“Recent developments in Artificial Intelligence (AI) have stoked new fears about large-scale job loss, stemming from its ability to automate a rapidly expanding set of tasks (including non-routine cognitive tasks), and its potential to affect every sector of the economy,” said The impact of Artificial Intelligence on the labour market: What do we know so far?, a recently published report by the Organization for Economic Co-operation and Development (OECD). Founded in 1961 to stimulate economic progress and world trade, the OECD now has 38 member countries around the world.
“Furthermore, there are concerns about employee well-being and the broader work environment, linked to the idea that AI may soon become pervasive in the workplace and threaten and undermine humans’ place in it,” noted the report. “However, AI also has the potential to complement and augment human capabilities, leading to higher productivity, greater demand for human labour and improved job quality.”
A number of recent studies have focused on the impact of AI on the future of work. For example, in the spring of 2018, MIT launched a task force on the Work of the Future to understand whether and how our current period of technological disruption differs from prior industrial epochs. The task force final report, The Work of the Future: Building Better Jobs in an Age of Intelligent Machines, released in November of 2020, concluded that:
“No compelling historical or contemporary evidence suggests that technological advances are driving us toward a jobless future. On the contrary, we anticipate that in the next two decades, industrialized countries will have more job openings than workers to fill them, and that robotics and automation will play an increasingly crucial role in closing these gaps. Nevertheless, the impact of robotics and automation on workers will not be benign. These technologies, in concert with economic incentives, policy choices, and institutional forces, will alter the set of jobs available and the skills they demand.”
Similarly, Jobs Lost, Jobs Gained: Workforce Transition in a Time of Automation, a McKinsey report published in December of 2017, concluded that a growing technology-based economy will create a significant number of new occupations which will more than offset declines in occupations displaced by automation. However, it added that “while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging - matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.”
Let me discuss some of the key findings in the OECD report.
Over the past few decades, automation has mostly affected routine tasks that follow precise, well understood procedures that can be well described by a set of rules. These include physical activities such as manufacturing and other forms of production, as well as information-based activities like accounting, record keeping, and administrative tasks. As a result, mid-skill white-collar and blue-collar jobs, - where such routine tasks predominate, - have experienced the biggest declines in employment and earnings.
At the same time, jobs that require the kinds of expert problem solving and complex communications skills typically seen in managerial, professional and technical occupation have significantly expanded, with the earnings of the college educated workers needed to fill them rising steadily. Until recently, such high skill jobs have been beyond the scope of technology automation, while being amenable to be complemented by sophisticated computer tools.
However, thanks to a number of major recent advances, - such as deep learning algorithms, powerful and inexpensive computer technologies, and the availability of huge amounts of data, - AI has overcome some of the limitation of previous automation technologies, and can thus now impact more industry sectors and occupations across the economy.
“In particular, AI’s problem solving, logical reasoning and perception capabilities mean that the automation of some non-routine cognitive tasks is now possible,” said the OECD report. “This explains why some high-skilled occupations such as radiologists, lab technicians, engineers, lawyers and actuaries are judged to be highly exposed to AI, i.e. there is overlap between the tasks that these occupations comprise and the tasks that AI can perform. However, high exposure does not necessarily mean that jobs in these occupations will disappear.”
The report includes a summary of the occupations that are most and least exposed to AI-based automation. Most exposed are occupations that rely on abilities where there’s been considerable AI progress in the past few years. These include lab technicians, optometrists, inspection and quality control, epidemiologists, actuaries, credit analysts, accountants, computer programmers, operations research analysts, concierges, mechanical drafters, and brokerage clerks.
Least exposed to AI are high skilled occupations requiring reasoning about novel situations like researchers; occupations requiring interpersonal skills like teachers and managers; and physical occupations including food preparation, cafeteria attendants, baristas, massage therapists, fitness instructors, maids and cleaners, and roofers and painters.
“Some bottlenecks in the development of AI remain: humans outperform AI in creative and social intelligence, reasoning skills and dealing with uncertainty. Even when AI facilitates automation of certain tasks, this still leaves other tasks that only humans can perform. Indeed, in these cases, AI can complement workers and enable them to increase their productivity. In this way, workers in occupations most exposed to AI could see parts of their work complemented or substituted by AI, and could experience substantial change in the tasks they perform.”
The 2022 AI Index Report, an annual study on the impact and progress of AI, concluded that AI is being integrated into the economy, and it’s now transitioning from a research technology only deployed at scale in a relatively small number of leading edge companies to a high potential technology with real-world impact across a variety of sectors around the world.
At this early stage of AI’s market deployment, there is still considerable uncertainty about AI’s overall economic impact. “Discussions about the predicted impact of AI on productivity, employment and wages are filled with uncertainty,” said the OECD report. “AI is expected to increase productivity but there is debate about the size of the impact, particularly when predictions rely on advances that have yet to be seen.” Furthermore, “the empirical evidence based on AI adopted in the last 10 years does not support the idea of an overall decline in employment and wages in occupations exposed to AI.”
The report cites a number of studies by consultancies on AI’s potential to contribute to global economic output. For example, the overriding finding of a 2018 study by PwC was that AI was the biggest commercial opportunity for companies, industries and nations over the next decades. The PwC study estimated that AI advances will increase global GDP by up to 14% between now and 2030, the equivalent of an additional $15.7 trillion contribution to the world’s economy.
Similarly, a second 2018 study, this one by the McKinsey Global Institute concluded that AI has the potential to incrementally add 16% or around $13 trillion by 2030 to current global economic output, - an annual average contribution to productivity growth of about 1.2% between 2018 and 2030. Both the Mckinsey and PwC studies said that AI marketplace adoption would likely follow a typical S curve pattern, - that is, a slow start in the early stages, followed by a steep acceleration as the technology matures and firms learn how to best deploy it.
“The impact of AI on the labour market is likely to run much deeper than changes in employment and wages. … Many researchers share the view that the impact of AI must be understood not only in terms of its potential to destroy jobs, but also in terms of its potential to substantially transform the nature and content of jobs that remain. … AI has the potential to reshape the work environment of many people, by changing the content and design of their jobs, the way they interact with each other and with machines, and how work effort and productivity are monitored. … Further empirical analysis will help establish to what extent the impact of AI resembles the impact of previous waves of automation, in terms of its potential to substitute and/or complement human labour and to create new tasks, and the implications for labour demand and income inequality.”
Comments