 "Economic Survey 2024-25: Workers need safeguards against AI disruption")
The government will need to provide safety nets for workers to shield them from the economic and social fallouts that may arise due to artificial intelligence (AI) and its impact on jobs, the Economic Survey for 2024-25 (FY25) has said.
The onus of ensuring the introduction of AI over an optimised period to minimise job loss and its impact lies with both the government and private sector, the Survey noted.
The need and demand for government interventions, especially if companies fall short of handling AI’s impact, could lead to taxation of profits generated from the replacement of labour, the Survey said.
Such interventions, however, could “leave everyone worse off and the country’s growth potential will suffer”, Chief Economic Adviser (CEA) V Anantha Nageswaran said.
Policymakers worldwide — especially in labour-driven, services-dependent economies like India — will, therefore, need to pay attention to the evolving technological landscape and its potential impact on the labour market, the Survey said.
“By fostering collaboration between policymakers, the private sector, and academia, India can align AI-driven innovation with societal goals. Ensuring inclusivity and sustainability in this transition is key to maximising benefits while minimising disruptions,” the Survey stated.
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Though AI has been in development over the last 70 years, the development in the field since 2022 has initiated an “arms race”, with companies scrambling to capitalise on the demand for the technology.
Despite this, concerns over AI’s reliability, resource inefficiencies, infrastructure deficits as well as its experimental nature provide lawmakers with a unique opportunity to act right now.
To minimise the risks associated with AI, and the potential job losses due to the technology, India should also focus on high-quality institutions that can act as mediators while also helping to equip the workforce with the skills to adapt to the changing landscape, the Survey noted.
“The right infrastructure and safety will go a long way in quick adoption of the new frontier technologies by both the industry and the workforce. Again, careful and long-term deployment will help them make the workforce more agile and broad base societal benefits,” said Rumki Majumdar, an economist at Deloitte India.
To ensure an AI-ready workforce, governments as well as private institutions will need to collaborate with edtech platforms, universities, and career transition entities that offer mentorship and upskilling programs, said Milind Shah, managing director of Randstad Digital in India.
“The future of work isn’t about replacing jobs. It’s about evolving them, and with the right investments in education and skilling, India’s workforce can lead this transformation,” Shah said.
These stewarding institutions, however, will need to cut across industries and sectors instead of focusing their energies on India’s services sector, which, despite being one of the biggest employers in India, uses a lot of low-skill, low-value-add workers, the Survey noted.
For example, in human-centric sectors such as healthcare, health insurance, and education, these institutions can help mitigate adverse effects that may arise due to biases in AI models. These institutions must also work to advance the social acceptability of AI by promoting the right levels of transparency and accountability, the Survey said.
“It is important to clarify that stewarding in this case does not imply placing restrictions on innovation or dictating a narrow set of applications for technology. It implies that policymakers demonstrate a certain degree of cognisance when it comes to emerging technologies, so that when the need arises, they stand well-placed to mitigate any adverse effects that emerge as by-products of technological applications,” the Survey stated.
Despite the fast-paced developments in the field of AI, India has the time to build supporting institutions needed to ably help its workforce as technological revolutions have to overcome several obstacles such as changing the fundamental nature of the way technology is demanded by users, reorienting macroeconomic processes by changing investment habits, and the education and quantity of labour, the Survey said.
Though large-language models can perform and ace tasks such as achieving high scores in tests and exams, they will need to prove their feasibility, effectiveness, and usefulness in addressing real-world problems to qualify as a general-purpose technology and find mass acceptance.
“For instance, the pursuit of smarter AI models promises to propel the applicability of self-driving cars but identifying why they are needed, their cost-effectiveness, and social acceptability remains an ongoing challenge,” the Survey said.
Digital economy impact
The digital economy offers India a unique opportunity to bridge the gender gap by allowing women to overcome barriers such as unequal access to education, limited job opportunities, cultural bias, mobility, and time restrictions, the Economic Survey FY25 has said.
“Such barriers frequently exclude women from participating in traditional labour markets, particularly in developing economies. The key benefit of the digital economy is that it allows and encourages remote working, where gender may not matter as much as in the physical economy,” the Survey noted.
These opportunities, in turn, allow women in developing countries to have increased financial independence and empowerment. To ensure the long-term benefits of digitalisation on employment, the government must work on the right policies to address potential negative impacts on labour share due to automation and digital integration, the Survey said.
In a nutshell
> 2021-2022: AI patents granted globally increased 62.7% to over 62,000
> 2022-2023: Global private investment in Gen AI increased from $3 billion to $25.2 billion
> 2021-2023: Global corporate investments in all types of AI at $761 billion
Job losses due to AI
(Estimates by experts)
75 million jobs globally at complete risk of automation: ILO
300 million full-time jobs exposed to AI-driven automation: Goldman Sachs
30% current work hours could be automated by generative AI by 2030: McKinsey
57% of occupations in emerging countries to be affected by higher Gen AI adoption: Ernst & Young
68% workers expect jobs to be automated by AI within 5 years: IIM Ahmedabad