Portugal has 'enormous productivity potential' in the adoption of AI

The global workforce is undergoing a profound transformation driven by the rapid advancement of artificial intelligence (AI). In recent months, major technology companies have announced significant layoffs, citing AI as a primary reason. Meta has cut 8,000 jobs and canceled 6,000 new hires, while Amazon laid off 16,000 employees. Microsoft offered early retirement packages to approximately 7% of its workforce, marking the first such move in the company’s 50-year history. These cuts often coincide with reports of record-breaking profits, raising questions about the true drivers behind these decisions.

Beyond the tech giants, the impact of AI on employment is being felt globally. In Portugal, Altice announced the dismissal of 16% of its staff to adapt to AI integration. Collective layoff processes in Portugal increased by 18% last year, and the banking sector spent nearly one billion euros on early retirement packages in 2025. According to a Goldman Sachs report, there is no significant correlation between AI adoption and increased productivity. The Massachusetts Institute of Technology (MIT) notes that only 5% of companies have successfully translated their AI investments into tangible results.

Despite technical advancements, current AI systems still struggle with everyday tasks, often producing convincing but incorrect outputs and lacking a genuine understanding of the world. This highlights a critical challenge: while AI promises efficiency, it remains unreliable in many practical applications. The transition to AI-driven work environments brings real consequences—job losses, heightened inequality, and over-reliance on unproven technology. While panic may not be warranted yet, the need for collective discussion on managing this shift is urgent.

The concern over job displacement is not unfounded. Kristalina Georgieva, head of the International Monetary Fund (IMF), estimates that up to 40% of global jobs could be at risk due to AI. The World Bank reports a 20% decline in job openings, particularly in sectors such as call centers and software development. Automation of repetitive and monotonous tasks could offer benefits, but the issue lies in who benefits from the output of automation. Currently, the astronomical profits made by corporations announcing mass layoffs speak volumes about the distribution of gains.

Historically, technological revolutions have reshaped labor markets, but improvements in workers' quality of life have come not from machines alone but through collective action. The Industrial Revolution saw the rise of labor laws, social protections, and taxation reforms. Similarly, addressing the challenges posed by AI will require regulatory frameworks, transparency, and equitable profit-sharing mechanisms. Technological progress must serve all society, not just capital interests.

In Portugal, the potential for AI to boost productivity is substantial. Bernardo Caldas, an AI expert, highlighted during the Vodafone Open Day that the country's service-based economy and digital infrastructure position it well for AI integration. He noted that functions heavily reliant on computer interaction and information processing are most vulnerable to automation. Software development has already seen measurable increases in code production, and knowledge-intensive roles such as lawyers and consultants are also experiencing transformative changes.

For Portugal, the opportunity lies in leveraging AI to enhance economic output without necessarily increasing the number of workers required. By adopting AI more rapidly than other economies, Portugal could benefit from lower-cost products and services, strengthening its competitive edge in the global market. The energy sector plays a crucial role here, as AI requires significant computational power, which is supported by renewable energy sources. Portugal's abundant and affordable renewable energy resources provide a strategic advantage, potentially positioning the country as part of the global AI infrastructure network.

Certain industries stand to gain more from AI integration. Healthcare, for instance, faces severe shortages of human resources and can benefit greatly from automated assistance. AI's ability to follow treatment guidelines and adapt to specific patient needs makes it particularly valuable in this sector. Financial services, another area with high barriers to entry, can leverage AI to reduce costs and improve efficiency, fostering greater competition and innovation.

As AI continues to evolve, the balance between technological advancement and societal well-being becomes increasingly important. The path forward involves not only embracing AI's potential but also ensuring that its benefits are distributed equitably. Governments, businesses, and workers must collaborate to create policies that protect jobs, promote fair wages, and ensure that the rewards of automation are shared broadly. Only then can the promise of AI be realized in a way that truly enhances the lives of all individuals.