the level of AI use across the entire economy, is so important, according to Phillip Tomei, research director at the AI Objective Institute.
While encouraging diffusion of AI across the economy may look only like industrial policy, Tomei argued that its good social policy too. If European workers and firms fail to use AI and fall behind the U.S., then companies will become uncompetitive on the global level. “If you keep firms competitive, they don’t need to lay off workers,” he said.
But re-skilling has still become a big part of the AI debate in Europe — especially considering the relatively low level of tech competence throughout the continent. According to the EU’s 2024 Digital Economy and Society Indicators survey, 45% of European workers between the ages of 16 and 74 have no basic digital skills.
Even if Europe doesn’t compete directly in developing cutting-edge frontier models, it still needs workers who have the digital skills to use chatbot programs. For example, making computer science courses mandatory across the EU — as they are in large parts of the world — could help strengthen digital skills that are important in the AI age, such as prompt engineering, according to the European Parliament.
The challenge is that Brussels has limited authority to make that happen. Employment policy, education and workforce training are overwhelmingly the responsibility of member states competency, leaving the EU with few policy levers — and little funding — to usher in a broad re-skilling program for AI. For example, the European Globalisation Adjustment Fund for Displaced Workers, or EGF, only has €35 million in 2026-27 to help displaced workers with retraining and other forms of support.
That fragmentation could leave the countries facing the greatest disruption with the fewest resources to respond. Economies such as Italy, where digital adoption is lower and automation risks are higher, may struggle the most to prepare workers for the AI transition.
A welfare state for the AI transition
So far, the EU has primarily focused on industrial policy and regulation rather than strengthening the welfare state to prepare for the AI transition. That’s a problem, according to Federico Plantera, researcher on AI at the Centre for European Policy Studies. “An AI-focused industrial policy without social policy will inevitably lead to inequalities,” he said.
Plantera described a strategy focused solely on diffusion and adoption of AI across the bloc as “violent” because it ignores Europe’s social and economic fabric. For example, farmers, artisans and many other professions may never use AI in their day-to-day work, and forcing AI adoption on workers would betray Europe’s social roots, he said.
At the same time, if European firms and workers don’t use AI, then they risk no longer being competitive in the global economy, and there will be very little gains to redistribute at all, according to Valetto. “If we can’t use the technology, then we have no productivity gains and less surplus to share between workers and firms or resources to help any workers negatively impacted by AI.”
The redistribution mechanism also doesn’t necessarily require radical ideas, such as UBI. If economic growth is strong enough and labor market institutions are able to ensure workers are shielded from replacement, then Europe’s suite of corporate, payroll and VAT taxes would be strong enough to support the system, Valetto said.
Unions in Europe will also play a role in ensuring the productivity gains of AI are redistributed to workers, shoring up the financial health of the social model, according to Schneider. Many unions have already negotiated use of AI and the distribution of productivity increases in collective agreements, according to Aída Ponce Del Castillo, a researcher at the European Trade Union Institute. In particular, she pointed to the European Works Councils of large multinationals, in which AI was becoming a more important point of negotiation.
But because welfare systems, training programs and labor protections vary widely among member states, Europe’s social model will not protect all workers equally — and the EU has few tools to ensure otherwise.
“Social protection in Europe is a unique part of our identity, and we should keep it strong,” said Petropoulos. “However, we also need to move one step further and link social protection with more help and guidance to people, so that they will be relevant in the job market of tomorrow.
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