Will AI take over human jobs? The question at the forefront of everyone’s mind. This paper attempts to answer this question, whilst simultaneously exploring AI’s benefits for businesses and the global economy.
[Milena is in her penultimate year of studies, studying a Bachelor of Politics, Philosophy and Economics/Bachelor of Arts at Monash University, specialising in Economics with a major in politics and minor in bioethics. She is interested in the field of microeconomics and economic policy, specifically in how economic methodologies can aid policy and improve living standards.]
Over the past decade, Artificial Intelligence (AI) has advanced significantly and now has the power to shape global economies. Certainly, AI’s recent developments in deep and machine learning can improve economies through an increase in productivity and enhancement of living standards. However, AI’s recent advancements and ability to conduct various tasks efficiently begs the question:
Can and will Artificial Intelligence take human jobs?
This is a pressing question in an age of constant technological advancement, and one in which this paper will attempt to answer.
AI’s Effect on Businesses
AI can benefit the economy greatly, as it can increase the productivity of businesses. Businesses can improve automation, production processes, and digital data sets through AI technology. This is achieved as AI has the potential to advance automation processes (Buchholz, 2020) and increase labour productivity through an increase in employee retention and reduction in workers’ mistakes (McKendrick, 2023); which are inevitable as they are merely human. The allocation of resources in businesses is further improved by leveraging production processes to AI technology, as AI can be more efficient than physical labour. This ultimately reduces variable costs, achieves economies to scale, and increases firms’ total level of output.
However, such benefits of lower costs and productivity are only reaped in the long-term, as the implementation of such technologies is both time-consuming and pricey. Regardless, AI technologies nonetheless improve business processes through more efficient means of production.
AI’s Effect on Global Economies
Through an increase in productivity, economies can grow and flourish as an increase in technical efficiency increases GDP and living standards. In fact, AI is expected to improve global economies through the aiding of productivity. Analyses from Accenture and Frontier Economics also support this notion and predict “that [labour] productivity in developed countries can increase by up to 40 percent until 2035 due to the influence of artificial intelligence.” (Ibid)
The graph below further depicts how AI is expected to aid productivity in global economies:
Figure 1:
This increase in productivity enhances global economies as greater productivity increases GDP and hence, material living standards - through a greater access to goods and services.
In addition to this, by adopting AI technologies, countries can establish a competitive advantage and greater military security. With some countries merely considering the use of AI (Wagner, 2018), countries who take the initiative and adopt AI into their production systems will gain a competitive advantage against the countries which fail to take technological action. Wagner explains that “technologically advanced countries could become the de facto guardians of AI, ensuring that significant resources are devoted to its development on a long-term basis. It is … certain that leading companies in these countries will achieve and maintain … a substantial competitive advantage.” (Ibid). Overall, through AI technologies, global economies are enhanced through an increase in productivity, material living standards, and through a competitive advantage.
What does this mean in terms of Unemployment?
Given AI’s ability to transform the workplace and production processes, it poses the question of ‘will AI replace labour workers?’ The question at the forefront of everyone’s minds. The answer to this question is perplexing and quite complicated.
- AI will take away human jobs
As mentioned above, AI can be used by businesses to speed up production processes as they are more efficient than physical workers. AI’s ability to reduce production costs, achieve economies of scale, and increase overall output, jeopardises workers’ jobs as AI, put simply, can do these jobs better. This is a valid concern, and it is expected that AI could replace up to one billion jobs globally within the next 10 years (Miller, 2023). Additionally, it is predicted that approximately 47% of US employment is at risk of computerisation (Ibid), and currently 32.9% of businesses have already replaced human tasks with AI substitutes, impacting labour dynamics (Ibid). Given these statistics, AI technology will - and has - replaced human workers.
- AI will create human jobs
However, whilst AI technology can replace labour workers, it also creates jobs for these workers. Indeed, AI is predicted to eliminate 85 million jobs, and yet create 97 million jobs by 2025. (Ibid) Further to this, AI is predicted to create new fields of work (McKendrick, 2023), and its constant development calls for more workers within the technological industry. Whilst AI can replace jobs and displace workers (Miller, 2023), it simultaneously creates jobs globally. However, another issue arises, for the people replaced by AI cannot fulfil the jobs created by AI. For instance, while AI technology may replace customer service representatives, it creates the need for AI technicians; these customer service representatives cannot readily fulfil the role of the AI technician. Hence, unemployment nonetheless remains a topic of concern, as workers are left structurally unemployed.
To explain further, structural unemployment occurs due to a mismatch between what is required of workers, and what available workers can offer. Figure 2 outlines the relationship between AI technology (K) and labour demand (L). It illustrates how an increase in K reduces the need for labour workers and hence, L. Increasing K reduces L, as this maintains output and efficiency, as shown through the isoquant curve (IQ). These workers would require upskilling to fulfil the roles created by the advancement in AI technology. Given this, perhaps businesses should not replace workers with AI, but rather adopt AI to assist workers with their duties, increasing efficiency.
Figure 2:
Hypothetical numbers were used to illustrate the above figure. The figure in itself illustrates the correlation between AI technology (K) and Labour demand (L).
Conclusion
Ultimately, AI technology is extremely beneficial for businesses and the global economy, as it increases efficiency, enhances living standards, and grants nations with a competitive advantage. In this paper, it is uncovered that whilst AI can – and has – replaced human jobs, it creates jobs simultaneously. However, the jobs created through the advancement of AI require upskilled workers. Given that AI-induced unemployed workers cannot fulfil the jobs AI creates, it is suggested that businesses employ AI as a tool for current workers, rather than using AI as a worker’s replacement; maintaining efficiency and employment. AI’s rapid advancement calls for greater attention, careful consideration, and adaptability. Looking into the future, we must continue to watch AI’s progression thoroughly. We should consider its implications to avoid structural unemployment, and act accordingly to adapt to this new era of technological development.
References
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