Image source: Visual China
When CEOs talk to investors about layoffs, they often blame economic uncertainty or a "bad business environment." Now, a new term is starting to appear in the relevant announcements: artificial intelligence.
In recent months, shipping giant UPS has announced plans to cut 12,000 office jobs, with CEO Carol Tomei saying the jobs cut are unlikely to be reinstated, as the company increasingly uses artificial intelligence to automate related tasks. Meanwhile, financial giant BlackRock said it would cut about 600 jobs, saying the layoffs were in preparation for an impending shift in the asset management industry, with artificial intelligence being one of the considerations. Google recently laid off ad salespeople because of new AI tools that help customers manage ad campaigns on their own. IBM's chief executive, Arvind Krishna, noted that the company will suspend hiring for 7,800 jobs because artificial intelligence is already available.
In the view of some commentators, the circumstances confirm the long-held prediction that AI will lead to widespread unemployment, and even that the era of "great unemployment" may come. The public consciousness is so entrenched in the public mind that AI can cause job losses, and even when there is no empirical evidence, people can find evidence.
In February, the U.S. unemployment rate edged up to 3.9%, but it remains near record lows. However, a report released by executive search firm Challenger Gray & Christmas said that from May 2023 to January 2024, 4,600 job cuts in the U.S. were directly related to AI, with some commenters saying the relatively low numbers were due to companies hiding the severity of AI's impact for fear of a public backlash.
The possibility that AI will lead to a significant reduction in jobs in the future does exist. Goldman Sachs predicts that by 2030, AI software could automate 300 million jobs worldwide. But economists and business analysts say that day has not yet come. Daniel Susskind, a professor of economics at King's College London, said: "It's not time yet. He is the author of several books on the impact of technology on work, including the forthcoming Growth: A History and a Reckoning.
At present, the large-scale application of artificial intelligence is constrained by several factors. Many companies are still trying to justify the sky-high costs. According to a recent report by the Boston Consulting Group, most executives are anxious about the company-wide adoption of AI because AI software sometimes produces dangerous misinformation, known as the risk of "hallucinations."
So why do some CEOs mention AI when announcing layoffs? Experts say some of this is nothing more than hype. Erin Lin, an assistant professor studying artificial intelligence and the future of work at the University of Surrey in the United Kingdom, said AI is often a convenient excuse when layoffs are caused by mismanagement, troubled businesses and deteriorating economic conditions. Grace Lordan, an economist and professor of behavioural science at the London School of Economics and Political Science, noted that the bad news that companies are being forced to lay off workers because of financial difficulties "with the addition of artificial intelligence is not so bad" and "looks like a smart cost-cutting move." ”
This seems to be the case with UPS. While announcing layoffs and mentioning the increasing use of artificial intelligence, the company also sent unpleasant news to Wall Street, with the company's revenue and earnings numbers falling short of expectations, lowering its revenue target for the coming year, and reducing delivery volumes. In Tomei's announcement, almost only artificial intelligence is quite positive.
Google and some other tech companies are in a different situation. Tech companies aren't simply raising their position in the tech world. They have mastered the technical aspect. Instead, tech companies are laying off workers to cut costs and invest more in developing artificial intelligence, which requires expensive computing resources and machine learning talent. In these cases, AI is actually related to job attrition, and it is not the reason people have been worried.
Carl Benedict Frey, an economist at the University of Oxford, co-authored the first major studies on the potential impact of artificial intelligence on employment. He said people may be overestimating how much unemployment will be caused by AI in the short term. "Generative AI is not a fully automated technology." He points out that the technology still requires people to write the content that is fed into the software and also to check the quality of the output. "In most cases, human involvement is required."
He sees a clear "Uber effect" with AI, where less skilled and less experienced employees are able to take on more difficult tasks after using AI. On the Uber platform, anyone with a driver's license and a car has the potential to become a taxi driver. As a result, more people are driving ride-hailing.
Similarly, AI "assistants" can help more people perform legal, financial, or code-writing tasks. Frey pointed out that AI will not reduce jobs in related fields, but can also improve the level of human beings. There is evidence that there is currently a huge unmet demand for services in the professional sector, mainly because they are too expensive for many clients to afford.
But Uber is bad news for taxi drivers, who are struggling with low-cost competition. Similarly, the wages of some existing employees may also fall or stagnate as a result of the impact of AI. On the other hand, some employees may earn more than their less skilled counterparts in other fields, even if their wages fall. Overall, therefore, economic inequality is likely to have eased.
However, Frey's long-term impact on AI is less optimistic. He said that at the moment artificial intelligence may be in the stage of "lamplighters": when the street lamps are still using gas, the lamplighters will light each lamp at dusk with the wick on the long pole. After the invention of the light bulb, the lamplighter kept his job for the time being, as each light had to be turned on separately. Soon, however, the city began installing switches that controlled entire neighborhoods, and by the time timers and light sensors were applied, there was no need for human intervention. Frey argues that the path of AI could be similar, except that there are relatively few alternative jobs at the moment, creating a false sense of security.
Almost everyone agrees that AI is in a time of uncertainty and disruption, and employees need to be prepared to learn new skills and switch roles. Several experts believe that the government should do more to encourage lifelong education and retraining. Saskand said the government should remove tax incentives that encourage businesses to replace humans with artificial intelligence, and not increase them.
If measures are taken now, the apocalyptic scenario of mass unemployment caused by AI may never happen. At the very least, after the CEO made a statement about AI and layoffs, we shouldn't panic and go back to good work. (Fortune Chinese Network)
Translator: Feb
The Fortune China Best Design list seeks to find outstanding designs that start from the real needs of people, focus on solving complex problems, have business prospects or can have a lasting impact on social development.
At Fortune Plus, netizens have made many in-depth and thoughtful comments on this article. Let's take a look. You are also welcome to join us and talk about your ideas. Other hot topics today:
Check out the actionable view of "EU says Chinese automakers don't provide enough information to raise tariffs".
Check out the great view of "Microsoft is preparing to launch its own AI model".
