Artificial Intelligence (AI) has emerged as a transformative force across various sectors, revolutionizing the way we live and work. Its potential to enhance productivity, efficiency, and decision-making has captured the imagination of businesses and consumers worldwide. While AI brings numerous benefits and advancements, there are concerns about its potential to trigger an unemployment shock and a rise of inequalities.
AI technology enables automation on a scale previously unimaginable, leading to increased productivity and reduced costs. With the ability to perform repetitive tasks more efficiently and accurately than humans, AI-driven automation has the potential to replace a significant number of jobs across industries such as transportation, finance, healthcare, journalism or IT.
According to a report released by Goldman Sachs this March, AI is projected to replace approximately 300 million full-time jobs conventionally held by humans. https://www.key4biz.it/wp-content/uploads/2023/03/Global-Economics-Analyst_-The-Potentially-Large-Effects-of-Artificial-Intelligence-on-Economic-Growth-Briggs_Kodnani.pdf
Meanwhile, According to a survey conducted by the World Economic Forum (WEF) https://www3.weforum.org/docs/WEF_Future_of_Jobs_2023.pdf , it is estimated that over the next five years, approximately 14 million jobs will be lost worldwide, with 69 million jobs being created and 83 million jobs being eliminated. This represents a net decrease of 2% of total employment. The survey suggests that the rise of new technologies will be a significant factor contributing to job changes, and nearly a quarter of employees are expected to switch jobs
As a concrete example, In early May, Arvind Krishna, the Chief Executive Officer of International Business Machines Corp. (IBM), stated that the company plans to halt or reduce hiring for certain positions that are deemed susceptible to being replaced by artificial intelligence (AI) in the future https://www.bloomberg.com/news/articles/2023-05-01/ibm-to-pause-hiring-for-back-office-jobs-that-ai-could-kill?sref=ZVajCYcV . Krishna mentioned in an interview that back-office functions, including roles in human resources, will be affected. These specific roles make up approximately 26,000 employees within IBM. Krishna projected that AI and automation could potentially replace about 30% of these positions over a span of five years
Unequal Distribution of AI Benefits
AI advancements have the potential to exacerbate economic inequalities as its benefits may not be evenly distributed across society. AI implementation requires specialized skills and knowledge. Companies and organizations that have the resources to invest in AI talent and training programs are more likely to reap the benefits . However, individuals with limited access to quality education and training may face barriers in acquiring the necessary skills, perpetuating inequality in accessing AI-related opportunities.
An academic research study published by the National Bureau of Economic Research https://www.nber.org/papers/w28920 suggests that automation technology has been the main contributor to income inequality in the United States over the last four decades. According to the report, approximately 50% to 70% of the changes in U.S. wages since 1980 can be attributed to the decline in wages among blue-collar workers who have been either replaced or experienced job degradation due to automation. The adoption of artificial intelligence, robotics, and other advanced technologies has resulted in a significant wealth and income gap, which is expected to continue expanding in the future.