In the era of artificial intelligence, employment opportunities show promise, despite the less-than-ideal salary scale.
Recent research by the European Central Bank (ECB) indicates an increase in the job market share within AI-exposed sectors across 16 European nations. It is noteworthy that low- and medium-skill positions remain relatively stable, while highly skilled roles see a positive trend.
In contrast to previous technological advancements that led to a decline in medium-skilled jobs due to computerization, a recent study in the surveyed countries shows no such pattern. The period spanning from 2011 to 2019 revealed no significant link between software exposure and employment fluctuations, with no evidence of software displacing routine medium-skill occupations.
However, concerning wages, the European Union’s central bank characterizes AI’s impact as “neutral to slightly negative.”
The Notion of “Bounded Automation”
Experts have expressed concerns about a potential wage crisis in the AI era. Professor Peter Fleming from City University of London introduced the concept of “bounded automation” in a 2019 publication, suggesting that while AI may not eliminate jobs entirely, it could lead to an increase in poorly remunerated positions.
Fleming argues that various socio-economic factors such as labor costs, power dynamics within organizations, and the nature of tasks play a crucial role in determining the adoption of digital technologies in different work environments. Real-world instances underscore these influences:
1️⃣ In India, manual sewage pipe cleaners endure perilous conditions for meager pay, contrasting with the automated systems in the West due to the high costs of skilled technicians with protective equipment.
2️⃣ The automation of tasks such as dockwork and the potential introduction of driverless cars in services like Uber pose a threat to unionized workers if the cost of human labor exceeds that of technological alternatives.
3️⃣ While commercial aircraft can operate autonomously to a significant extent, the need for human pilots remains. Nevertheless, with technological advancements, the CEO of Boeing envisions the eventual introduction of pilotless commercial flights.
The impact of AI on the labor market continues to be a subject of ongoing research and speculation. ECB researchers caution that the full implications on employment, wages, growth, and equality are yet to be fully understood as AI technologies progress and become more integrated.
Labor Market Transformation Due to Computerization
Historically, from 1975 to the mid-‘90s, computerization played a pivotal role in labor market dynamics. This shift eliminated traditional middle-wage occupations, leading to a transition towards blue-collar and high-skilled roles at the extremes of the job market spectrum. The positions that were replaced typically involved repetitive tasks with minimal complexity.
Thought-Provoking Quote on AI’s Impact on Employment
“The level of exposure presents both opportunities and risks. The impact on jobs hinges on whether AI-enabled technologies will substitute or complement labor.”
— European Central Bank
