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AI Is Gathering Pace, but How Will This Impact the Global Economy and Wider Workforce?

AI Is Gathering Pace, but How Will This Impact the Global Economy and Wider Workforce?

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AI Is Gathering Pace, but How Will This Impact the Global Economy and Wider Workforce?
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In the past 12 months, the rapid expansion of AI across various aspects of our lives, both personal and professional, has significantly influenced the way we live, work and do business. As we progress towards 2025 and beyond, AI will take on many substantial advancements. They are expected to reshape both the economy and society as we know it and are projected to automate up to 50% of all manual tasks across certain industries. Inevitably, this revolution will come with its own set of distinct challenges.

As a result, consumers need to swiftly adapt to the ever-changing AI landscape and may struggle to keep pace with its continuous stream of innovations. Similarly, major industry players are embracing AI in a volatile market setting. For instance, tech giant Nvidia experienced significant losses amounting to $550 billion but quickly rebounded the following day. At the same time, Microsoft encountered an antitrust charge from the EU over Teams yet demonstrated resilience by establishing a dedicated AI office in London. This is with a view to supporting a thriving sector which already employs over 50,000 people and contributes £3.7 billion to the UK economy.

The intense competition among entities striving to lead in AI development underscores a highly contested race for dominance within this field. Throw a proverbial political hot potato such as the pending UK general election into this complex scenario, and it is clear to see how today’s politicians are still discussing at great length what to do about AI at national and international levels. While the UK has maintained a relatively light regulatory approach towards overseeing AI practices so far, there is mounting pressure for more stringent regulations to be implemented promptly. Recently, the British Safety Council reported how imperative it is that the UK government protect jobs while harnessing the benefits of AI. Consequently, political parties are being urged to articulate their strategies for addressing AI in their manifestos as they prepare for potential election success on July 5.

The evidence suggests that we stand at the cusp of a technological revolution that is poised to enhance productivity, spur global economic growth and elevate incomes worldwide. This forecast gains significance as the IMF projects that nearly 40% of jobs around the world will be impacted by AI, replacing some in their entirety while deftly complimenting and augmenting others. This could deepen labour inequalities, so how can the fallout be managed?


Balanced policies help to restore the equilibrium

What is required now is a careful balance of policies - again something for UK politicians to consider at this timely juncture - as they will be crucial in restoring a stable environment that takes advantage of AI's capabilities for the greater good. The intricate impact of AI on the global economy is challenging to predict, necessitating proactive measures to ensure its potential benefits are safely utilised, while mitigating any negative repercussions. 

While acknowledging that certain jobs may be replaced by AI - according to Forbes the likes of customer service and data entry roles - the primary objective remains integrating it to complement human labour rather than replacing it entirely. Advanced economies face higher risks and opportunities from AI compared to emerging markets, with up to 60% of jobs in these countries potentially impacted by it. This dynamic could lead to enhanced productivity for some roles while diminishing labour demand and potentially lowering wages for others. Conversely, low income countries are anticipated to experience a lesser immediate impact from AI due to their limited exposure and infrastructure. 

However, the risk of technology exacerbating inequalities among nations persists as workers engaging with AI witness productivity and wage increases while those unable to adapt may face setbacks. Research indicates that less experienced workers can benefit from AI in boosting their output and career progression speed. And the vast majority (85%) of UK and US office workers believe AI will enhance their roles instead of replace them, research by data platform Jitterbit has revealed. 

Meanwhile, workers who do not adopt AI technology may face challenges in adjusting and risk falling behind, which is why companies need to be flexible in incorporating AI processes. The impact on income distribution, and resulting inequalities, will largely hinge on how AI advantages higher paid employees, potentially leading to a disproportionate rise in their earnings. Additionally, productivity enhancements from AI adoption by firms are likely to increase overall profit margins, potentially favouring those with higher incomes.

This is a concerning trend that policymakers must proactively tackle to prevent further social tensions caused by technology. It is therefore essential for nations to establish comprehensive social safety nets and provide retraining programs for at-risk workers to ensure a more inclusive transition to AI. The good news is that some businesses are making a point of creating new jobs whose main focus is to handle the impact of AI. Research from management consultancy Expleo has found that 98% of business leaders in Ireland believe AI will have transformed their industry within the next three years. In response, one-in-five (19%) businesses had already created new positions and roles within their company to help them to deploy and manage AI.


Robust AI policies will protect economies and their workers

The rapid integration of AI into global businesses emphasises the urgent need for policymakers to take action swiftly. To help countries develop appropriate policies, they must take into account factors such as digital infrastructure, workforce skills, labour market dynamics, innovation, economic connectivity and robust ethical standards.

Regarding countries' readiness for AI adoption based on an IMF Preparedness Index across 174 countries, there are significant discrepancies among nations. Singapore, the United States and Denmark achieved the highest ratings while parts of Africa and South America scored low. This substantiates the theory that the world’s wealthiest economies are better equipped for AI adoption than low-income countries. 

The index suggests that advanced economies should focus on promoting AI innovation and integration while building strong regulatory frameworks. This approach aims to foster a secure and accountable environment for AI usage that can uphold public confidence. For emerging markets and developing countries, the emphasis should be on establishing a solid foundation through investments in digital infrastructure and skilled labour forces.


AI and humans will join forces for the greater good

While the potential of AI beyond 2025 is promising, collaboration with humans will be crucial for societal advancement as, according to the Pew Research Center, it has the capacity to optimise, augment and improve human activities and experiences. And there are still evident concerns and obstacles that need addressing. Issues like data privacy protection, algorithmic bias mitigation, wage disparities and job displacements will require careful management. Regulations and ethical guidelines should evolve alongside AI's expansion, ensuring that these technologies positively benefit the global economy as a whole. Despite these challenges ahead, effective management of AI can lead to a brighter future for everyone involved.

With the scene now set, our next article will explore the new skills emerging from developments in AI and how individuals and companies should be leveraging it in the world of work across various sectors to guarantee future commercial success.

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