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How AI Is Expected to Impact Future Employment Trends

by internationalbanker

By Alexander Jones, International Banker


There has never been a period in history during which artificial intelligence (AI) has captured the world’s imagination as much as it has today. But with the sophistication of generative AI (GenAI) applications such as ChatGPT now expanding at a breathless pace, the fear that automated technology might soon take over large swathes of jobs has also become more palpable than ever. And while it might have been believed once upon a time that it was the lower-skilled, more repetitive work that was most at risk of being consigned to the dustbin of history by the AI revolution, the enormous advances in brainpower and human-like abilities of the latest AI applications mean that so-called “white collar” work is also looking increasingly vulnerable amidst a thorough disruption of the entire global labour market.

As this revolution gets into full swing, frequent analyses of just how impactful AI will be for the world of work are now coming to the fore. From an economic perspective, for example, Goldman Sachs expects AI to deliver 7 percent more (or almost $7 trillion) in global gross domestic product (GDP) and lift productivity growth by 1.5 percentage points over a 10-year period, whilst ushering in “sweeping changes” to the global economy. “Despite significant uncertainty around the potential for generative AI, its ability to generate content that is indistinguishable from human-created output and to break down communication barriers between humans and machines reflects a major advancement with potentially large macroeconomic effects,” Goldman Sachs economists Joseph Briggs and Devesh Kodnani wrote in a report published on April 5.

The report also projects that this new wave of AI systems could have sizeable effects on global employment trends, with shifts in workflows triggered by these advances potentially exposing the equivalent of a staggering 300 million full-time jobs to automation. That said, not all of that automated work will translate into layoffs. “Although the impact of AI on the labor market is likely to be significant, most jobs and industries are only partially exposed to automation and are thus more likely to be complemented rather than substituted by AI,” the authors noted. In the United States, for instance, the Goldman Sachs economists estimated that around two-thirds of occupations are exposed to at least some degree of AI automation, and that of those occupations, between one-quarter and one-half of their workloads could be replaced.

These are not concerns that can be filed away for the future. Rather, there is plenty of evidence that AI is already replacing jobs. On May 1, for example, IBM announced that it would pause its hiring for non-customer-facing roles that the tech giant believes could be replaced by AI over the coming years, which Chief Executive Officer Arvind Krishna said could amount to some 7,800 jobs. “There is no blanket hiring ‘pause’ in place. IBM is being deliberate and thoughtful in our hiring with a focus on revenue-generating roles, and we’re being very selective when filling jobs that don’t directly touch our clients or technology,” an IBM spokesperson told Business Insider. “We are actively hiring for thousands of positions right now.”

According to the non-partisan think tank Pew Research Center, 19 percent of American workers in 2022 were in the jobs most exposed to AI, in which the most important activities could be either replaced or assisted by AI; 23 percent of workers had jobs that were the least exposed to AI, in which the most important activities were farther from the reach of AI; and jobs with a high level of exposure to AI tended to be in higher-paying fields, in which college educations and analytical skills could be pluses. “AI is distinguished from past technologies that have come over the last 100-plus years,” Rakesh Kochhar, a senior researcher at Pew, said of the results. “It is reaching up from the factory floors into the office spaces where white-collar, higher-paid workers tend to be. Will it be a slow-moving force or a tsunami? That’s unknown.”

Ultimately, this trend may be determined by how quickly the latest generative AI applications, such as ChatGPT and Stable Diffusion, evolve. “It is their ability to write text, compose music, and create digital art that has garnered headlines and persuaded consumers and households to experiment on their own,” noted McKinsey & Company’s latest research published in June, which estimated that generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually to the global economy across the 63 use cases the consulting firm analysed. “As a result, a broader set of stakeholders are grappling with generative AI’s impact on business and society but without much context to help them make sense of it.”

Such trends also raise deep philosophical questions over the nature, utility and value of human input versus machine input for delivering superior results. While this generation of generative AI has demonstrated impressive knowledge, it has also frequently delivered misleading or outright incorrect information, which underscores not only the imperfect nature of the current technology but also the vital importance of such human qualities as cognition, judgement and emotional intelligence that are required in many jobs to deliver not only the highest but also the most nuanced performances. “We have to think about these things as productivity-enhancing tools, as opposed to complete replacements,” Anu Madgavkar, a partner at the McKinsey Global Institute, told Business Insider in June, adding that human judgement must be applied to these technologies to avoid error and bias.

Indeed, that “enhancing, not replacing” idea has significant implications for the nature of the labour market of the future, such that while millions of jobs may be lost due to AI, many millions more will be created in their places to support and complement the technologies of tomorrow. “The creation of new jobs resulting from the ability to create and deliver…new types of goods and services…ha[s] far outpaced the number of jobs displaced,” Steven Miller, professor emeritus of information systems at Singapore Management University (SMU), told CNBC in February. Dimitris Papanikolaou, a professor of finance at the Kellogg School of Management at Northwestern University, also noted that, as of now, people working alongside AI rather than being replaced by it is the likelier scenario. “There are far more opportunities for using AI for augmenting the work of human employees than for fully automating the work of humans,” Papanikolaou noted.

But such predictions are, understandably, doing little to allay ordinary workers’ fears over their future employment prospects. Perhaps most glaringly in the spotlight at present is the strike of Hollywood screenwriters and actors from the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) and the Writers Guild of America (WGA). Many in the industry are concerned that stringent regulations are needed to prevent AI tools from replicating and diluting their control over their work, thus reducing their chances of earning a living.

“Artificial intelligence poses an existential threat to creative professions, and all actors and performers deserve contract language that protects them from having their identity and talent exploited without consent and pay,” SAG-AFTRA’s president, Fran Drescher, announced on July 15. Meanwhile, the WGA’s demands, issued on May 1, read: “AI can’t write or rewrite literary material; can’t be used as source material; and [works covered by union contracts] can’t be used to train AI.” In response, the Alliance of Motion Picture and Television Producers(AMPTP), which represents employers, said that its offers included an “AI proposal which protects performers’ digital likenesses, including a requirement for performers’ consent for the creation and use of digital replicas or for digital alterations of a performance”.

This strike provides a glimpse of what will likely come as AI makes inroads into virtually all industries. It also demonstrates workers’ anxieties over AI’s replicative nature and its possible impacts on hundreds of millions of lives in the future. Indeed, a July 28-30 survey of US consumers conducted by Canada-based polling firm Leger sought to understand their perspectives on the SAG-AFTRA strike and their broader concerns over AI related to their jobs. “63 percent of U.S. consumers think governments need to regulate AI to reduce the risk of it replacing human jobs, while 37 percent think AI will inevitably replace some human jobs, the market will adjust, and people will find new opportunities,” the survey found. “45 percent of U.S. consumers are concerned about AI replacing human workers in their line of work, while 29 percent are unconcerned. 19 percent are not looking for work/currently working, and 6 percent don’t know.” Seventy-three percent of US consumers also support including a disclaimer with all AI-generated content so that it is clearly identified.


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