August 2, 2023

Does AI create more jobs than it destroys?

In the dawn of the digital age, one question is at the centre of our collective consciousness - the question of artificial intelligence (AI) and its impact on our world of work.


In the dawn of the digital age, one question is at the centre of our collective consciousness - the question of artificial intelligence (AI) and its impact on our world of work. As we stand at the beginning of the fourth industrial revolution, we must now clarify: Does AI create more jobs than it destroys? This is a question humanity has had to ask itself before every technological revolution or innovation phase - and so far it has gone relatively well. The challenge with AI, however, is that this development is not linear, but exponential. And we humans are notoriously bad at thinking exponentially.

As we explore, we will navigate the maze of AI, which will erase traditional roles while creating new ones. A dichotomy as well as a paradox as fascinating as it is worrying. Let's start with the status quo.

The impact of AI in the world of work

Artificial intelligence now permeates every facet of our lives. And in many areas, it has been doing so for longer than we thought: from voice assistants like Siri or Alexa, to chatbots and navigation programmes, to algorithms for predicting market trends or purchasing behaviour—AI is no longer a distant concept, but a longer-standing part of our reality. But with the release of ChatGPT in Nov 2022 (and all subsequent public AI applications), applications of this technology are evolving at an unprecedented pace—and this is creating a rapid wave of disruption that is causing significant disruption in the labour market. In recruiting, too.

The labour market has always followed the currents of technology and innovation, and AI is no exception. Traditional jobs are being automated, tasks are becoming redundant and entire industries are transforming. And this is where applications like ChatGPT, Midjourney, DALL-E and GitHub Copilot come in: copywriting, marketing, programming or graphic design—there is a monumental shift happening in these industries right now. But like any technology, AI is a double-edged sword, destroying old jobs and methods while creating new ones. At this crossroads, it is critical to look at both sides of the coin. Let's look at the dark side first and examine how AI is leading to job destruction.

The Dark Side of AI – Job Destruction

As we make our way through the digital landscape, we encounter the shadow that AI casts on the labour market—the spectre of job destruction. AI-driven automation is replacing human labour across a wide range of industries. From assembly lines in manufacturing to ever-improving chatbots in customer service, AI is proving to be an excellent replacement for tasks that used to be done by humans.

Even white-collar jobs that were once considered immune to automation are faltering. These include call centre work, accounting, clerical, customer service, secretarial and more. Sophisticated algorithms are now able to generate reports, analyse data and make decisions—tasks that used to be the exclusive preserve of skilled professionals. And at this point, this particularly affects middle management, who have to master precisely these activities.

Furthermore, as already mentioned, creative skills such as copywriting, marketing, programming or graphic design are targeted by artificial intelligence and often produce high-quality results in these areas. And we all believed that creativity was humanity's last bastion against artificial intelligence.

The implications are unmistakably profound. As AI continues its inexorable march, the spectre of job destruction looms large, casting a long shadow over the workforce. But is that the whole picture? Not at all. Every shadow also has a source of light  in this case, the creation of new jobs in the wake of the AI wave.

The good side of AI: job creation

While threatening security (=destroying jobs) is a primal fear, the reality looks a little rosier: New jobs are being created. And thus more than those that are being eliminated. The World Economic Forum (WEF) estimated in 2020 that 12 million more jobs will be created than destroyed by 2025 (see Fig 2).

German Bank economist Jim Reid also agrees, pointing to our history: “History teaches us, however, that technology does not lead to unemployment”. Figure 1 illustrates that unemployment fluctuates in response to business cycles, not technological waves.

(Fig 1: Unemployment as a function of business cycles, DE Research via BusinessInsider)

Consider the rise of data science, AI ethics or machine learning engineering—professions that didn't even exist a few decades ago. These professions are the result of the AI revolution and require a profound understanding of AI and its applications. As companies increasingly use AI, the demand for skilled workers who can bridge the gap between technology and business strategy is also increasing—further evidence of AI's potential to create jobs.

The emergence of the jobs just mentioned was predictable. But beyond that, AI also creates new jobs indirectly. The automation of routine tasks frees up human workers to focus on more complex, creative and ultimately more fulfilling tasks. This change leads to the creation of jobs that rely on unique human skills such as emotional intelligence, creativity and complex problem solving. And mostly in combination with AI tools.

(Fig 2: New jobs until 2025, WEF)

Goodbye skills shortage?

There is another confident aspect to the shortage of skilled workers, which is reaching frightening records, especially in IT in Germany. Because vacant positions are expensive. Deutsche Bank reckons that AI can close the skills gap. At least in the short term. The use of AI makes programming much easier and thus makes employees much more productive. However, AI in programming is still in its infancy and often produces code that does not work. On the other hand, people like Stability AI CEO Emad Mostaque say: “In five years there will be no (human) programmers”.

In areas such as care and the health system, AI can also help the often overburdened staff and reduce administrative tasks to a minimum. This means that the relief in all professions in demand leads to a reduction in the shortage of skilled workers.

(Fig 3: Occupations with the largest skills gaps, Deutsche Bank)

However, these positive sides of AI are not without challenges, which can also be seen in Figure 2. Let us therefore next address the important question: what skills do people need to succeed in an AI-driven labour market? The answer to this question reveals another facet, one that underscores the importance of adaptability in the age of AI.

Successful in an AI world: The new skill set

On the big chessboard of the AI-driven labour market, people are not mere pawns, but active players endowed with unique skills. And the point is to play these qualities to the full.

In this new world order, technical skills related to AI and data analytics are unsurprisingly of great value. But equally critical now are the “soft” skills—creativity, emotional intelligence, critical thinking and complex problem-solving. These are skills that will remain uniquely human, at least for the foreseeable future, and that are increasingly in demand in an AI-driven world. And according to the WEF, these skills also top the ranking of the most sought-after skills of the future (see Figure 4 below). And this is the big opportunity for many people who are less comfortable with the technical aspects.

(Fig 4: Top 10 skills 2025, WEF)

However, the steep evolution of AI presents another challenge—the need for constant learning and adaptability and resilience. As AI evolves, so must our skills. Lifelong learning, once a noble goal, is now a survival strategy in the AI-driven job market. Moreover, people who do not engage with AI are largely being replaced professionally by those who do.

But what does this mean for society in general? In the next chapter we will look at the impact of AI on the world of work, not only on individuals but also on society.

AI's Ripple Effect: The Societal Impact

The impact of AI goes far beyond the boundaries of the labour market and also affects society as a whole. As AI reshapes the world of work, it also shakes up societal norms and structures.

One of the most critical societal impacts of AI is economic inequality. As AI automates jobs, especially low-skilled jobs, it risks widening the gap between rich and poor. Those with the skills to succeed in an AI-driven labour market could see their wealth increase, while those whose jobs are automated could face unemployment and financial hardship.

It is therefore essential that policymakers take measures to mitigate the negative effects of the introduction of AI. This includes, above all, measures to qualify the workforce and to support employees who lose their jobs due to AI. Topics such as the universal basic income due to AI are also getting new wind.

The future of AI, the workplace and society

We are finding that the universe of AI is not just about jobs. It is a reflection of our society, our values, and our vision for the future.
As we navigate this AI landscape, it is important to remember that we are not just spectators, but active participants. Artificial intelligence is a topic that will encompass all sectors. Policymakers must become active—but above all, we ourselves must also actively embrace change.

This change is uncertain, but nevertheless promises a positive and exciting future. History teaches us that even this technological revolution can be mastered without causing great damage. It is important for us to maintain our adaptability—because this ability has brought us through a good 300,000 years of human history.

In the dawn of the digital age, one question is at the centre of our collective consciousness - the question of artificial intelligence (AI) and its impact on our world of work.
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