AI & The Future of Work

Blog post by: Liang Cheng and Rob McLay

Artificial Intelligence (AI) continues to evolve at breakneck speed, reshaping how we live and work. While OECD labour markets remain historically tight—unemployment in some countries is at levels not seen since the early 1970s—many workers are feeling the pinch of high inflation and sluggish wage growth. At the same time, organizations everywhere are waking up to the transformative power of AI, recognizing both its potential and the risks it may pose.

In this blog post, we’ll explore the current state of labour markets, examine how AI could alter job landscapes, and highlight emerging research from a range of reputable institutions. Finally, we’ll look at what policymakers and business leaders can do to ensure AI becomes a force for good in the future of work.

Labour Markets Have Stabilized

  1. Historically Low Unemployment
    In many OECD countries, unemployment rates are still remarkably low, dipping below pre-pandemic benchmarks. This is partly due to recovery efforts and a resurgence in consumer and business activity after pandemic-induced slowdowns.
  2. Job Vacancies and Skills Mismatch
    While the number of vacant positions per jobseeker has eased slightly, the tightness in the labour market persists—especially in roles requiring advanced digital or AI-related skills. This highlights the importance of reskilling and upskilling to bridge the gap between what employers need and what workers can offer.
  3. Increased Labour Force Participation
    Labour force participation rates have rebounded, reflecting both necessity and opportunity. More people are returning to—or entering—the workforce than in the early days of the COVID crisis. However, challenges remain for underrepresented groups, who often lack the resources or networks needed to re-engage successfully in a rapidly changing job market.

Cost-of-Living Crisis: Real Wages are Down

  1. Nominal vs. Real Wage Growth
    Although nominal wages (the amount on your paycheck) have seen moderate increases, inflation has risen faster, resulting in a decrease in real wages for most workers. Low-wage earners feel the brunt of this crisis, where every uptick in energy or food prices undercuts their purchasing power.
  2. Minimum Wage Protections
    On a positive note, many OECD countries have adjusted statutory minimum wages to keep pace with inflation, offering a critical buffer for the lowest earners. Still, high-level data from the World Bank and International Labour Organization (ILO) indicate that global wage gaps have widened, raising questions about equitable wealth distribution and the fairness of economic recovery policies.
  3. Unequal Burden-Sharing
    In some sectors, company profits have soared more than labour costs, suggesting that the burden of inflation is not being shared equally. This imbalance could stoke social tensions and dampen consumer spending if left unaddressed.

AI Likely to Significantly Impact Jobs

  1. Why Now?
    The cost of computing is falling, AI skills are spreading through new training programs, and generative AI technologies—like ChatGPT—are making headlines. These factors suggest that we may be on the threshold of an “AI revolution,” akin to earlier waves of automation but potentially broader in scope.
  2. Who is at Risk?
    Previous estimates from the OECD suggest that around 27% of jobs are at high risk of automation when considering AI and other advanced technologies. While repetitive or routine tasks are most vulnerable, the “AI wave” might also disrupt creative and analytical roles once thought immune to automation.
  3. New Opportunities
    Reports from McKinsey & Company and the World Economic Forum (WEF) emphasize that AI can also create new industries, products, and job categories—ranging from data science and machine learning engineering to AI ethics and compliance. However, realizing these opportunities requires robust education and training ecosystems.
  4. OECD and Beyond
    • The OECD’s survey of AI in manufacturing and finance underscores the dual nature of AI: increasing efficiency and innovation, but also raising ethical, legal, and employment-related questions.
    • The ILO warns of potential inequalities if AI is unevenly adopted, especially in lower-income countries with limited digital infrastructure.
    • The Mastercard Foundation highlights the importance of inclusive digital finance and youth-focused training to harness AI’s potential in emerging markets.

What Do Workers and Employers Think?

  1. Perceived Benefits
    • Improved Efficiency: Employers report faster decision-making and cost savings when AI handles repetitive tasks.
    • Potential for Higher Wages: Some skilled roles in AI-related fields boast higher-than-average pay, reflecting the premium on specialized expertise.
  2. Concerns and Fears
    • Privacy and Surveillance: Workers worry that AI-driven monitoring tools could erode trust in the workplace.
    • Job Security: A paradox emerges—many feel secure in their current AI-related tasks but are uncertain about the long-term implications of increasingly capable AI systems.
  3. Bridging the Knowledge Gap
    The ILO and World Bank have stressed the importance of clear communication about AI’s capabilities and limitations. Without transparent guidelines and open dialogue, misinformation and anxiety can proliferate, hindering both adoption and policy formation.

What Should Governments and Businesses Do?

  1. Protect Low-Wage Workers
    • Policy Instruments: Strengthening minimum wage policies, collective bargaining, and social safety nets can help cushion the blow from real wage declines.
    • Income Support: Targeted cash transfers or tax benefits can help those hardest hit by the cost-of-living crisis.
  2. Implement Safeguards
    • Responsible AI Frameworks: Uphold ethical standards, ensure data privacy, and guard against algorithmic bias. The EU’s AI Act and the OECD AI Principles serve as reference points for trustworthy AI.
    • Inclusive Approach: Policies should promote equitable access to AI opportunities, ensuring historically marginalized groups aren’t left behind.
  3. Invest in Training and Education
    • Reskilling and Upskilling: Collaboration between governments, educational institutions, and the private sector is vital for developing in-demand AI skills.
    • Youth and Older Workers: Tailored programs for these demographics can help close skill gaps. The Mastercard Foundation’s youth-focused digital programs in Africa are a prime example of investing in future talent.
    • Lifelong Learning: Continuous skill development is critical as AI evolves. Employers should offer ongoing training, while governments can incentivize or subsidize such programs.
  4. Foster Social Dialogue
    • Stakeholder Engagement: Regular consultation with workers’ unions, civil society, and industry bodies can help shape balanced AI policies.
    • Transparency: Clear standards on data usage, job transitions, and worker protections build trust and enable smoother technology adoption.

Final Thoughts

We stand at a pivotal point in the evolution of work. AI brings the potential for unprecedented innovation, efficiency, and even job creation—yet it also challenges established norms and threatens to widen existing inequalities if not managed responsibly. By adopting a forward-thinking policy approach, investing in education and skills, and embracing inclusive stakeholder engagement, we can ensure that AI augments human potential rather than undermining it.

The bottom line? AI won’t replace our work overnight, but it will continue to reshape how—and where—we work. The time to act is now, before the winds of change become a storm.

References

  1. OECD (2023). OECD Employment Outlook. Paris: OECD Publishing.
  2. OECD (2022). Survey on AI Use in the Manufacturing and Finance Sectors. Paris: OECD Publishing.
  3. ILO (2021). The Future of Work in a Post-Pandemic World. Geneva: International Labour Organization.
  4. ILO (2022). ILO Monitor on the World of Work. Geneva: ILO.
  5. World Bank (2019). World Development Report 2019: The Changing Nature of Work. Washington, D.C.: World Bank.
  6. Mastercard Foundation (2022). Digital Skills for Africa’s Youth: Preparing for the Future of Work. Toronto: Mastercard Foundation.
  7. McKinsey & Company (2021). The Future of Work after COVID-19. McKinsey Global Institute.
  8. World Economic Forum (2023). The Future of Jobs Report. Geneva: WEF.
  9. Schwab, K. (2017). The Fourth Industrial Revolution. New York: Crown Business.

Further Reading

  1. AI Superpowers by Kai-Fu Lee – A comparative look at AI strategies and implications for the global economy.
  2. The Big Nine by Amy Webb – Explores how nine tech giants are shaping AI and its social consequences.
  3. Superintelligence by Nick Bostrom – A deep dive into the existential risks posed by advanced AI.
  4. Jobs Lost, Jobs Gained (McKinsey & Company) – Analysis of automation’s potential impact on workforce transitions.
  5. Future-Proof: 9 Rules for Humans in the Age of Automation by Kevin Roose – Practical advice for individuals adapting to an AI-driven era.

Author’s Note: This blog post blends insights from OECD data with additional research from organizations like the ILO, World Bank, Mastercard Foundation, McKinsey & Company, and the World Economic Forum. The views expressed are my own, but they underscore the collective need for informed policy and social dialogue to harness the full promise of AI.

Robin McLay and Liang Cheng are writers and policy analysts focusing on the intersection of technology, human development, and inclusive economic growth.