FINANCIAL TECHNOLOGY
ARTIFICIAL INTELLIGENCE : JOBS CREATED OR JOBS DESTROYED ?
The launch of ChatGPT was an inflection point for artificial intelligence ( AI ) because of what it can do , and the impact those activities could have on our daily lives . ChatGPT is the first public Large Language Model – a type of generative AI . Generative AI can produce new and original content without human intervention as opposed to previous ‘ rules-based ’ AI which requires human input to decide the parameters for decision-making . Consulting firm Accenture estimated that around 40 % of working hours could be impacted by AI Language models1 . Earlier in the year , ChatGPT even passed the bar exam ! It has the ability to change the nature of jobs and economies in the years to come , but there are also concerns about intellectual property , data security , plagiarism and unemployment . When we develop the mix of investments in each portfolio , we consider how structural issues like technological advancements and changing labour markets will impact economies and how that influences different financial markets . That means considering questions like : How productive will workers be ? How will new technology impact productivity ? How will technology impact jobs ? AI impacts the answers to these questions , and following the launch of ChatGPT – what we think to be AI ’ s first key inflection point – we have been asking ourselves how we think AI will impact the labour market .
Productivity gains Technological advancements , such as AI , promote economic growth and improve living standards . We think generative AI has the potential to drive innovation and create new industries , giving opportunities for new projects . An upward shift in productivity may provide a multiplier effect for economic activity . A repetitive task , such as answering customer questions , could be completed by AI . This could allow people to focus on higher value-add tasks and create an efficiency gain . Improved efficiencies mean earnings increase and costs decrease , leading to wealth gain . This increases discretionary spending in services leading to further labour demand . Of course , this is reliant on the human being able to retrain into a higher value-add task and not being unemployed .
Jobs created or jobs destroyed ? We don ’ t think the adoption of AI is likely to increase unemployment . There will inevitably be jobs that become scaled down or even obsolete , but there is no significant evidence to suggest that new technologies lead to enduring unemployment . This is because :
• existing jobs are not all completely displaced but transferred through retraining
• new technology can unlock potential for creating new jobs and even new industries . For example , the introduction of the smartphone created new jobs in application development and user interface design
• higher productivity can lead to wealth gains , which increases spending , leading to further labour demand from companies
• and specifically with AI , its weaknesses are that it can be poor at ensuring the quality , accuracy and originality of its output . This means generative AI should not necessarily be seen as something that will replace people in the workplace . We think policymakers and regulators should be involved in the adoption of AI . Ensuring appropriate guardrails are in place is crucial to maximising the productivity gains and minimising the impact to those most vulnerable .
Forward-looking asset allocation Our approach to asset allocation focusses on where we see returns coming from over the next 10 years . Doing this effectively means spending time understanding technological changes and how these will impact jobs and productivity . Technological advancements have helped reduce costs for businesses and consumers . We think AI has the potential to change the nature of our economies in the years to come , and given some of the structural headwinds we face , such as low productivity growth and ageing population , a leap in technological development may offer a new source of growth .
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1 “ A new era of generative AI for everyone ”, Accenture , 5 May 2023
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