Impact of AI on jobs: Substitution or displacement?

  • Brookings Institution notes every tech shift tends to create more jobs than it destroys
  • Pikom maps out four courses of action, including to equip workforce with AI-related skills

The National Tech Association of Malaysia (PIKOM) expects AI to become pervasive across the domestic business landscape over the next five years, especially since both employers and employees seem to be embracing AI.

In this third column of The Sharp End, we have to address the launch of the natural language processing tool ChatGPT in November last year that has intensified the debate over the impact of generative artificial intelligence (AI) on jobs.

A worldwide concern, this issue is beginning to rear its head in Malaysia where the Covid-19 pandemic appears to have accelerated the deployment of chatbots and other AI tools among larger companies, just as it has in the developed world.

On the global front, generative AI is increasingly viewed as a grim reaper of knowledge jobs in the same way as automation has been to manual labour. According to American news portal, AI tools can already perform the functions of radiologists and potentially the tasks of coders, accountants, paralegals, graphic designers and journalists.

This perception is echoed by Brookings Institution, which highlighted the prospect that AI could soon displace as many higher-qualified professionals as lower-skilled drivers and retail workers. However, the US think tank has soothed concerns by pointing out that every technology shift tends to create more jobs than it destroys.

According to the World Economic Forum (WEF), AI and autonomous machines could replace 85 million jobs, but create 97 million new positions by 2025 in an evolving division of labour between humans, machines and algorithms. In other words, it’s a case of job substitution instead of merely job displacement.


The scenario in Malaysia

Malaysian and Malaysian-based companies, particularly the larger and more prominent ones, have been progressively incorporating AI into their processes and procedures. They include telecommunication entities such as Maxis and Celcom, financial institutions the like of Maybank and CIMB, e-hailing and e-delivery platforms as Grab and e-commerce marketplaces Lazada and Shopee.

Smaller companies are also leveraging AI tools for various functions, initially as a response to pandemic-related restrictions and subsequently to boost productivity and slash overheads in the form of employee wages.

The National Tech Association of Malaysia (PIKOM) expects AI to become pervasive across the domestic business landscape over the next five years, especially since both employers and employees seem to be embracing AI.

Microsoft’s Work Trend Index 2023 found that while 62% of Malaysian employees were concerned over being replaced, more than 80% were only too happy to delegate tasks to AI to lessen their workloads. And from the global survey results, more managers in Malaysia as compared to elsewhere felt AI could boost productivity without cutting employee headcount.

PIKOM understands that while some companies recognize the value of AI in terms of cost savings and efficiency, there are still many that are either ignorant of the technology or remain skeptical over its implementation.

Among the concerns of this latter group are the complexity of AI technology, data privacy and security and ethical considerations. Nevertheless, PIKOM believes that most if not all businesses will eventually integrate AI into their operations once it has demonstrated its uses and value.


Jobs substituted and created by AI

Naturally, jobs at risk from AI are the same in Malaysia as elsewhere. While there does not appear to have been any significant job displacement as yet, certain categories of jobs are on track or could be overridden by AI.

They include the obvious ones as jobs in manufacturing, warehousing, data entry, customer service and certain administrative positions

On the flip side of the coin, AI is creating a host of job opportunities and enhancing existing positions across multiple industries. In the past few years, companies have been increasingly hiring data scientists, analysts and engineers to curate data sets and derive insights require for better decision-making, particularly in the area of regulatory compliance and risk management at financial institutions.

As AI technology evolves, so do cybersecurity threats. Hence, companies are also hiring cybersecurity specialists who can develop AI-powered security solutions for greater protection.

The growing demand for AI-related jobs is also reflected by the rise in salaries for these positions, as reported presented in the table extracted from PIKOM’s Digital Job Market Outlook 2022, published in August last year.


What needs to be done to cushion the impact of AI job substitutions?

The burning question of how to reduce the effects on AI integration without disrupting the talent market. PIKOM has mapped out the following courses of action:

  • Investment in training programmes is, of course, essential in order to equip our workforce with AI-related skills. This would enable employees to transition into new roles instead of hiring new talents.
  • Implementing AI systems in phases to allow a smoother deployment of AI and related technologies in collaboration with talents. AI can automate tasks and augment human capabilities to enable employees to focus on more complex and strategic work.
  • It is critical to focus on ethical considerations in developing and deploying AI systems. The workforce must be at the forefront in ensuring transparency, fairness and accountability in all AI algorithms to mitigate any potential negative impacts on the labour market.
  • Companies can refocus job functions involving creativity, innovation, critical thinking, and emotional intelligence. Certain automated processes in customer experience may be layered with elements of human interactions.


What can governments do?

London-based Future Advocacy has outlined steps that governments can take to maximize the opportunities and minimize the risks of automation and AI. It has called for:

  • Detailed research to assess which jobs are most at risk, targeted strategies to support businesses that retrain employees.
  • Adapting education systems to prioritize creativity and skillsets deemed less replaceable by automation and lifelong learning; and
  • Development of alternative income and taxation models to ensure a fairer distribution of wealth.

The introduction of generative AI is bound to escalate and accelerate in the intermediate period. Employers and employees need to confront the relevant issues and work towards a work environment that integrates human and non-human intelligent systems. That is our future and we need to get ready!

Woon Tai Hai is chairman of Pikom's Research Unit and was also a past two term chairman of Pikom from 2010 to 2014.


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