This blog continues the UN Sustainability and AI relevance series and reviews the UN Goal 8 – “Promote sustained inclusive and sustainable economic growth, full and productive employment and decent work for all.”
Before COVID-19 the global economic growth was slowing down. To put this in context between 2010-2018, the GDP growth was 2.0%, and in 2019, the GDP growth was 1.5%.
While there is no way to tell exactly what the economic damage from the global COVID-19 coronavirus pandemic will be, economists are predicting that most major economies will have lost at least 2.9 percent of their GDP over 2020. This forecast was already restated to a GDP loss of 4.5 percent. To put this number in perspective, the Global GDP was estimated at around 87.55 trillion U.S. dollars in 2019 – meaning that a 4.5 percent drop in economic growth results in almost 3.94 trillion U.S. dollars of lost economic output.
Job losses have been severe. In early 2021 study, the UN’s International Labour Organization reported that 8.8 per cent of global working hours were lost in 2020, compared to the fourth quarter of 2019. This is equivalent to 255 million full-time jobs, or “approximately four times greater than the number lost during the 2009 global financial crisis.”
Highly impacted has been the over 1.6 billion workers in the informal economy have experienced major job losses, as part-time labour in retail, hospitality, and travel industries simply disappeared during COVID-19.
Many advocate that our world is currently facing the worst economic recession since the great depression, with an outlook that it’s not over yet.
How can AI drive more economic growth and improve productive employment and decent work for all?
AI is a powerful engine of productivity and economic growth. AI is an excellent innovation that can improve the decision-making process of almost every complex business process, given its appetite to analyze large volumes of data and perform complex calculations that humans simply cannot perform.
AI is rapidly driving economic growth in its ability to create new products and services generating new revenue streams and jobs.
In a report published in late 2020 by the World Economic Forum (WEF), they advised that said the rise of machines and automation would eliminate 85 million jobs by 2025. But at the same time, the WEF expects 97 million new jobs to be created, meaning an overall addition of 12 million jobs.
Hence AI will create new super firms and hubs of wealth and knowledge. However the biggest economic challenge is that the skills required to design and develop innovations tapping into AI, and other advanced technologies, like robots, IoT, smart buildings, etc. will require stronger skills in mathematics, computing science, data sciences disciplines that are stronger in developed countries vs undeveloped countries. So many are ethically concerned about this growing divide.
Research launched by Accenture covering 12 developed economies, which together generate more than 0.5 % of the world’s economic output, forecasts that by 2035, AI could double annual global economic growth rates. AI will drive this growth in three important ways. First, it will lead to a strong increase in labour productivity (by up to 40 %) due to innovative technologies enabling more efficient workforce-related time management. Secondly, AI will create a new virtual workforce – described as ‘intelligent automation’ – capable of solving problems and self-learning. Third, the economy will also benefit from the diffusion of innovation, which will affect different sectors and create new revenue streams.
Another study by Pricewaterhouse Coopers (PwC) estimates that the global GDP may increase by up to 14 % (the equivalent of US$15.7 trillion) by 2030 as a result of the accelerating development and take-up of AI.
Despite the promising economic benefits of AI – there remains concern about job loss. A forecast by think-tank Bruegel warns that as many as 54 % of jobs in the EU face the probability or risk of computerization within 20 years.
Early research by Carl Benedikt Frey and Michael A. Osborne, from the University of Oxford, first projected job losses due to automation in late 2013. The Oxford Study predicted that 47 percent of U.S. jobs could be lost due to automation.
Some other stats that are sobering are:
- As many as 30% of jobs will be replaced by automation, especially the boring and repetitive ones.
- 1.5 million people in England are at high risk of losing their jobs to automation, according to the Office for National Statistics (ONS).
- We’re at risk of losing 375 million jobs worldwide by 2030.
- 14 to 80 million U.S. jobs are at risk of being automated.
- The Brookings Institution estimated that 36 million workers will lose their jobs because of AI.
- World Economic Forum says machines will create 58 million new jobs.
So we have a challenge as we have an economic situation where AI fuels growth in modernizing our world on so many levels, while at the same time, AI is impacting employment in many sectors and for the first time technology will be eliminating more professional jobs as well.
In summary, board directors and CEO’s need to step back and decide as they are automating, they have a responsibility to retrain their workers to be able to support new jobs in new ways that they may have never thought of in the past.
A recent World Economic Forum (WEF) report stated that, although 75 million jobs are expected to be displaced by deep learning technologies over the next three years, these same technologies are expected to create 133 million new roles, resulting in a net gain of 58 million new jobs.
Another study by PWC also predicted that AI, robotics, and smart automation technology could contribute up to $15 trillion to the global GDP by 2030.
Some of the areas where AI is impacting new job creation is that over 200,000 extra jobs in the education sector are being created due to the rapid shift to online e-learning. An eSchool News study indicated that the application of AI in education will increase by 47.5% by 2021.
We have already seen how much value AI has had on the entertainment industry as companies like: Netflix, Amazon Prime, Spotify, etc are using AI to identify and classify the online behavior of consumers, and smart AI algo’s are surfacing up relevance to consumer’s historical interests to entice them to keep in their genre groove.
Global technology giants such as: Apple, Google, Samsung, and Amazon are pouring billions of dollars into making digital assistants. Alexa, Siri are now household names in North America and as friendly cobots, like little Sophia, start to move into mainstream households they will become as common place to Americans having a dog in their home (note: 63% of the US population own a dog in their home = 76 million dogs in homes).
As we look ahead, we should recognize that a cobot will become more common place and enter into every industry and home experience as our world continues to thrive on smarter everything. According to Zion market research, by 2025, the global intelligent virtual assistant market will reach $19.6 billion, and there are already.
In addition, the global collaborative robot market is expected to grow from USD 981 million in 2020 to USD 7,972 million by 2026; it is expected to grow at a CAGR of 41.8% during the forecast period, according to Research and Markets.
However which ever direction the world evolves what is clear is that the requirements or knowledge workers versus blue collar workers will be much higher, as many repetitive tasks are easily replaced by robots, whether it’s in a car assembly plant, or even in a restaurant, cobots are now serving food to customers, or even delivering hotel services to customers. We already have over 30% of manufacturing jobs that have been lost by increasing factory automation with robots and now cobots are also advancing into more human related tasks.
Board directors and CEO’s will need to have more strategic conversations about the world they want to create and should make much bold decisions and engage in scenario planning exercises to dig deep into the areas of responsibility, stewardship and legacy.
Boards have an important role in ensuring their CEO leadership is effectively managing both the potential of AI and also increasingly its organizational risks—including ethical, and reputational risks.
It is part of a board’s fiduciary responsibility to oversee AI and its potential impact on the business, but also ethically on society.
The United Nations developed in 2015 the Sustainable Development Goals as an universal call to action to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere. The 17 Goals were adopted by all UN Member States in 2015, as part of the 2030 Agenda for Sustainable Development which set out a 15-year plan to achieve the Goals.
To see the full AI Brain Trust Framework introduced in the first blog, reference here.
To learn more about Artificial Intelligence, and the challenges, both positive and negative, refer to my new book, The AI Dilemma, to guide leaders foreword.
If you have any ideas, please do advise as I welcome your thoughts and perspectives.