AI layoffs put Estonia’s tech workforce under pressure

Estonia’s technology sector is facing a wave of layoffs as companies increasingly cite artificial intelligence as a reason for restructuring, ERR reports. Pipedrive, one of Estonia’s success stories, said on Thursday that most of its employees would lose their jobs.

The changes are expected to affect the labour market further. Microsoft recently offered voluntary severance packages to about 60,000 employees to cover the costs of AI and data centres. Amazon has cut about 30,000 office jobs in a year, while Meta has laid off 10% of its workforce. The International Monetary Fund has warned that AI will affect about 40% of jobs.

Telecommunications company Telia recently announced plans to cut 100 jobs in Estonia. Its chief executive, Andre Visse, said companies may increasingly be able to do the same amount of work with fewer employees.

Young people have been hit particularly hard. Employment among under-25s working in Estonia’s IT sector has fallen by nearly a quarter in three years, said Urve Mets, a research manager at OSKA. She said it is now more difficult for young people to enter the labour market than it was three years ago.

Sergei Anikin, who expanded Pipedrive’s engineering department from 10 people to more than 400, said younger workers may adapt more readily to new ways of working. People with established careers and family commitments could find it harder to adjust if machines can perform their work better and much faster, he said.

Visse said layoffs numbering 400 to 500 people at once would affect the labour market and could temporarily increase unemployment, but he expected the situation to correct itself relatively quickly. He added that IT specialists in Estonia are concentrated in the technology sector, while AI could encourage more technology-skilled workers to move into other industries and support their digitalisation and automation.

Mets said demand for technology skills would remain high, but coding alone would not be enough. She encouraged young people to consider how technology could be applied in fields such as medicine or industry. Anikin said that with AI removing obstacles to putting ideas into practice, the ability to distinguish good ideas from bad ones would become increasingly important.