AI & Future of Work, first part.

Artificial Intelligence (AI) is a transformative technology that is significantly reshaping industries, automating tasks, and redefining careers across the globe. It has not evolved to replace anyone. From healthcare to finance, AI applications are enhancing operational efficiencies, driving innovation, and providing data-driven solutions to complex challenges. The rapid integration of AI systems into various sectors is not only improving productivity but also revolutionizing customer experiences and business models, marking a pivotal moment in the evolution of technology as you can see in the following timeline and evolution:

The significance of AI stems from its ability to process vast amounts of data, identify patterns, and make predictions, thus enabling organizations to optimize their operations and make informed decisions. For instance, AI-powered systems are being utilized in manufacturing to enhance quality control and predictive maintenance, while in retail, they facilitate personalized shopping experiences and inventory management as you can see in the second part of the following timeline and actual evolution:

As AI continues to advance, it is anticipated to generate substantial economic benefits, with executives expressing optimism about the potential for revenue growth driven by AI applications in each and every business model, as well as their respective economies normally called level of work [LoW] as you can see:

Reshaping the Nature of Work

In a new analysis, IMF staff examine the potential impact of AI on the global labor market. Many studies have predicted the likelihood that jobs will be replaced by AI. Yet we know that in many cases AI is likely to complement human work. The IMF analysis captures both these forces.

The findings are striking: almost 40 percent of global employment is exposed to AI. Historically, automation and information technology have tended to affect routine tasks, but one of the things that sets AI apart 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 market and developing economies.

In advanced economies, about 60 percent of jobs may be impacted by AI. Roughly half the exposed jobs may benefit from AI integration, enhancing productivity. 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. In the most extreme cases, some of these jobs may disappear.

In emerging markets and low-income countries, by contrast, AI exposure is expected to be 40 percent and 26 percent, respectively. These findings suggest emerging market and developing economies face fewer immediate disruptions from AI. At the same time, many of these countries don’t 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.

Al's impact on jobs

Most jobs are exposed to Al in advanced economies, with smaller shares in emerging markets and low income countries.

AI could also affect income and wealth inequality within countries. We may see polarization within income brackets, with workers who can harness AI seeing an increase in their productivity and wages—and those who cannot falling behind. Research?shows that AI can help less experienced workers enhance their productivity more quickly. Younger workers may find it easier to exploit opportunities, while older workers could struggle to adapt.

The effect on labor income will largely depend on the extent to which AI will complement high-income workers. If AI significantly complements higher-income workers, it may lead to a disproportionate increase in their labor income. Moreover, gains in productivity from firms that adopt AI will likely boost capital returns, which may also favor high earners. Both of these phenomena could exacerbate inequality.

In most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers must proactively address to prevent the technology from further stoking social tensions. It is crucial for countries to establish comprehensive social safety nets and offer retraining programs for vulnerable workers. In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.

An Inclusive AI-Driven World

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

To help countries craft the right policies, the IMF has developed an AI Preparedness Index that measures readiness in areas such as digital infrastructure, human-capital and labor-market policies, innovation and economic integration, and regulation and ethics.

The human-capital and labor-market policies component, for example, evaluates elements such as years of schooling and job-market mobility, as well as the proportion of the population covered by social safety nets. The regulation and ethics component assesses the adaptability to digital business models of a country’s legal framework and the presence of strong governance for effective enforcement.

Using the index, IMF staff assessed the readiness of 125 countries. The findings reveal that wealthier economies, including advanced and some emerging market economies, tend to be better equipped for AI adoption than low-income countries, though there is considerable variation across countries. Singapore, the United States and Denmark posted the highest scores on the index, based on their strong results in all four categories tracked.

Advanced-economy advantage

Wealthier countries often are better equipped for Al adoption.

However, the rise of AI also raises critical ethical and societal questions. Concerns surrounding algorithmic bias, data privacy, and the transparency of AI decision-making processes highlight the need for responsible deployment and regulation of AI technologies. Studies indicate that a significant portion of the public harbors apprehensions about the implications of AI on society, emphasizing the urgency for ethical guidelines and accountability in AI development.

Highlights: Artificial intelligence is a specialty within computer science that is concerned with creating systems that can replicate human intelligence and problem-solving abilities. They do this by taking in a myriad of data, processing it, and learning from their past in order to streamline and improve in the future. A normal computer program would need human interference in order to fix bugs and improve processes.

Highlights: Implementing AI in customer services ensures one goal: that your best agents or human resources are available for more complex customer issues, such as account recovery, payment issues, or any such substantial issues.

Ai's impact on Emerging Markets

Artificial Intelligence (AI) relieves them of more complex tasks and boosts the company’s overall productivity. With generative AI development services, you can get custom software developed to cater to your customer service needs. Chatbots are the best way your organization can be of service to customers with technology all around the clock. These conversational AI-powered chatbots are used to troubleshoot basic customer problems and save the customer representatives for more complex issues like a stuck customer with unresolved queries. Chatbots are available 24/7 for customers, which saves up on additional cost and time.To project future demand and optimize inventory levels, artificial intelligence (AI) systems use past sales data as well as external factors.

AI-driven inventory management solutions are used by retailers to cut down on surplus inventory, minimize stockouts, and enhance supply chain effectiveness. Customers can now use images or photos instead of text-based searches when searching for products as a result of AI-powered visual search technology. AI-driven visual search engines are used by retailers such as ASOS and Pinterest to help users easily locate new products, explore style inspiration, and find visually comparable products. Companies like Warby Parker and IKEA leverage AI-powered AR tools to offer virtual try-on experiences, allowing customers to see how products look and fit into their homes. A supply chain is the backbone of distribution and can make or break any business. Companies with a sound supply chain grow swiftly. AI is streamlining the: AI-powered Chatbots or Virtual Assistants like Ava on Navan help travelers book their corporate trips in advance.

Using natural language processing, virtual assistants can provide instant assistance. Conversational AI chatbots answer inquiries effortlessly. Examples include Expedia’s virtual travel assistant, which helps users search for flights, hotels, and rental cars using voice commands, and KAYAK’s chatbot, which assists with travel planning and booking. AI-driven customer support improves response time and increases customer engagement. Automating the booking modifications, inquiry handling, and other tasks reduces human input, freeing human resources for even complex tasks like face-to-face customer handling. Hilton’s AI-powered concierge robot, Connie, assists guests with common questions and requests during their hotel stay, such as restaurant recommendations and local attractions.

Artificial intelligence (AI) tools, such as predictive technology, can assist students with tasks, such as navigating the educational platforms their school uses, locating resources for assignments, and receiving timely responses to inquiries. Nowadays, schools are equipped with smart systems and online portals to manage the lessons and curriculum. Hiring generative AI engineers who are skilled with AI tech can design solutions like SMS bots for intelligent student-teacher assistance. With the use of immersion technologies, students can gain practical experience in a low-risk setting by simulating real-world scenarios, including technical experiments and medical simulations. Conglomerate Siemens implements predictive maintenance systems in their manufacturing plants to detect system failures in advance.

By analyzing the data from sensors from different machinery, the AI-powered tool can detect potential breakdowns and schedule maintenance activities. AI algorithms analyze vast amounts of manufacturing data for inefficiencies and optimize overall operational efficiency. Optimizing these factors drastically reduces the cost and increases the throughput. General Electric (GE) deploys AI for process optimization to identify the bottlenecks and increase the throughput.

Agriculture revolutions introduced tech to agriculture, and the world saw different varieties and breeds of grains. With the presence of AI in agriculture, new and innovative techniques have come to light. The rapid growth of IoT use cases in AI systems, which enable communication between automobiles, smartwatches, and smartphones, has made autonomous driving much safer and more pleasurable.

Since the introduction of IoT to the automotive sector, cars have evolved into “smart cars” enabling connections for smart gadgets. For instance, connected cars can communicate with one another to maintain a safe distance while driving. Connected cars also help traffic managers better control traffic flow and provide a more complete picture of the condition of the roads. ITMS is traffic management that promotes safe transportation and mitigates collision risks – popularly known as ITMS or ATMS (Advanced Traffic Management System), it works on real-time traffic data.This approach analyzes real-time traffic data from GPS and security cameras using artificial intelligence (AI). AI algorithms process this data to maximize traffic flow, reduce congestion, and enhance road safety. Adaptive traffic signal management systems automatically modify signal timings based on actual traffic circumstances to reduce bottlenecks.

Drivers are recommended alternate routes by dynamic route planning, which shortens travel time. Moreover, AI-powered accident detection systems locate events quickly, allowing for effective rerouting and timely reactions. Singapore and the USA are some countries that are utilizing AI tech to control the traffic management system and safeguard the risks of accidents.When intelligent routing is used in a call center, hold times are significantly decreased since consumers are quickly directed to their destination, which may include numerous call centers and branches if necessary. It routes calls based on their intent by utilizing information about the caller’s online activities, including the websites they visited. Additionally, relevant information about callers and their intentions is immediately provided to agents. This contributes to increased agent productivity and enhanced client satisfaction in general. E-commerce is facilitating business online.

AI in E-commerce makes it even easier to filter, get personalized suggestions,AI algorithms analyze market trends, news, and historical trading data to identify new opportunities. They predict and recommend market moves depending on your history. Fintech platforms like Robinhood and Wealthfront use AI-powered robo-advisors to offer automated investment management services, creating diversified portfolios and rebalancing assets based on investors’ goals and risk tolerance.

The retail markets are concerned with customer dealings. AI enhances the customer retail experience with better image recognition techniques and personal recommendations. Use case of AI in retail like – AI-powered recommendation engines analyze customer choices, browsing patterns, and purchase behavior to deliver personalized product recommendations and suggestions. Platforms like Amazon and Netflix use AI algorithms to recommend products, movies, and TV shows based on individual user interests and preferences.AI sentiment analysis tools detect customer sentiments towards the services. Sentiment analysis uses machine learning, NLP, and AI to analyze customer feelings, emotions, and underlying sentiments from reviews, texts, and feedback. Popular companies like BrandWatch, Hootsuite, MonkeyLearn, HubSpot, and many others successfully implement this technique to undermine customer sentiments. When calling the service center for the repair services for the appliance, you are prompted by an automated voice to follow some steps, and if need be, it connects you to the customer rep. This is AI voice analysis, popularly known as IVR (Interactive Voice Response).

AI-powered FAQs or Knowledge Bases like “How-Tos” use NLP to understand the customer query and direct the reader to the desired pages. These are extensive information guides that empower customers to find the answers on their own and reduce reliance on the support team. Based on regional demand trends, a chain of retail stores must restock inventory at each site. To predict demand at specific stores, artificial intelligence (AI) systems examine sales data, historical inventory levels, and external influences (such as regional events or promotions). This minimizes stockouts and lowers the cost of carrying extra inventory by enabling effective inventory replenishment plans.

Another AI technology that is heavily invested in to improve supply chain management for organizations is warehouse robots. Amazon employs 200,000 robots in its warehouses. These robots assist humans in picking, sorting, transporting, and stowing items in 26 of Amazon’s 175 fulfillment centers. Customers who are dissatisfied with a product may churn. Companies can use computer vision technology in their warehouse operations to keep quality control and identify damage. Logistics managers can determine the type and extent of damage and take the necessary action to stop further damage.

The future of AI is characterized not only by its vast potential but also by the challenges it presents, necessitating ongoing dialogue among stakeholders to ensure that technological advancements benefit all people as centric component, as you can see in our official infographic IA & Digital Economy:

In the second part of my article I will talk about AI and its relationship with the Digital Economy. Welcome to a new way to achieve superior results in a digital and future-oriented economy.

Source: International Labour Organization (ILO) and IMF staff calculations Note: Share of employment within each country group is calculated as the working-age- population-weighted average.

Source: VI? frame = Value innovation is the simultaneous pursuit of radically superior value for stakeholders, shareholders, buyers and lower costs for companies from AMBE Alliance Groups.