Disruption in the Labor Market due to the AI Revolution
By Devashish Shrestha, Kathmandu, Nepal
The advent of technology with its unprecedented power and capability has brought mankind to the verge of the Fourth Industrial Revolution where Artificial Intelligence is going to play an instrumental role in disrupting the global economic landscape including the job market. Similar to the industrial revolution of the 1800s, where technological advancements completely transformed the world economy, the recent AI revolution is anticipated to do the same. This revolution brought about by Artificial Intelligence seems to be a turning point in history that will bring sweeping economic changes worldwide. However, the type of change that it will bring about is a matter of huge debate and concern. Widespread speculation suggests that it will disrupt job markets worldwide and “could both create (or) limit economic opportunity” as mentioned in an article in the World Economic Forum website, “How Artificial Intelligence is Shaking up the Job Market.”
The article further states that according to the analysis done by the World Economic Forum on the data gathered from LinkedIn, tech jobs will steadily rise along with those that are humanistic. Hence while jobs in software engineering, data analysis, cloud computing, mobile applications development, software testing, and AI are increasing, those that consist of highly repetitive tasks and can be automated like administrative assistant, customer service representative, accountants, and technicians have seen a sharp decline in hiring rate. While the previous industrial revolution created mass employment through the invention and adoption of innovative technology, the impact that the AI revolution will have is an open-ended question.
There is a growing sense of uncertainty on whether AI will replace human workers as they can perform manual repetitive tasks much more efficiently and accurately, resulting in many labor-intensive jobs becoming obsolete. For example, AI chatbots capable of catering to customer concerns or queries are already replacing human agents. Even AI robots that perform more accurate diagnosis of diseases are seemingly replacing some tasks traditionally done by doctors. A lot of tasks that an administrative clerk used to perform like filing paperwork and booking meetings are being done by AI systems. AI is even capable of flying passenger aircraft without pilots between different locations.
A study titled “The Future of Employment: How Susceptible Are Jobs To Computerization”, done by Carl Frey and Michael Osborne of Oxford University in 2013 after they studied 702 occupational groupings, suggests that in the US, 47% of workers will lose their jobs over the next 20 years. According to McKinsey, on global scale automation is likely to replace 400 to 800 million jobs by 2030 requiring as many as 375 million people to switch to a different job category entirely.
However, although the idea of automation might seem to correlate to people losing their jobs, it is not true in all cases. Evidence has emerged that warehouse workers at Amazon, a worldwide e-commerce retailer, have benefited from automation since it led to an increase in salary for more than 250,000 of its employees as mentioned in the New York Times article, “Why Some Amazon Workers Are Fuming About Their Raise”. According to the article, previous employees who were engaged in work that didn’t require using much machinery are now troubleshooting robots after undergoing training. They have been reported to derive more job satisfaction out of their new work that is less labor intensive. This goes in line with what was said in the article “Jobs lost, jobs gained: What the Future of Work will Mean for Jobs, Skills, and Wages,” from McKinsey, “that even when some tasks are automated, employment in those occupations may not decline but rather workers may perform new tasks.” Hence, automation might get rid of a few jobs while introducing new ones at the same time.
The article, further states that “automation and AI will lift productivity and economic growth” requiring “millions of people worldwide to switch occupations or upgrade (their) skills.” Hence, apart from cutting jobs or creating new ones, Artificial Intelligence is predicted to restructure the job market as it will transform different types of jobs by changing the nature of the tasks to be performed. Hence, the job market could become more geared to help those who upgrade their skills.
One possible way how this restructuring could occur would be through a significant rise in professionals in different fields who are either experts in AI or are in some way acquainted with the technology. As more and more jobs require being conversant with AI, there is a strong likelihood that the labor market will get saturated with more working professionals who have some training in using Artificial Intelligence technology or are familiar with the technology. Workers in every field will have to upgrade their skill set to keep up with the demands of the changing nature of work in order to maintain a competitive advantage in the labour market and survive in the modern economy. Although many might think that AI engineers and programmers will increase drastically, PwC’s chief economist John Hawksworth mentions that only 5% of the job market will consist of such hardcore professionals. Whatsoever, the job market landscape will change as people will get forced to pursue jobs that require more creative thinking.
Wildly divergent schools of thought exist in regards to what Artificial Intelligence will do to the job market. Some speculate that AI will create more jobs than it will take away while others predict widespread job losses. For instance, it is estimated that automation will replace 1/5th of China’s jobs in the manufacturing industry. Neil Shen, the founding and managing partner of Sequoia Capital China, stated that “work will shift from being labor-centric to innovation-driven.” If this is true, prospects seem good for employees whose job demands creativity while it may be quite upsetting for those whose jobs entail tasks that are repetitive in nature. This goes in line with what PwC’s chief economist John Hawksworth told Forbes that “jobs that require a human touch and aren’t easy to automate will be there and remain in high demand”. Furthermore, according to this Forbes article, PwC suggests that although automation could take away around 7 million existing jobs in the UK by 2037, Artificial Intelligence systems will increase productivity and put approximately the same number of jobs, 7.2 million, back over the next two decades.
So whether it be creating a barrage of opportunities or rendering certain jobs obsolete, one thing is certain that the AI revolution will surely disrupt the job market. As added by Hawksworth that although there are huge concerns about AI affecting the global economy by leaving many jobless, the gains in productivity that AI is likely to bring to boost GDP is not understood by many. Although AI can have a positive impact on big economies with plenty of highly educated white collar workers, the effect can be quite the opposite in emerging economies where a vast majority of people rely on hard labor to earn a living.
While it might be possible to educate masses of people in AI in developed nations, the possibility of being able to do that in developing nations with limited infrastructure and financial capital may be more challenging than most are willing to acknowledge. Nonetheless, we need to be prepared for the new global economy where we have to adjust to the labor effects and changes that may come with Artificial Intelligence.
