Akava chair warns AI job cuts could erode Finland’s tax base

Artificial intelligence could reduce public-sector jobs, weaken tax revenues and send economic gains abroad unless Finland prepares for the consequences, Akava chair Maria Löfgren told Yle.

Löfgren criticised plans by the Ministry of Finance to improve public-sector efficiency through artificial intelligence. She said the discussion has focused on how many jobs could be eliminated without addressing how society would support people who lose work.

“If human work in the public sector is replaced by artificial intelligence and the private sector cannot employ everyone who becomes unemployed, the funding base of the welfare society will genuinely erode,” Löfgren said.

She also pointed to the cost of software licences bought from large US technology companies. Europe accounts for only a few per cent of the artificial intelligence business, while China and the United States dominate the market.

“The benefits of artificial intelligence will automatically flow to the technology giants, and reforming public administration will set off an effect in which money flows somewhere other than Finland,” Löfgren said.

Löfgren calls for strategic planning

Löfgren’s criticism is directed particularly at the Ministry of Finance. She said Finland needs a deeper strategic discussion about how the productivity gains from artificial intelligence should be distributed more widely, through taxation or another collective model.

She said the issue is international and should at least be addressed within Europe, but added that Finland could take the lead. In her view, the matter should already have been resolved rather than being delayed while Finland waits to see what other countries do.

Löfgren hopes future elections will include a discussion about the resources needed to safeguard skills and expertise. She said the debate should cover more than how many people can be replaced by artificial intelligence.

She also warned that using artificial intelligence to pursue savings could, at worst, weaken the financial foundation of society. At the same time, she said people are already concerned about the economy and that this is not a good moment to create frightening scenarios.

Proposal to tax AI profits

Akava has not proposed a specific new tax model, but Löfgren outlined possible approaches. She suggested taxing artificial intelligence profits more heavily and earmarking the revenue for purposes such as developing skills.

Some of the revenue could also be directed into a fund, she said. The aim would be to use the money for the benefit of all citizens and to renew expertise.

“As a small, open economy, we do not have any other asset as significant as being so skilled that our experts can outperform those of other countries,” Löfgren said.

The idea has also been discussed internationally. The International Monetary Fund and several leading economists have considered how small welfare states could prepare for a situation in which artificial intelligence weakens the traditional tax base.