Artificial Intelligence is the future of jobs: will humans successfully adapt to the changes?
By Michael Megarit.
AI is the Future of Jobs: Will Humans Adapt?
In October 2020, the World Economic Forum (WEF) published The Future of Jobs Report, an in-depth study on the future of employment.
In this report, the WEF surveyed key decision-makers working for 300 of the world’s biggest companies. The study found that 80% of them are actively accelerating the automation of work processes and 50% are increasing the automation of jobs in their companies.
In the short term, this means that human jobs will be destroyed.
In the long term, the question is will these jobs be replaced?
On the one hand, consulting firm McKinsey & Co projects that by the end of the decade, 30% of the hours worked globally could be automated. This would result in the displacement of anywhere between 400 and 800 million jobs.
On the other hand, the World Economic Forum (WEF) presents optimistic views. Its study concludes that by 2025, 85 million jobs will disappear due to rising automation, but that corporations and governments can create 97 million new ones if they invest in training programs to upskill workers.
While AI will disrupt the job market, it also has the potential to create millions of new jobs and increase humanity’s quality of life.
New Technology Always Disrupts the Status-Quo
Concerns about job losses and job displacements due to automation are nothing new.
Since the dawn of the industrial age, humans have always dealt with disruptive technology.
In 1811, the Luddite movement protested against automation by attacking and burning factories. They accused the machines of stealing their livelihood and making them redundant. At the same time in Europe, French textile workers insurrected and destroyed machines they claimed were taking bread out of their families’ mouths.
These events occurred throughout the Industrial Revolutions of the 19th and 20th Centuries.
In the 1960s, US President John F. Kenney declared that “the major challenge of the sixties is to maintain full employment at a time when automation is replacing men”.
The same can be said of today’s AI revolution.
The Future of Jobs: AI Will Replace Millions of Workers
The automation of work is increasing.
The WEF’s report found that most global corporations are investing heavily in AI systems and machines to perform tasks that were until now done by humans.
For example, by 2025, the WEF expects that machines will perform:
- 90% of cloud computing operations
- 88% of big data analytics
- 65% of information and data processing
- 50% of physical and manual work activities
- 30% of all reasoning and decision-making activities
As a result, data entry clerks, accountants, auditors, financial analysts, factory workers and middle- management are among the jobs expected to be most affected by automation. In fact, the WEF believes that by 2025, AI will perform nearly 50% of all economic activities.
This means 1 out of every 2 people will need to adapt or find new employment opportunities.
The question is where will displaced humans find employment?
The Future of Jobs Requires New Skills – Can People Be Trained?
Every time industries die, new industries emerge. This process is what famed economist Joseph Schumpeter dubbed “creative destruction”.
Over the past 250 years, technology has progressed at a blistering pace. In parallel, the US unemployment rate hovered between 5 and 10%, even when revolutionary technologies such as steam power, electricity, and the internet emerged.
The fact is that while millions of jobs were destroyed, millions of new ones were created.
Indeed, opportunities abound and quality of life has increased:
- Young adults can choose exciting careers that didn’t exist 30 years ago.
- The cost of doing business has decreased significantly.
- International transport is cheap and accessible.
- Communication is instant and virtually free.
When you look at the data, it is indisputable that recent technological advances contributed to bettering billions of peoples’ lives across the world.
Believe it or not, it can be argued that the current rise of AI will produce the same results.
Indeed, the WEF claims that 97 million new jobs can be created if businesses and governments invest in training and upskilling workers.
The question is in what domains will workers be trained to work in?
The WEF states that the leading fields of tomorrow’s employment will be the green economy and sustainable development, data analytics, AI research, cloud computing and medical services. Millions of job opportunities as software developers, robotics engineers, data analysts, online marketing, digital services and machine-learning specialists will present themselves.
The main challenge will be training people to make the transition a successful one.
Are Governments and Businesses Investing Enough?
The WEF says that governments and business need to invest considerable sums in job training and development programs.
Its report states that “while technology-driven job creation is still expected to outpace job destruction over the next five years, the economic contraction is reducing the rate of growth in the jobs of tomorrow. There is a renewed urgency to take proactive measures to ease the transition of workers into more sustainable job opportunities”.
The immediate challenge is capitalizing on a short window of opportunity to ensure that the transformations actually fulfill the promises of better jobs and an improved quality of life for all.
Right now, less than 25% of companies have access to public funds to finance employee reskilling.
The WEF is convinced that a revolution is needed to accelerate employee retraining and ensure a smooth transition.
Otherwise, economic and social inequalities that have been exacerbated by the pandemic will worsen. The divide between low-skilled and high-skilled workers, rich and poor will deepen and become irreparable.
Will the WEF’s call be heard by government and businesses?
Only time will tell.
About the Author
Michael Megarit is a partner with Cebron Group.
With over 25 years of domestic and international corporate finance experience,
he provides M&A and capital advisory to high-growth technology companies.