A primary concern regarding Artificial Intelligence (AI) is not our proximity to mastering General Intelligence, but whether AI will snatch away jobs.
The honest answer tends to be a trigger to a variety of concerns. AI is predicted to completely replace manual or cognitive repetitive jobs in the near future. Other jobs also face the peril of being wiped out eventually.
Ronin Legal takes a closer look at the gap between public perception and the actual trajectory of AI-driven job displacement.
General Perception Vs Reality
The initial response to the inevitable future tends to be dismissal. Some common perceptions include the thought that AI will create more jobs than it will destroy. In reality, enterprise-level AI is often sold as a cost-reduction tool. It would fail its objective if it created a new job for everyone it eliminated.
Similarly, stating that “AI will not take jobs, a person using AI will”, echoes the gun lobby’s “Guns Don’t Kill People, People Do” defence. This is a defence that judges in gun crime cases never warmed up to.
However, progress cannot be fought. This has been evident over generations, from the steam engine to the factory assembly line, and the iPhone.
With every turn of the tech wheel, there are winners and losers. On one hand, we may stay ahead of the general populace by improving awareness and staying up to date. On the other hand, we may hold on to the hope that the government has the will to pass laws that limit AI’s less desirable outcomes.
Therefore, the persistent question remains as to where we stand in the job replacement cycle for AI and how governments are responding.
The AI Wave
A recent paper by the National Bureau of Economic Research (NBER) examined the dynamic relationship of labour and capital. It found that software is increasingly replacing the workforce due to its production efficiency, reducing the labour income share.
It also found that labour and equipment are not easily interchangeable. Yet labour can be replaced more readily by software in production. This study reinforces a trend since the 1980s, that technology investment has cut the share of income going to workers. Software is the main driver of this drop in labour share.
Another NBER paper in 2023 looked at Generative AI’s impact on firm valuations and equity returns. Using ChatGPT as an example, it found that Generative AI and Large Language Models (LLMs) created value for firms whose workforces were more exposed to these tools.
However, it also negatively impacted firms in other industries. Occupations most affected had high shares of non-routine cognitive analytical tasks or routine cognitive tasks. Manual physical jobs were largely unaffected.
Regulatory Efforts
United Kingdom
A 2021 UK government report revealed that 7% of jobs in the labour market faced high automation risk within five years. This figure is predicted to rise to 30% in the next 20 years.
Despite calls to pause AI development, the UK adopted a pro-innovation approach in 2022. A consultation paper, followed by a 2023 white paper, proposed reforms. The main idea was to embrace AI innovation while limiting risks and building public trust using existing regulations.
However, it did not include creating a new AI regulator.
European Union
In July 2024, the EU enforced the EU AI Act, the first major AI law. It requires human oversight for AI systems, sets risk levels for different types of AI, aiming to balance innovation with fundamental rights such as employment.
Recital (9) states that the Act complements union laws on employment and worker protection. This promises that such rights will not be violated.
United States
In October 2023, President Biden issued an executive order to promote AI while guiding federal agencies in AI design, acquisition, deployment, and oversight.
Section 6 includes worker protections. It directs the government to identify the workforce and job displacement effects of AI. It also requires AI deployment to follow the ‘principles and best practices’ set by the Secretary of Labour, ensuring worker rights and well-being.
As we reported earlier, writers, artists, and performers in Hollywood have already recognised AI’s potential for causing job loss. Unions like the Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) have gone on strike. They demand clauses in standard guild agreements to protect members from AI replacement.
The Way Ahead
By 2025, AI-driven automation is expected to reduce entry-level job opportunities significantly, with approximately 41% of employers aiming to downsize roles where tasks can be automated.
This shift risks narrowing access for new workforce entrants and intensifying competition globally, notably as firms leverage offshore talent for cost efficiency.
The evolving market demands recalibration of social mobility and equitable representation amid these changes. As discussions around technology, regulation, and ethics continue, insights from an experienced AI Law firm can help businesses and workers navigate this uncertain landscape.
Authors: Varun Alase, Shantanu Mukherjee, Shruti Gupta
