AI’s Growing Impact: Lower Demand for Labor & Greater Inequality Predicted
Artificial intelligence (AI) is rapidly expanding across various industries, but its effects may lead to a decrease in labor demand and exacerbate inequality between different countries, reports the BBC. The International Monetary Fund (IMF) predicts that nearly 40% of jobs will be influenced by AI, resulting in both positive and negative outcomes for humanity.
In a blog post authored by IMF’s Managing Director Kristalina Georgieva, it is explained that AI is likely to widen the gap between countries. Advanced economies, which heavily rely on jobs that require cognitive processing, are more exposed to the advantages and disadvantages of AI compared to emerging markets and developing nations.
AI has the potential to replace important human tasks, potentially leading to a decline in labor demand and affecting salaries or even causing job eliminations. According to the IMF’s analysis, around 60% of occupations in developed nations could be impacted by AI. Approximately half of the affected occupations might experience increased productivity through the integration of AI, while the other half could face lower labor demand, resulting in reduced earnings and fewer job opportunities as AI takes over critical functions currently performed by humans. In some cases, certain positions may disappear altogether.
On the other hand, developing economies are expected to have around 40% exposure to AI, while low-income nations might see a 26% exposure. This suggests that poorer countries and emerging markets will experience fewer direct disruptions caused by AI. However, many of these nations lack the necessary infrastructure and skilled workforce to fully harness the potential of AI, increasing the risks associated with this technology.
The analysis also highlights that college-educated workers are better prepared to navigate the AI revolution. Conversely, older workers may be more vulnerable to the changes driven by AI. In countries like the UK and Brazil, college-educated individuals have historically been able to transition more easily from professions with high displacement potential to ones that have high complementarity with AI. However, workers without a college degree have less mobility. Younger people, if equipped with flexibility and knowledge of new technologies, may be better positioned to seize new opportunities. In contrast, older workers could face difficulties in finding new employment, adapting to technology, relocating, and acquiring training for new technological skills.
According to Forbes, employment in information processing industries, such as IT, is most susceptible to generative AI, while jobs in sectors like manufacturing, mining, and agriculture are least exposed. This difference is attributed to professions that directly require programming and writing skills, which are closely linked to the capabilities of AI systems like GPT.
It is clear that AI’s impact on labor demand and inequality is a complex issue affecting various countries differently. While advanced economies face the advantages and disadvantages of AI earlier, they also have a higher potential for displacement among specific job sectors. Developing economies may experience less direct disruption from AI but struggle to fully utilize this technology due to infrastructure and skills limitations.
As the world moves forward with AI implementation, it is crucial to find ways to ensure a smooth transition for workers, offer retraining programs, and bridge the gaps in infrastructure and educational resources. Only through careful consideration and proactive measures can we effectively manage the challenges and opportunities posed by the growing influence of AI.
