How AI could help curb global labor shortages
In conversations with a slew of business leaders this month about the economic implications of generative AI, a recurring theme cropped up: that AI-driven productivity gains are the world's best hope to limit the pain of a demographic squeeze.
Why it matters: As computers get better at doing jobs humans have traditionally done, it creates the risk of mass displacement of workers.
- But the flip side is an emerging shortage of working-age humans in most advanced economies and a murky future for globalization, which effectively expands the global pool of workers.
- The big macroeconomic question for the coming decade is which force proves more powerful — the undersupply of workers or the displacement of jobs caused by AI.
State of play: The Baby Boom generation is entering retirement years and comparatively smaller generations are entering their prime working years. There is no equivalent of China's massive population poised to join the global economy, as happened in the early years of this century.
- With global tensions rising, there is even a risk that countries will become more economically siloed.
- If — and it's a big if — generative AI enables companies to keep increasing output even with a stagnant or shrinking pool of workers, however, it offers a way out of the jam.
What they're saying: During the first part of this century, a confluence of forces led to decades of "quasi-permanent expansion to production capacity" known as the "Great Moderation," BlackRock vice chairman Philipp Hildebrand told reporters in Davos, Switzerland, earlier this month.
- Now, he said, most of the mega-forces in play in the global economy are working in the other direction.
- The exception, Hildebrand said, is AI, "which is very important, is one of the perhaps hopeful dynamics that could lead to a kind of boost to productivity… the kind of dynamic we saw in the Great Moderation."
"The skills required for every job will change," Katy George, chief people officer at McKinsey & Co., told Axios. The open question, she said, is whether "we just exacerbate some of the problems that we've seen with previous waves of automation, but now in the knowledge sector, as well."
- "We're in a structurally tight labor market," George said. "And as we look forward around demographics, we will continue to see that at a global level."
Yes, but: Even if the macroeconomics of AI-induced productivity are positive, the microeconomics for individual workers affected may not be.
- "The concern is, even though on net it will be a positive for the workforce, and there's lots of opportunity, individuals will not feel that way," George said.