Artificial intelligence potential impact on economy and jobs

Author Moonshot.news

Published on: 16/06/2023

Generative AI’s impact on productivity could add trillions of dollars in value to the global economy. It could add the equivalent of $2.6 trillion to $4.4 trillion annually across 63 use cases analysed, consultancy McKinsey says in a report. This would increase the impact of all artificial intelligence by 15 to 40%. Current generative AI and other technologies have the potential to automate work  that takes 60 to 70% of employees’ time today. 

The report says this estimate would roughly double if you include the impact of embedding generative AI into software that is currently used for other tasks beyond those use cases.

“The era of generative AI is just beginning. Excitement over this technology is palpable, and early pilots are compelling. But a full realization of the technology’s benefits will take time, and leaders in business and society still have considerable challenges to address”, the report says.

“These include managing the risks inherent in generative AI, determining what new skills and capabilities the workforce will need, and rethinking core business processes such as retraining and developing new skills.”

FOUR AREAS

About 75% of the value that generative AI use cases could deliver is across four areas: Customer operations, marketing and sales, software engineering, and R&D.

“Across 16 business functions, we examined 63 use cases in which the technology can address specific business challenges in ways that produce one or more measurable outcomes. Examples include generative AI’s ability to support interactions with customers, generate creative content for marketing and sales, and draft computer code based on natural-language prompts, among many other tasks.”

The report says generative AI will have a significant impact across all industry sectors. 

“Banking, high tech, and life sciences are among the industries that could see the biggest impact as a percentage of their revenues from generative AI.” 

As an example is mentioned that across the banking industry the technology could deliver value equal to an additional $200 billion to $340 billion annually if the use cases were fully implemented. In retail and consumer packaged goods, the potential impact is also significant at $400 billion to $660 billion a year.

ANATOMY OF WORK

“Generative AI has the potential to change the anatomy of work, augmenting the capabilities of individual workers by automating some of their individual activities. Current generative AI and other technologies have the potential to automate work activities that absorb 60 to 70% of employees’ time today. 

Generative AI has more impact on knowledge work associated with occupations that have higher wages and educational requirements than on other types of work.

“The pace of workforce transformation is likely to accelerate, given increases in the potential for technical automation.”

“Half of today’s work activities could be automated between 2030 and 2060, with a midpoint in 2045, or roughly a decade earlier than in  previous estimates.”

The report says generative AI can substantially increase labor productivity across the economy, but that will require investments to support workers as they shift work activities or change jobs. 

“Generative AI could enable labour productivity growth of 0.1 to 0.6% annually through 2040, depending on the rate of technology adoption and redeployment of worker time into other activities.”

“Combining generative AI with all other technologies, work automation could add 0.2 to 3.3 percentage points annually to productivity growth. However, workers will need support in learning new skills, and some will change occupations. If worker transitions and other risks can be managed, generative AI could contribute substantively to economic growth and support a more sustainable, inclusive world.”