Impact of Artificial Intelligence on Employment

The Economic Survey for 2024-25 emphasizes the need for safety nets to shield workers from economic and social impacts due to AI. Both the government and private sector have a responsibility to introduce AI over an optimized period to minimize job loss.

Government Interventions

• Potential taxation on profits generated from labor replacement could arise if companies fail to manage AI's impact.
• Such interventions might negatively affect growth potential, as noted by Chief Economic Adviser V Anantha Nageswaran.
• Policymakers should pay attention to AI's potential impact on the labor market, especially in labor-driven economies like India.

Collaboration and Innovation

Fostering collaboration among policymakers, the private sector, and academia is crucial to align AI-driven innovation with societal goals. Ensuring inclusivity and sustainability is key to maximizing benefits and minimizing disruptions.

Challenges and Opportunities

• While AI development has accelerated since 2022, concerns about its reliability and resource inefficiencies remain.
• Lawmakers have a unique opportunity to act proactively to mitigate risks and job losses.

Building an AI-Ready Workforce

To minimize AI-related risks, focus on high-quality institutions to equip the workforce with adaptable skills.

• Collaboration with edtech platforms and universities for mentorship and upskilling programs is vital.
• Efforts should cut across industries beyond the services sector, impacting low-skill, low-value-add workers.
• Stewarding institutions should promote transparency and accountability in AI models.

AI as General-Purpose Technology

Despite advancements, AI must prove its feasibility and usefulness in real-world applications to gain mass acceptance.

• For example, the applicability of self-driving cars remains contingent on cost-effectiveness and social acceptability.

Digital Economy and Gender Gap

The digital economy offers a unique opportunity for gender gap reduction by overcoming traditional barriers for women.

• Remote working facilitated by the digital economy allows for increased financial independence for women.
• To sustain the benefits, policies addressing potential negative impacts of automation on labor share are essential.

Key Statistics on AI and Employment

• AI patents globally increased by 62.7% to over 62,000 from 2021 to 2022.
• Global private investment in Generative AI rose from $3 billion to $25.2 billion from 2022 to 2023.
• Corporate investments in AI from 2021 to 2023 were $761 billion.
• Estimates on job losses due to AI:
  • 75 million jobs globally at risk of automation (ILO).
  • 300 million full-time jobs exposed to AI-driven automation (Goldman Sachs).
  • 30% of work hours could be automated by generative AI by 2030 (McKinsey).
  • 57% of occupations in emerging countries affected by Gen AI adoption (Ernst & Young).
  • 68% of workers expect jobs to be automated within 5 years (IIM Ahmedabad)