The UK business press was a compendium of gloom the past week. The pound is down, bond yields are up, and inflation is expected to rise. A Bank of England survey reveals firms expect to raise prices and reduce staff in the coming year.
The UK labour market stands in sharp distinction from the US, where an unexpected surge in jobs could translate into fewer rate cuts this year. As US investors look to navigate an economy running hot, UK policymakers need to convince the public the country is not heading for stagflation.
In this context, the UK Prime Minister has announced a plan to ‘unleash AI’ across the UK.
In a press release, Keir Starmer says his government’s AI plan – which takes “a marked move from the previous government’s approach” – “will make Britain the world leader. It will give the industry the foundation it needs and will turbocharge the Plan for Change. That means more jobs and investment in the UK”.
Many analysts will welcome any initiative that promises to boost investment in the UK’s tech sector. But with companies already reluctant to hire, should UK workers start worrying about Artificial Intelligence taking their jobs?
The cynic may take Starmer at his word that AI “has the potential to transform the lives of working people” and suggest that there’s no guarantee that the transformation will be wholly positive.
Updating the rule book
A recent IMF discussion paper on ‘Artificial Intelligence and the Future of Work’ found that “almost 40 percent of global employment is exposed to AI”. In advanced economies, the figure is even higher, with 60% of jobs exposed to AI.
What will the impact of AI be on these jobs, and on the broader economy? We can’t say with any certainty. AI promises to enhance productivity, but it could also disrupt the job market. And, as the paper notes, history suggests that some demographics (such as older workers) may find it harder to adapt to technological change.
AI also introduces new risks. In advanced economies especially, where the rate of adoption is likely to be higher, the IMF economist urge ensuring legal and ethical frameworks to meet the new AI reality. Moreover, regulations to mitigate the new cybersecurity risks of widespread AI adoption are also crucial.
New opportunities
In the immediate term, a shift is already noticeable. The Financial Times reports a recent poll demonstrating that 50% of UK businesses plan to “redirect investment from staff to AI” following the rise in employers’ NI contributions.
The good news: the demand for AI is already boosting the demand for news types of jobs, notably (and not surprisingly) AI engineers.
In other sectors, the trendline is not so positive. Among the disruption listed in the FT article, telecoms group BT has cut as many as 10 000 jobs “because of digitisation and automation”.
On balance, will AI be bad news for workers, or could the rising cost of labour force firms to invest in productivity-enhancing technology that ultimately benefits us all? AI offers an opportunity to boost moribund economies, but we probably can’t take progress for granted – policy, ingenuity and coordination between stakeholders will be key.
Financial services professionals who think none of this is their concern should note that the site Will Robots Take My Job puts the current risk of investment managers being replaced by AI at 54%.
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