AI and Automation: The Acceleration of Job Displacement

The COVID-19 pandemic has proven to be a catalyst for the rapid advancement of AI and automation, leading to the potential elimination of millions of jobs. A study by McKinsey Global Institute indicates that nearly 9 million workers shifted occupations between 2019 and 2022, marking a 50% increase compared to the previous three years. This shift primarily affected low-wage positions in industries like food services, customer service, office support, and production. At the same time, high-wage positions in fields such as science, technology, healthcare, business, legal, and management experienced growth.

According to McKinsey’s predictions, an additional 12 million workers may change jobs by 2030, as low-wage positions continue to diminish while higher-paying professional roles flourish. This would result in a 25% increase in occupational shifts in the 2020s compared to previous expectations. Saurabh Sanghvi, a McKinsey partner and co-author of the report, sees this as an opportunity to drive upward economic mobility by addressing mismatches and providing workers with the necessary training for these roles.

While automation, assisted by generative artificial intelligence (AI), hastens the effects of job displacement, it is expected to redefine professional jobs rather than eliminate them, at least in the short term. The transformation of the labor market will likely necessitate a significant increase in training programs and the adoption of new hiring practices.

COVID-19 has further expedited this process by driving changes in the workforce. The shift towards e-commerce and remote work has led to the decline of customer-facing jobs, such as those in food service and office support. It is estimated that 10 million out of the projected 12 million occupational changes by 2030 will come from these industries. Repetitive tasks involved in jobs like clerks, retail associates, administrative assistants, and cashiers can be easily replaced by automation, leading to expected job losses in these fields.

While there has been recent growth in low-wage job openings, it is primarily due to high turnover rates as workers quit these positions. In contrast, managerial and professional jobs paying over $57,000 per year have increased by approximately 3.5 million since the onset of the pandemic. However, it remains uncertain how many workers from lower-paying fields have advanced to higher roles, and how many new entrants have filled these positions.

Generative AI, capable of creating new content, such as software code, products, images, video, and conversations, enhances the impact of automation. Rather than completely replacing jobs, generative AI empowers workers to engage in more creative and higher-level tasks. This allows managers more time for strategic thinking and coaching, and researchers to expedite projects by utilizing automation tools for data analysis.

Even without generative AI, automation was already projected to replace tasks equivalent to 21.5% of total work hours by 2030. However, with the incorporation of generative AI, this share has risen to 29.5%. The study suggests that generative AI and automation in general can significantly enhance productivity, leading to a faster-growing economy and potential job creation in new occupations.

To ensure successful transitions in the labor market, workers must receive adequate training to secure better jobs, and efforts should be made to connect skilled workers with opportunities across different regions. The study proposes that employers should evaluate candidates based on their capacity to learn, intrinsic capabilities, and transferable skills, rather than focusing solely on credentials.