Emile Ormond: South Africa unready for AI-era job disruption
Emerging economies like South Africa may be partially shielded from the initial waves of AI automation, but when it inevitably arrives, the country could be especially vulnerable due to its large, predominantly young labour force, writes Emile Ormond.
As artificial intelligence (AI) grows more sophisticated and pervasive, its potential to disrupt labour markets demands urgent attention.
Will AI displace workers? Could it trigger unprecedented unemployment? There has been an influx of news articles, predictions, and expert claims that AI will be highly disruptive to the workforce. For instance, McKinsey estimates 400-800 million people globally may need new jobs by 2030, while a BCG survey found 42% of workers fear their roles may vanish within a decade.
For South Africa, with an unemployment rate of 32.9% and 46.5% for youth, these predictions are dire. The country simply cannot afford large-scale job losses without jeopardising fragile social stability, deepening poverty and inequality, increasing crime, and threatening fiscal sustainability. As the government of national unity prioritises 'inclusive growth and job creation,' understanding AI's impact on jobs is not just critical - it's urgent.
Impact yet to materialise
Despite these warnings, evidence of current AI-driven job losses remains limited. In advanced economies like the US and EU, unemployment is near historic lows. Research has found that, for now, AI's impact on employment is minimal, often boosting productivity instead. In South Africa, high unemployment predates AI, rooted in structural economic challenges.
So far, AI has not significantly shrunk job markets globally or locally.
Historical, technological leaps, like the Industrial Revolutions, sparked similar fears of mass labour market disruption but ultimately resulted in substantially higher employment and productivity. For instance, more than two-thirds of the world's population lived in extreme poverty before the Industrial Revolution – today, it is less than 10%.
This precedent, combined with AI's limited impact to date, may have bred complacency among South Africans, especially policymakers, that AI's impact will be manageable and a net positive. However, this view is shortsighted and lacks nuance. Rapidly increasing advances in areas such as multi-modal and agentic AI are poised to transform workplaces.
The vast majority of organisations are planning on introducing or expanding their use of AI. This will see workers requiring new skills, creating new roles, and eliminating others. While the balance of these changes is debated, massive labour market disruption is almost certain.
This time is different
AI's unique traits, distinct from past technologies, will amplify its impact on jobs. These features include:
Cognitive capabilities: Unlike earlier automation that targeted manual tasks, AI can handle complex cognitive work, such as analysis and decision-making.
General-purpose technology: Like electricity or the internet, AI's application spans all sectors, driving broad economic impact and broadly fuelling productivity at an unrivalled pace.
Self-improvement: AI can help enhance future iterations of itself, unlike previous technologies. For instance, the most advanced nuclear reactor cannot design new reactors, but AI can make better AI.
Democratised access: Many AI tools are freely or cheaply available, unlike costly previous industrial technologies that were often limited to large, wealthy organisations.
Rapid adoption: Generative AI, for example, surged from obscurity to global prominence in just three years. Now, South African workers use generative AI more than those in the US and UK.
These characteristics illustrate why AI will disrupt labour markets at an unprecedented pace and scale, but not all countries and groups are equally vulnerable.
SA has breathing room
High-income countries, with more white-collar jobs, face earlier AI-driven disruption. For instance, 34% of European Union jobs are exposed to AI automation, compared to 19% in the African Union, according to the International Labour Organisation (ILO).
Ageing populations and high labour costs may also accelerate AI adoption in developed markets. Young workers, often in entry-level roles, are particularly at risk. The ILO notes that youth hold jobs most susceptible to automation, potentially blocking their entry into the labour force.
This is particularly pressing for Africa, with 350 million young Africans expected to reach working age by 2050.
In other words, emerging economies like South Africa may be partially shielded from the initial waves of AI automation, but when it inevitably arrives, the country could be especially vulnerable due to its large, predominantly young labour force. In conjunction with this, AI will likely also drive massive productivity gains and create new, currently unforeseen jobs, but the transition period could be long and hard. Moreover, it could ultimately further entrench South Africa's world-leading inequality.
Charting a path forward
South Africa has a narrow window, as short as two to three years, to harness AI's productivity gains while mitigating its fallout. Key actions stakeholders can take include:
Policy development: Political leaders must move beyond vague rhetoric and adopt nuanced, thoughtful policy positions on AI. The government should finalise a national AI strategy, released for comment in mid-2024, to address labour market impacts.
Digital infrastructure: Expand reliable, high-speed internet nationwide, resolving disputes over providers like Starlink to ensure equitable AI access.
Reskilling programmes: Invest in large-scale training to equip workers with AI-relevant skills and update school and tertiary education curricula for emerging roles.
Responsible AI governance: Regulators and organisations should integrate AI oversight into corporate governance, aligning innovation with national development goals. Moreover, AI needs to be a cross-cutting responsibility in government.
Social protections: Plans for displaced workers need to be considered now – there are nearly 19 million grant recipients, compared to a tax base of 7 million. Growth measures and/or new revenue sources will need to be found if the if the
South Africa stands at the edge of an epoch-defining labour shift. The question is whether we act proactively or react in a crisis.
- Dr Emile Ormond has an interest in policy analysis and risk managment.
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