Klarna Is Replacing Workers With AI, but Claims Those Who Survived Cuts Will See Gains 'In Your Paycheck' The "buy now, pay later" company stopped hiring new workers a year ago.

A year ago, the "buy now, pay later" financing company Klarna stopped hiring new employees. Now Klarna is incentivizing its remaining employees to stay, and work harder, by promising higher pay related to AI improvements.

"By not hiring, we're simply shrinking," Klarna CEO Sebastian Siemiatkowski explained in an interview with Bloomberg on Thursday. 1,000 people have left Klarna since its hiring freeze started last year, leaving 3,500 workers behind.

Siemiatkowski has told employees that as the company's salary costs decrease, and as its productivity goes up thanks to AI, workers will see their salaries increase more frequently.

Related: Klarna Says Its AI Assistant Does the Work of 700 People. The Company Laid Off the Same Number of Employees 2 Years Ago.

"What we've said to our employees is the total salary cost of Klarna is going to shrink, but part of the gain of that is going to be seen in your paycheck," Siemiatkowski said. "So we're going to give some of the improvements that the efficiency that AI provides by increasing the pace at which the salaries of our employees increase."

According to Siemiatkowski, as a result of salary increases, employees are more motivated and internally rallying to use AI. They're using it for tasks like generating images, creating marketing material, running financial analysis, developing products, and interpreting customer service requests, he said.

Siemiatkowski told the Financial Times in September that Klarna's goal is to cut its workforce down to 2,000 people with the hiring freeze. He said at the time that the employees who stay will use AI to help fill in the gaps.

^{Klarna CEO Sebastian Siemiatkowski. Photographer: Chris Ratcliffe/Bloomberg via Getty Images}

Klarna has already touted AI's capabilities to replace human work. In February, the company claimed that its AI customer service assistant did work equivalent to 700 full-time, human agents.

Related: Klarna CEO Says AI Could Help Reduce Company Headcount By 50%

Klarna has even shown that its CEO can be replaced with AI. Last week, the company used an AI clone of Siemiatkowski to report its latest financial results.

Buy Now, Pay Later Is Thriving

Klarna and other "buy now, pay later" services like Affirm and Afterpay recently had their best day ever, according to a new report.

Adobe Analytics estimates released Sunday showed that shoppers spent a record-high $991.2 million with buy now, pay later on Cyber Monday.

Shoppers are also increasingly turning to these services, spending $75.1 billion with buy now, pay later in 2023, a 14% increase from the $65.6 billion they spent in 2022.