The economics of AI: why the job loss argument doesn’t add up

It will come as no surprise to hear that AI and automation are revolutionising the world of work as we know it. The rapid rise in these technologies has sparked intense debate over their impact on the labour market, leaving people questioning whether it will replace jobs.

This is further intensified by news headlines that claim AI will threaten millions of jobs, but do those claims add up? The short answer, of course, is no.

The fear of the unknown is a driver of the concern, however as AI is more widely adopted, I suspect these concerns will fade. There’s incredible opportunity in this new technology for the individual contributor. If businesses harness AI in a controlled way, their people can be empowered to deliver twice as much value in the time they have and creativity can be supported and democratised with new generative AI tools.

History repeating itself

From the invention of tractors and other mechanical agricultural machinery to Henry Ford’s moving assembly line, technology (particularly automation) has revolutionised how we work. While commonplace today, these developments were initially met with resistance from the workforce and wider society. Fast forward 100 or so years and we all recognise not only what they have been able to deliver, but also how many jobs have been created – along with a host of other benefits. Despite this, according to recent research from HAYS, less than half of employees think their employers should embrace AI. However, if history is anything to go by, we know that these currently overblown fears will be addressed and we’ll see comfort levels associated with AI increase – just as they did with the automation of the car production line.

Of course, AI is going to impact the jobs market in some way, but the connection between it and redundancies is not anywhere near as clear cut as some of the media coverage would have you believe. In 2020, The World Economic Forum found that while AI is likely to replace 85 million jobs globally by 2025, it will also generate around 97 million new jobs in fields including big data, machine learning, IT and digital marketing.

The economic effects of AI and automation This has been reinforced by other researchers who argue that the positive spillover effects of automation and AI will create more jobs in much broader areas than mentioned above, counteracting any negative effects on the labour market at all. In fact, according to a PwC analysis, AI and other automated technology could contribute to as much as $15 trillion to global GDP by 2030. The aforementioned PwC analysis also found these technologies have the potential to transform the productivity and GDP gains of the global economy, with 45% of gains set to come from product enhancement that stimulate consumer demand.

As more and more businesses adopt AI and automation to support their workforce, we’ll see them drive greater product variety with increased personalisation, attractiveness and affordability. Over time, we’ll start to see improvements that will ultimately boost productivity and drive global GDP.

A symbiotic relationship between humanity and machine

What we must keep in mind though is that these evolving technologies are not intended to replace human labour, but rather enhance it.

Economist Daron Acemoglu’s “role of complementarity” supports the argument that AI and automation technologies can enhance human productivity and capabilities if they are seen to be mutually beneficial rather than strictly substitutive.

Just think of it as a trusty co-worker that handles the day-to-day repetitive and time-consuming tasks and allows you to focus on more creative and emotionally intelligent areas that bring more value to the business. AI’s ability to scan mass amounts of data in a short period of time also allows it to be used as a consultant, offering valuable insights that may have been overlooked by humans.

However, there’s only so much that AI tools can do on their own before they require human intervention. While generative AI such as ChatGPT is supreme in processing mass amounts of data with high accuracy, there’s one thing that it cannot learn – how to be human. Empathy, creativity, critical thinking and emotional intelligence are all skills that cannot be replaced by these AI models.

Understanding the symbiotic relationship that exists between technology and humans will allow businesses to see automation and AI as beneficial tools, rather than threats. Therefore, it’s essential employers consider how these technologies can be used to support their staff to adapt and grow as the job landscape evolves.

Increasing operational efficiency

AI can give back operational capacity to employees and allows businesses to scale up their operation by serving more customers.

Take contact centres for example. We work with one of the UK’s biggest energy suppliers, who struggled with multiple, disperate systems. This meant compliance was tough and the cost to serve customers was increasingly high. By implementing AI and automation, data was pulled into a single view so customer service agents could resolve customer enquiries 74% faster. This allowed the organisation to resolve over 1,200 requests a day in their pay-as-you-go department as well as significantly reducing costs, increasing compliance and better serving vulnerable customers.

However, this is only possible if staff can adapt to these new technologies.

Adapting to the AI revolution

Upskilling and reskilling are two strategies that will allow businesses to navigate the AI revolution and future-proof their workforce. Having even a basic understanding of AI and its capabilities will allow employees to use the technology to their advantage and to do this, leaders must invest in workshops and training days to impart the fundamental practice of these tools. With these new skills, employees can rest assured they will be safe in the face of technological change and adapt to new roles that emerge from this new age.

The reality is, whether we like it or not, the job landscape is evolving. As the new economy takes shape, it’s essential to view these technologies as a means of support rather than a threat to ensure your business stays competitive and ahead of the technological curve.