Understanding AI Literacy under the EU's AI Act

As AI becomes more integrated into everyday business operations, understanding its implications is essential. To ensure responsible and effective AI use, the European Union has made AI literacy a key requirement under the AI Act.

This is the third article in our series on the AI Act. Today I am looking into Article 4, the one about AI literacy.?

Definition & significance

AI literacy refers to the knowledge and skills required to develop, deploy, and use AI systems responsibly. It’s not just for technical experts, it refers to anyone working with AI-driven tools. The EU AI Act, specifically Article 4, mandates that organizations using AI ensure their employees and end-users have adequate AI literacy to make informed decisions about AI-driven processes.

In a recent AI Pact Webinar on AI Literacy (hosted by the EU AI Office), experts highlighted the importance of AI literacy for companies, regulators, and the public.

Key takeaways from the webinar included:

• AI literacy is essential for ensuring compliance with ethical and legal requirements.
• Organizations must provide training programs and resources to improve AI knowledge.
• The European Commission introduced a living repository, a collection of best practices from AI Pact members to guide organizations on AI literacy implementation.

Timeline & Implementation

The AI Act’s literacy requirements took effect on February 2, 2025. Companies are now expected to:

• Assess the AI literacy levels of employees and users.
• Implement educational initiatives, such as training programs and internal policies.
• Contribute to the European Commission’s living repository, a resource designed to foster shared learning and best practices.

What happens if companies don’t comply?

Non-compliance with AI literacy requirements could result in regulatory scrutiny. While specific penalties under Article 4 aren’t yet clearly defined, enforcement will be overseen by the European AI Office. Given the broader AI Act’s potential fines of up to €35 million or 7% of global annual turnover for major violations, it’s safe to assume that failing to address AI literacy could carry significant consequences.

Use cases from companies that contributed to the repository?

Several organizations have already begun implementing AI literacy initiatives to align with the AI Act:

1. Financial Sector: ING has introduced an AI training program for employees to help them understand AI-driven financial decision-making. The program covers how AI models assess creditworthiness, ensuring responsible lending practices.
2. Insurance Industry: the insurance giant has launched workshops for employees on AI-driven risk assessments and pricing models. These initiatives help staff critically evaluate AI-generated recommendations and enhance transparency for customers.
3. Technology Sector: SAP has developed an educational platform offering courses on AI system design and deployment. This initiative ensures both employees and clients are equipped with the necessary AI knowledge to navigate AI-based solutions effectively.

What’s next?

AI literacy is not a one-time effort, it’s an ongoing process that businesses must integrate into their long-term strategy. Organizations should:

• Regularly update AI training programs based on evolving regulations and technological advancements.
• Leverage resources like the living repository to stay ahead of compliance requirements.
• Participate in EU-led initiatives such as AI Pact webinars to exchange best practices with industry peers.

The AI Act is shaping the future of AI governance, and AI literacy is at its core. Companies that invest in education today will be better equipped to navigate the AI landscape tomorrow.