A year after the International Labour Organization (ILO) published a study stating that generative artificial intelligence is not coming for your job and might even enhance it, the UN body has seemingly taken a U-turn as their latest study suggests AI could "deepen inequality" and negatively impact labour income share.
The study World Employment and Social Outlook: September 2024, which covers 36 countries has found that the labour income share has stagnated and a large share of youth remain out of employment, education or training showing inequality in wealth distribution.
The report attributes this decline in jobs and wealth of labourers to AI and technological advancements, asserting that achieving the Sustainable Development Goals (SDGs) "seems out of reach".
"This is the case for two SDG indicators that we analyse in this brief – the share of youth not in employment, education, or training (NEET) and the labour income share," the report says.
🚨 The global labour income share is declining, putting upward pressure on inequality.
— International Labour Organization (@ilo) September 4, 2024
Meanwhile, a large share of #youth remains out of employment, education, or training.
New @ilo findings 👇
It adds that the global labour income share has been declining for a long time, and recent years have been no exception to this trend, putting upward pressure on inequality, as labour income is more evenly distributed than capital income.
"We analyse the role that technological progress, an important driver among other prominent factors, can have in determining the labour income share. We find evidence compatible with automation-oriented technological progress causing labour income share declines. These findings, based on data from 2003 to 2019, are particularly relevant given recent advances in the artificial intelligence (AI) field," the report adds.
Over the past two decades, the global labour income share has declined by 1.6 percentage points, resulting in a $2.4 trillion annual shortfall in 2024.
— International Labour Organization (@ilo) September 4, 2024
This decline indicates that workers are receiving a smaller share of global income, contributing to rising inequality. pic.twitter.com/OpMGth036O
Workers' income fell by 0.6 percent
As per the study, the total income earned by workers fell by 0.6 percentage points from 2019 to 2022 and has since remained flat – compounding a long-running downward trend. The data presents the portion of total income earned by workers. The study predicts that if the share had remained at the same level as in 2004, labour income would be large by US$2.4 trillion in 2024 alone.
One of the key drivers of this decline as per the study is the COVID-19 pandemic which affected nearly 40 per cent of the reduction in the labour income share occurring during the pandemic years of 2020-2022. This crisis increased the existing inequalities, particularly as capital income continues to concentrate among the wealthiest, undermining progress toward SDG 10, which aims to reduce inequality within and among countries.
The study reports technological advances, including automation, have played a role in this trend. While these innovations have boosted productivity and output, the evidence in the study suggests that workers do not have an equal share. The report also recommends forming comprehensive policies to ensure that the benefits of technological progress are broadly shared as the recent developments in the field of artificial intelligence could deepen inequality, which can put the achievement of the SDGs at risk.
Latest study versus 2023 report
Interestingly, while the latest ILO report has flagged the challenges AI could have on jobs, a 2023 study by the same UN agency had stated that generative AI was "more likely to augment than destroy jobs by automating some tasks rather than taking over a role entirely".
📚 The latest ILO study on Generative AI and Jobs is here.
— ILO Research (@ILO_Research) August 22, 2023
Findings suggest that #AI will complement, not replace, most jobs.
The focus must be on a more human-centered workforce transformation.
𝑹𝒆𝒂𝒅 𝒎𝒐𝒓𝒆 ➡️🔎 https://t.co/ih6IJtgU45 pic.twitter.com/pU0g0FYegh
The study suggested that most jobs and industries are only partly exposed to automation and are more likely to be complemented rather than substituted by the latest wave of Generative AI, such as chatGPT. "The greatest impact of this technology is likely to not be job destruction but rather the potential changes to the quality of jobs, notably work intensity and autonomy," the ILO said in that report.
Recommendations to Governments
In light of their findings in the 2024 report, the ILO maintained that without policy intervention by governments, breakthroughs in generative AI “could exert further downward pressure” on pay packets.
Countries must strive to reduce such inequalities in line with the internationally agreed Sustainable Development Goals (SDGs), says Steven Kapsos, Head of the Data Production and Analysis Unit at the UN agency.
“Over the last two years when we’ve seen inflation rates come down, the labour income has stagnated, so we haven’t seen a recovery… an increase in the share as inflation has come down,” he told journalists in Geneva.
Recommendations from ILO to governments to overcome this trend of rising inequality by 2030 in line with the SDGs include offering universal social protection to workers and a decent minimum wage. In addition, countries should seek to promote policies in support of freedom of association and recognition of collective bargaining, “so that workers and employers can negotiate how to share those productivity gains”, insisted ILO Deputy Director-General Celeste Drake.
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