The Impact of AI on the Job Market: Will AI Create or Destroy Jobs?

Artificial intelligence (AI) is the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings, such as reasoning, learning, and problem-solving. AI has become a powerful and pervasive technology that is transforming various industries, from manufacturing to health care. However, AI also raises important questions about the future of work and employment. How will AI affect the job market? Will AI create or destroy jobs? What skills will be needed in the age of AI? These are some of the questions that this article will explore and attempt to answer.

The impact of AI on the job market

Artificial intelligence (AI) is a rapidly developing technology that has the potential to transform various aspects of work and life. AI can perform tasks that require human intelligence, such as perception, reasoning, learning, decision making, and creativity. AI can also augment human capabilities and enhance productivity and innovation. However, AI also poses significant challenges and risks for the job market, such as displacing workers, changing skill requirements, and creating new ethical and social issues.

According to a literature review by the OECD, the impact of AI on the labour market can be analysed from four perspectives: employment and wages, job transformation and skill needs, work environment and quality, and distributional effects.

Employment and wages: AI can affect the demand and supply of labour, as well as the wage structure. On the one hand, AI can create new jobs and industries, increase labour productivity and income, and stimulate aggregate demand. On the other hand, AI can substitute for human labour, reduce labour costs and prices, and increase inequality and polarisation.

Job transformation and skill needs: AI can change the nature and content of jobs, as well as the skill requirements for workers. On the one hand, AI can automate routine and codifiable tasks, reduce cognitive load and errors, and enable workers to focus on more complex and creative tasks. On the other hand, AI can also create new tasks that require human skills that are difficult to automate or augment, such as social and emotional skills, critical thinking, problem solving, communication, collaboration, adaptability, and lifelong learning.

Work environment and quality: AI can affect the physical, psychological, social, and legal aspects of work. On the one hand, AI can improve work conditions by reducing hazards, enhancing safety and health, increasing autonomy and flexibility, facilitating communication and coordination, and providing feedback and support. On the other hand, AI can also deteriorate work conditions by increasing stress, isolation, surveillance, manipulation, discrimination, and liability.

Distributional effects: AI can affect the distribution of income, wealth, power, and opportunities among different groups of workers, firms, industries, regions, and countries. On the one hand, AI can increase social welfare by enhancing efficiency, innovation, and growth. On the other hand, AI can also increase social inequality by creating winners and losers, concentrating market power and rents, and exacerbating digital divides.

The future of jobs in the age of AI

According to a report by the Boston Consulting Group, the future of jobs in the era of AI can be analysed from three perspectives: job creation, job transformation, and job transition.

Job creation: AI can create new jobs and industries, as well as increase the demand for existing jobs that are complementary to AI. For example, AI can create jobs for data scientists, software engineers, AI trainers, AI ethicists, and AI explainers. AI can also increase the demand for jobs that require human skills that are difficult to automate or augment, such as social and emotional skills, critical thinking, problem solving, communication, collaboration, adaptability, and lifelong learning. The report estimates that AI can create 21 million new jobs by 2030 globally.

Job transformation: AI can change the nature and content of jobs, as well as the skill requirements for workers. For example, AI can automate routine and codifiable tasks, reduce cognitive load and errors, and enable workers to focus on more complex and creative tasks. AI can also create new tasks that require human-machine interaction and collaboration, such as monitoring, supervising, explaining, and correcting AI systems. The report estimates that AI can transform 36% of all jobs by 2030 globally.

Job transition: AI can displace workers from their current jobs or occupations, as well as create new opportunities for workers to move to different jobs or occupations. For example, AI can substitute for human labour in tasks that are repetitive, predictable, or rule-based, such as data entry, bookkeeping, or customer service. AI can also enable workers to reskill, upskill, or cross-skill and transition to new or emerging jobs or occupations that are more compatible or attractive with their skills, interests, or values. The report estimates that AI can displace 12 million workers from their current jobs by 2030 globally, but also create opportunities for 95 million workers to transition to different jobs or occupations.

AI has a significant impact on the future of jobs, but it is not deterministic or uniform. The impact of AI depends on various factors that interact in complex ways, such as the pace and direction of technological change, the degree of adoption and diffusion of AI across sectors and regions, the availability and quality of education and training systems, the mobility and adjustment of workers and firms, and the policy and institutional responses. Therefore, it is important to monitor and evaluate the ongoing developments and trends of AI, as well as to design and implement appropriate policies and institutions that can maximise its opportunities and minimise its risks for workers, firms, sectors, regions, and countries.

Ethical considerations of AI and the job market

Job displacement and societal impact: As AI continues to advance and automate tasks, there is a growing concern about the potential impact on society. While AI has the potential to increase productivity and create new job opportunities, it can also lead to job displacement and income inequality. Ethical considerations for job displacement include ensuring that workers are not left behind in the transition to an AI-driven job market and ensuring that everyone has access to education and training to adapt to the changing job market.

AI bias and discrimination: AI systems are only as good as the data they are trained on. If the data is biased, the AI system can perpetuate that bias, leading to discrimination. Examples of AI bias and discrimination include biased hiring algorithms and facial recognition systems that are less accurate for people of color. Ethical considerations for AI bias and discrimination include ensuring that AI systems are trained on unbiased data and that there is transparency in how AI systems make decisions.

Regulation and policy considerations: Currently, there are few regulations governing the use of AI in the job market. However, there is a growing recognition of the need for regulation to ensure that AI is used ethically and responsibly. Future implications for regulation and policy include ensuring that AI is used in a way that benefits society as a whole, rather than just a few individuals or corporations. Additionally, regulations may need to be put in place to ensure that AI systems are transparent and accountable.

AI is a powerful and pervasive technology that will have a profound impact on the job market. AI will both create and destroy jobs, but the net effect will depend on several factors. AI will also create new types of jobs and skills, as well as eliminate some existing jobs and skills. AI will also raise important ethical issues that need to be addressed by society. The impact of AI on the job market is not predetermined, but rather influenced by human choices and actions. Therefore, it is essential for workers, employers, policymakers, and educators to stay informed and prepared for the future job market. By embracing the opportunities and challenges of AI, we can shape a more inclusive, equitable, and sustainable future of work.