The advent of AI

A new report by the International Monetary Fund (IMF) has painted a bleak picture of the future with the advent of artificial intelligence or AI, which refers to computer systems and models capable of performing tasks that usually require human intelligence.

According to the report, as much as 14 percent of the Filipino workforce could be replaced by AI as the technology continues to evolve.

It estimates that four out of 10 or 36 percent of jobs in the Philippines are highly exposed to AI. However, more than half of these highly exposed jobs fall under the highly complementary category meaning that AI could actually help workers perform tasks more efficiently rather than replace them altogether.

But the real concern lies in the remaining 14 percent which the IMF has classified as having low complementarity with AI.

One of the Philippines’ most vital industries, the business process outsourcing (BPO) sector, is among those having high exposure and low complementarity to AI, as advances in AI-powered chatbots and virtual assistants threaten to replace many customer service positions. Other roles that are at risk include sales and service jobs, many of which involve routine tasks that AI can perform efficiently.

Those with high exposure but high complementarity with AI include managers, professionals and technicians while those with high exposure but low complementarity include clerical support. Those with low exposure, meaning they are at less risk of being replaced by AI, are elementary occupations, skilled agriculture, craft and trades and machine operators.

The IMF also found that half of women’s jobs are highly exposed to AI, compared to only a quarter of men’s roles. It explained that it is due to the fact that more women are being employed as clerical support, service and sales workers, whereas men have a higher share in trades, agriculture, machine operations and elementary occupations, which are less likely to be impacted by AI at this stage.

The IMF said that to ensure that the gains from implementing AI are widely shared, authorities will need to invest in digital infrastructure and education and strengthen the social safety net.

It likewise noted that local authorities concur that skills gaps, including those related to AI, and the high cost of power are the biggest bottlenecks to greater private sector investment.

The IMF, in its country report, said that AI would have a potential impact on the global labor market, citing many studies predicting the likelihood that jobs will be replaced by AI, but in many cases will likely complement human work.

It revealed that almost 40 percent of global employment is exposed to AI, explaining that historically, automation and information technology have tended to affect routine tasks.

But one of the things that sets AI apart, it said, is its ability to impact high-skilled jobs. As a result, advanced economies face greater risks from AI, but also more opportunities to leverage its benefits compared with emerging markets and developing economies.

In advanced economies, it said that about 60 percent of jobs may be impacted by AI. Roughly half the exposed jobs may benefit from AI integration, enhancing productivity while for the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring while in the most extreme cases, some of these jobs may disappear, it warned.

In emerging markets and low-income countries, on the other hand, AI exposure is expected to be 40 percent and 26 percent, respectively, the IMF estimates, adding that many of these countries do not have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time, the technology could worsen inequality among nations.

An article by IMF’s Kristalina Georgieva also noted that younger workers may find it easier to exploit opportunities offered by AI while older workers could struggle to adapt.

She said that AI is being integrated into businesses around the world at remarkable speed, underscoring the need for policymakers to act.

Meanwhile, the JobStreet Decoding Global Talent Report revealed that nearly half or 46 percent of professionals in their 20s or so-called Gen Zs are worried about technology putting them out of work.

According to the 2024 edition of the Government AI Readiness Index published by Oxford Insights, the Philippines is only 56th out of 188 countries.

Cisco Philippines in its 2024 AI Readiness Index also revealed that only 22 percent of organizations in the Philippines are fully ready to utilize AI although many are eager to increase AI investments in the next five years.

Cisco’s study showed that 98 percent of Filipino organizations reported increased urgency to deploy AI over the past year while 65 percent of them allocated 10 to 30 percent of their information technology budgets to AI deployment.

A report by the Philippine Institute for Development Studies (PIDS) revealed that globally, AI is expected to contribute around $15.7 trillion to the economy by 2030. The Asia-Pacific region is projected to see its AI market growing to $136 billion by 2025, driven by the widespread adoption of AI technologies across multiple sectors, including healthcare, financial services, education and telecommunications.

According to Statista, the global AI market size was estimated at around $200 billion in 2023 and is projected to surpass $1.8 trillion by 2030.

Meanwhile, the International Data Corp. (IDC) forecasts worldwide spending on AI-centric systems to reach $154 billion in 2023, a 26.9 percent increase from the previous year. AI spending is expected to exceed $300 billion by 2026, growing at a compounded annual growth rate of 27 percent from 2022 to 2026.

This growth, the report explained, is being driven by advancements in AI technologies, including machine learning, natural language processing, computer vision and robotics.

Industries at the forefront of AI adoption include banking, retail, professional services and manufacturing.

The PIDS recommends that the government develop detailed frameworks for responsible AI development. This includes establishing clear guidelines on AI ethics, data privacy and algorithmic transparency, with regulations flexible enough to accommodate rapid technological changes while ensuring public safety and trust.

AI offers so much potential yet, business organizations and workers alike likewise need to be ready to harness this potential. Otherwise, the dangers posed by AI can become realities and the disadvantages can outweigh the benefits.

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