German Firms See Expanding AI Use Crimping Wages, Survey Shows

German companies deploying artificial intelligence are expecting its growing use to depress wages over the next five years, especially for junior workers.

About half of businesses using AI predicted falling wages for employees with fewer than five years experience, according to a June survey of more than 3,000 German firms by the Munich-based Ifo Institute published Wednesday.

For more senior staff, around 40% of companies said they expect lower wages, while workers with a college degree were considerably more likely to see their salaries rise than those without one, the institute said.

“For many businesses, artificial intelligence will not impact all employees equally,” said Ifo researcher Anna Ruffert. “For workers with formal degrees, especially in combination with more extensive experience, businesses more frequently expect positive effects on wages due to AI to be possible.”

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Ifo’s findings are in line with research from the IESE Business School in Spain showing that generative AI is compressing the wages of new hires at companies exposed to AI.

Using a dataset of 138 million US workers, the researchers showed that, after the launch of ChatGPT, wages for junior positions fell 6.3%, while those for senior positions remained largely unchanged or increased.

IESE highlighted the ability of large language models to automate tasks such as drafting, summarizing, coding and basic analysis, which in most workplaces are concentrated in low-seniority roles.