What is the potential impact of AI on the labor market? Studies foresee varying effects on different social groups.

Josep Lluís Cano

This article was published in Infojobs and Esade's report State of the Labor Market in Spain 2023 

The arrival of artificial intelligence (AI) and generative artificial intelligence (GIA) opens up the possibility of boosting workers' productivity, complementing them, but it may also increase the risk that they will become superfluous and are replaced by AI.  

Two research studies by the World Economic Forum and the International Monetary Fund provide a valuable insight into the magnitude and the complexity of the impact of AI and GIA.  

In the first, the World Economic Forum estimates that by 2025, 85 million jobs may be displaced by a shift in the division of labor between humans and machines. On the other hand, it estimates that 97 million new roles may emerge that are more adapted to the new division of labor between humans, machines and algorithms. There can be no doubt as to the importance of artificial intelligence behind these predictions. According to this report, the field of artificial intelligence is responsible for creating the biggest skills gap in the technology industry, which means that there are few qualified candidates to fill the jobs available, in spite of rapidly growing demand. 

In the second study, the International Monetary Fund analyzes the impact of AI on labor markets in both advanced economies (the US and the UK) and emerging markets (Brazil, Colombia, India, and South Africa). This analysis takes into account AI's potential as a complement for workers or a substitute for labor, where complementarity reflects a lower risk of job loss. 

Although AI poses the risk of job displacement due to task automation, it can also enhance productivity and complement human labor, especially in occupations that require a high level of cognitive engagement and advanced skills.  

Programmers, researchers, translators, and financial advisers are some of the professions that could be most affected

The most advanced economies are more exposed to AI than emerging markets, due to the higher proportion of jobs in the professional and managerial sector, these being the groups most affected and with the highest risk of displacement. However, when accounting for potential complementarity, differences in exposure are much smaller in all countries. Some common patterns can be observed in both advanced and emerging economies. Women and highly educated workers face greater occupational exposure to AI, at both high and low complementarity, whereas employees with higher earnings are more likely to be in occupations with high exposure, but also high potential complementarity.  

Among the conclusions of this research, it is observed that positive and negative outcomes are distributed across different demographic and income groups in more complex patterns, thereby challenging simplified narratives of IA as solely a threat to employment or a technology that can enhance productivity across the board.   

Impact on process automation

Another research study which can throw some light on this complex subject is the report produced by McKinsey. This suggests that, with the arrival of GAI, approximately half of today's business processes could be automated a decade ahead of previous estimates. This report predicts that by 2030, automation could take over tasks accounting for 21.5% of the hours worked in the US economy, whereas with GIA that share would jump to 29.5%.  

The aforementioned data are general, but it is interesting to observe the differences between the various occupational categories. Traditionally, automation had a greater impact on low-skilled workers with the lowest salaries; however, with GAI, those most affected are knowledge workers, who have a higher level of income: thus, computer programmers, scientific researchers, market researchers, translators, and financial advisers are just some of the professionals that could be most affected.  

Main challenges

People are more exposed to AI, but they are also better prepared to take advantage of its benefits, while older workers are potentially less exposed to AI. Labor income inequality may increase if the complementarity between AI and high-income workers is strong, and capital returns will increase wealth inequality. However, if productivity and profits are sufficiently large, income levels could surge for most workers.  

Countries must focus on upgrading regulatory frameworks, supporting labor reallocation while safeguarding those adversely affected by AI. To achieve this, they should prioritize the development of digital infrastructure and digital skills, and promote training programs that go beyond mere user training and which also address ethical, legal and cultural dimensions. There will be a need to create cultures that foster collaboration between humans, AI, and GAI. The challenge for leaders lies in helping people to use the new technologies and to perform tasks correctly, as well as to constantly adjust and adapt to the unrelenting growth of AI and GAI. 

All written content is licensed under a Creative Commons Attribution 4.0 International license.