Brace for the impacts of AI on labour legislation, GDP

by | Apr 20, 2023 | Insights

By Mike Styer, General Manager at Breakpoint

Artificial Intelligence (AI) is on an upward trajectory in its hype cycle, promising to revolutionise every sector. But while the first world assesses the potential and possible effects of AI on particular jobs, AI in South Africa could bring with it even more far-reaching and potentially devastating impacts on areas such as unemployment, labour legislation, social grants and even investment and GDP growth.

AI is now progressing at a pace and scale that outstrips that of automation, which was once seen as a key threat facing South African workforces. It has the potential to reduce costs, fast-track innovation and improve efficiency – without the need for scores of clerical workers, manual labourers and low-skilled employees. For organisations, achieving profit without the challenges and costs of human labour could be a compelling proposition. But for a country like South Africa, which is already beset by soaring unemployment and poverty, a mainstreaming of AI and automation could prove disastrous.

AI and the job market

The Labour Research Service notes that automation alone could replace the jobs of 4.5 million South Africans. Many of these people are low-skilled workers and labourers.  AI can take this scenario further, replacing the entry-level white-collar jobs many young graduates currently hold, as well as many mid-level corporate jobs. A WEF Future of Jobs Report in 2020 estimated that AI would replace around 85 million jobs by 2025. The pace of change appears to have accelerated, with Goldman Sachs reporting recently that AI and automation could replace the equivalent of 300 million full-time jobs, and two-thirds of occupations could be partially automated. The report said tools using advances in natural language processing could drive a 7% (almost $7 trillion) increase in global GDP and lift productivity growth by 1.5 percentage points over 10 years. The general consensus globally is that while automation and AI will replace existing jobs, new jobs will emerge as a result.

However, the challenge with this is that many – or indeed most – South Africans lack the specialist digital skills that will be in demand in an AI-enabled future.

This raises concerning questions about what it all means for South Africa’s labour force. Are we ready as a country to weather the changes brought on by AI?

Any attempts to counter unemployment could backfire. Businesses that can get the job done cheaper, more efficiently, and without human workers will do so. They could simply offshore their AI workforces and bypass local labour legislation and local labour. Too much government interference could derail new business development and investment entirely.

On the other hand, thriving local businesses built on AI – even without employees – could boost GDP and tax revenues, contributing to the fiscus and ultimately the implementation of universal basic income grants.

There is also cause for concern on the ethics front. AI is guided by fact, not ethics and emotions. Many things are legal, but not always ethical, and allowing AI to make key decisions could be dangerous.

AI boosting work

Despite concerns about its possible negative impacts, there is no doubt that AI can revolutionise work and daily life.

We are already seeing great strides in the way AI is used, and we can expect even greater progress as it moves beyond using existing databases, to drawing from multiple data sources and actually broadening and enriching the intelligence provided. For example, in the retail sector, AI is currently making supply chains, stock management and the customer experience better. Research and analysis that previously might have taken humans with spreadsheets weeks or even months is now achieved in the blink of an eye.

In research and health sciences, AI can analyse decades of data and research findings to offer meaningful information that speeds up progress and new developments. AI enables surgeons to 3D model complex physical problems and plot treatment plans and possible outcomes, using robots to perform complex and precise surgeries.

In software development, journalism, marketing and the creative arts, AI is already proving its worth – if not as a replacement for humans, certainly as a support tool.

AI takes on repetitive tasks, accurately, around the clock. Where humans would not enjoy continual analysis of how many basic products have been sold, where and when, in order to tweak supply chain and stock planning, AI never gets bored and just keeps getting better at it.

AI will inevitably find its place in every sector, and we should all be preparing now to adapt to the changes it will bring.