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Human and Machine at work: the effects of AI and Frontier technologies on the job market

In recent decades, human development has been accompanied by rapid changes in technology, in an increasing proliferation of digitized devices and services, and frontier technologies. In this context, a group of new technologies combining digitalization and connectivity and including artificial intelligence (AI), robotics, biotechnology, nanotechnology, Internet of Things (IoT), big data, 5G, block chain etc. have come to dominate everyday life.

Frontier technologies, already representing a $350 billion market and expected to reach $3.2 trillion by 2025, offer great opportunities for sustainable development. Unfortunately, many countries are unprepared to adapt, thus resulting in growing inequalities and exacerbated digital divides.

Prospects of frontier technologies can bring enormous benefits in agriculture, health, education, energy and other areas of development. They also optimise the use of materials and human resources, minimizing waste, making agricultural and industrial processes more efficient, reducing working time, and eliminating heavy and dangerous activities for human workers.Yet, due to a lack of a regulatory framework that defines the principles and limits on which AI should move, there is a general concern about the disruptive impact of such tools on labour markets and how to prepare the work force to benefit from automatism, AI and technologies, and to minimize the risks. Indeed, it is believed that every wave of technological revolution brings with it inequality in new shapes and forms and new consternation relating to many aspects. Nowadays, the major concern is the effect on labour markets of AI and robotics, combined with big data and IoT. In particular, there are fears these instruments will in the long run replace middle-skilled jobs, and encourage the growth of the gig economy, associated with lower wages and jobs insecurity, while simultaneously widening the disparities between companies, sectors and social classes by concentrating profits in a few dominant hands, ultimately exarcebating inequalities between sectors, firms, capital and labour.

With new jobs emerging, some current jobs will need to adapt if they wish to survive. Figure 1 here below shows a hypothetical workflow for three jobs in which tasks are performed in sequence, by humans in blue and by machines in grey.

Figure 1

But digitalisation does not necessarily imply bad news. Technology has created many more jobs and of different kinds. Having said so, given the rapidity and volatility with which frontier technologies evolve, careful evaluations must be drawn. One great risk is their potential capacity in overcoming and outpacing the abilities of society to respond and to adapt to their emergence. Another risk that must be identified and taken care of is the one of job polarization – a concept referring to an expansion of high and low-wage jobs combined with a contraction of middle-wage jobs. A study based on data on robot adoption within industries in 17 countries found that increased robot use reduced the share of employment of low-skilled workers. As such, AI softwares and more capable robots will put further pressure on workers performing routine assignments that are both cognitive and manual.

Given these premises, the challenge now is guaranteeing the quality and accessibility of the jobs that will exist and the career directions they offer to workers, in particular to those with less education. Whether nations will be able to benefit from the output growth created by frontier technologies will depend on the institutions of government, social investments, education and private and public leadership, in transforming aggregate wealth into greater prosperity.

To conclude, frontier technologies have great potential for addressing existing needs, increasing productivity and improving livelihoods. To benefit from such advantage, countries need to promote their use, adoption and adaption while also addressing their potential adverse effects with adequate and up to date regulatory frameworks.

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