AI: The beginning or the end of job innovation?

Since the Sora, a cutting-edge AI capable of autonomously producing videos up to 60 seconds in length, burst onto the scene two months ago. People who had found temporary solace in the new pace of their careers were once again at a crossroads, forced to rethink their roles. Is the rise of AI like Sora the dawn of unprecedented employment innovation, or does it signal the end of traditional employment as we know it?

Why are more and more companies turning to AI?

IBM CEO Arvind Krishna highlighted a major shift in the workforce: Over the next five years, 30% of IBM's work is expected to be automated by AI. But it's not just IBM; companies in many industries are increasing their investments in AI. Here's why more and more organisations are choosing AI over human employees:

- Efficiency and value creation.

AI consistently outperforms humans in many tasks, getting the job done faster and more accurately. A study from the University of Zurich highlights this trend, showing that ChatGPT has a 4:1 ratio to human capabilities in accurately determining relevance, stance, and subject matter, demonstrating the huge productivity gains that AI technology can bring potentially.

- Cost Savings and Profit Improvement.

Many factories are adopting automation because of the significant cost savings that AI can provide to businesses. According to the University of Zurich, using ChatGPT for tasks such as annotation is 20 times cheaper than hiring human annotators. In addition, AI can run uninterrupted, improving operational efficiency and directly increasing business profits. This relentless operation reduces downtime and drives businesses to improve financial performance.

The impact of artificial intelligence on employment: fact or fiction?

AI is increasingly taking over everyday tasks in our lives. This is particularly evident in areas such as management, coding and customer service, where automation can lead to significant job losses. The rise of AI technologies poses a profound challenge to traditional employment. For example, in manufacturing, automated assembly lines are replacing traditional production roles. In the services sector, the banking industry is actively incorporating AI into its operations; According to the Cambridge Centre for Alternative Finance, 56% of banks are using AI for administrative tasks, and 52 % are using AI for increasing revenue. Analysing these trends using the Economist's Labour Market Model, a leftward shift in the labour demand curve indicates a decrease in labour demand.

As workers become aware of the potential for unemployment, many are forced to consider leaving their industry to find alternative livelihoods. In addition, a portion of the young unemployed may choose to exit for a while and retrain in AI to enable them to thrive in the evolving job market. In the economic framework, the labour supply curve, which reflects an individual's willingness to work and potential contribution, shifts to the left. This trend indicates a decline in the willingness of the labour force to participate in traditional employment roles. Job losses in traditional sectors are accelerating as these dual changes are driven by the rapid integration of artificial intelligence. This may highlight a period of change in the labour market.

As AI becomes more deeply integrated into business operations, the need for specific types of labour is changing. Whereas in the past, companies primarily valued strong operational skills, they are now increasingly looking for people with expertise in AI research and development. While automation may cause some people to lose their jobs, it also paves the way for new career paths. For example, IBM predicts that while AI may replace many roles over the next five years, it will simultaneously open up new opportunities in software development and systems maintenance. The World Economic Forum's recent whitepaper, Tomorrow's Jobs: Large-scale language models and Work, states that the job market for AI and machine learning specialists could grow by 39 % over the next five years. Discovering top talent is increasingly seen as vital in the rapidly evolving field of AI. At the same time, it is exciting to note that the escalating demand for skilled AI professionals has brought their average annual salary to a staggering $117,954 (as of February 2024). The surge in salaries underscores the growing value of expertise within this field.

Will Regulation Balance AI’s Impact?

As AI reshapes the industry, its dual impact cannot be ignored. Firstly, the rapid adoption of AI will dramatically improve business operations - increasing a company's productivity through automation, improving the way decisions are made, and leading to greater efficiency and innovation. These improvements can reduce costs and increase revenue due to better product quality and smoother operations. However, these benefits also bring challenges, such as increased unemployment and inequality. These businesses frequently shirk accountability for these problems, leaving society to bear the costs. This might result in a mismatch, which is an indication of “market failure”, when the costs to society exceed the benefits. Governments must take action to solve these problems. The government intends to regulate AI to promote growth, innovation, and the development of public trust, as stated in the UK's Regulatory Impact Assessment on AI. They seek to strike a balance between the need to address AI's detrimental effects on society and the technology's economic advantages through cautious regulation. By distributing the advantages of AI more fairly, this approach seeks to improve the state of the economy as a whole and benefit everybody.

Wrapping up…

In this age of rapidly advancing AI, concerns about jobs being replaced are understandable, but recognising the new careers created by AI is crucial. Individuals in industries traditionally seen as vulnerable to technological disruption should remain positive. Because the integration of AI into the workforce is a lengthy process, it will not result in the sudden disappearance of jobs. Furthermore, mastering AI is essential for everyone. Not only does it improve competitive advantage, it also fosters a productive partnership between humans and AI. We are entering this exciting new era, and embracing AI can unlock extraordinary prospects for innovation and expansion.

References

OpenAI (2024) Introducing Sora, our text-to-video model.Sora can create videos of up to 60 seconds featuring highly detailed scenes, complex camera motion, and multiple characters with vibrant emotions. https://t.co/7j2jn27m3wprompt: "beautiful, Snowy... pic.twitter.com/rutewn87vf, Twitter. Available at: https://twitter.com/OpenAI/status/1758192957386342435 (Accessed: 19 April 2024).

Ford, B. (2023) IBM to pause hiring for ‘back-office’ jobs that AI could kill, Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2023-05-01/ibm-to-pause-hiring-for-back-office-jobs-that-ai-could-kill (Accessed: 18 April 2024).

Gilardi, F., Alizadeh, M. and Kubli, M. (2023) CHATGPT outperforms crowd-workers for text-annotation tasks, arXiv.org. Available at: https://arxiv.org/abs/2303.15056 (Accessed: 18 April 2024) 

(No date) Jobs of tomorrow: Large language models ... - weforum.org. Available at: https://www3.weforum.org/docs/WEF_Jobs_of_Tomorrow_Generative_AI_2023.pdf (Accessed: 18 April 2024).

Artificial Intelligence salary: Your guide to ai pay in 2024 (no date) Coursera. Available at: https://www.coursera.org/articles/artificial-intelligence-salary (Accessed: 18 April 2024).

Lutkevich, B. (2023) Will AI replace jobs? 9 job types that might be affected, WhatIs. Available at: https://www.techtarget.com/whatis/feature/Will-AI-replace-jobs-9-job-types-that-might-be-affected (Accessed: 18 April 2024).

Johnson, A. (2024) Which jobs will AI replace? these 4 industries will be heavily impacted, Forbes. Available at: https://www.forbes.com/sites/ariannajohnson/2023/03/30/which-jobs-will-ai-replace-these-4-industries-will-be-heavily-impacted/?sh=6cdf29e5957f (Accessed: 18 April 2024). 

(2023) UK Artificial Intelligence Regulation Impact Assessment ia no. Available at: https://assets.publishing.service.gov.uk/media/6424208f3d885d000cdadddf/uk_ai_regulation_i mpact_assessment.pdf (Accessed: 18 April 2024)