57 | The wave of AI-driven layoffs has begun. Everything you need to know to prepare your career and your business - Jan 27, 2024

0:00Hello and welcome to a short weekend news episode of the Leveraging AI podcast. This is Isar Maitis, your host, and we're going to do something a little different this weekend with regards to the news. Instead of sharing with you a lot of news that happened this week, and a lot did, I want to dive into one topic that's been in the news in the last few weeks that is very critical to the future of businesses and AI, and that's the impact of AI on the job market.

0:30There have been several reports from reputable sources based on actual research that have been released recently that share a lot of relevant and interesting information about how AI is expected to impact jobs in the near future. The first report comes from the IMF, the International Monetary Fund, and their research shows that 60 % of jobs in advanced economies are going to be impacted by AI. And the interesting thing is, is the less developed the economy is, the lower the impact AI will have on that, right? So we're used to that the technological revolutions impact low-income jobs and low-developed countries, where in this particular revolution, the AI revolution, it's exactly the other way around.

1:17So it's 60 % impact of jobs in advanced market, 40 % in emerging countries, and 29 % in low-income countries. So the more advanced the economy is, the higher the impact is. the way the IMF defined the different levels of exposure to AI based on specific jobs is the following. They said that there's jobs with high exposure, but high complementary, meaning AI will help you in the job. Then they have high exposure and low complementary, meaning AI will replace your job. And then they have low exposure, meaning those particular jobs will most likely not be impacted by AI. And when combining both high exposure groups, meaning high exposure with high complementary and high exposure with low complementary capabilities in advanced economies, like the one we live in in the US, and most of the people listen to this podcast in the Western Hemisphere for sure, you get to almost 60 % of jobs and almost half of them will be able to be replaced by AI.

2:22So that's obviously not very good news coming from a very serious source. Another interesting report on this topic comes from the OECD Employment Outlook. And what they have done is they have surveyed 750 business leaders talking about AI. And they found that 37 % of them said they already replaced workers by AI in 2023. And 44 % of them reported that they're planning to do so in 2024. So in this particular case, we're talking about another highly reputable source that looks at the most advanced economies in the world. And they are sharing that it's not a projection to the future, but it's something that is already happening.

3:04PwC, one of the largest consulting companies in the world, also released a report on this topic. And the good side is that they're projecting that AI will add$15.7 trillion to the global economy by 2030, which is only six years away. And to put things in perspective, that's more of the combined output of China and India together right now. But they're also saying that AI is most likely to impact 40 % of jobs with 25 % of CEOs that they research are saying they're going to lay off at least 5 % of their people in the near future. If you're looking at the specific jobs that are more at risk, or if you want the industries that are more at risk, well, it's media, entertainment, banking, capital markets, insurance, marketing, and design are on the top of the list.

3:52And if you're looking at the stuff that's on the bottom of the list, it's things like construction and agriculture, where this will take more time until robots will be able to start take over these kind of jobs. Deloitte also released their report recently on the impact of AI on the job market. They have found that 61 % of workers have reported using AI at work. Out of those people, 63 % said that it's helping them do the work more efficiently. 54 % said that it helps them be more creative. And 45 % said that it's increasing the quality of their work. So overall, extremely positive results from the people who are actually using it at work.

4:32That being said, only 31 % of responders have actually received any support or training from their employers on how to use AI effectively in the workplace. If you combine that with the recent wave of layoffs in large tech companies, so a few thousands of people were laid off from Google, eBay let go of a thousand people, that's 9 % of its staff. TikTok released a lot of people. Wayfair has sent a 13 % of our work staff home, and that's just since the beginning of this year. If you look since mid of 2023, the numbers are staggering, and they are more than one and a half times what the layoffs in these companies have been in the same period in 2022.

5:14too. So if you combine all of this together, it shows you that AI is expected to impact a lot more job and is already impacting jobs definitely in the tech sectors because the economy is now actually projected to do better. The stock market is doing very well. We are seeing big tech companies experiencing huge growth, both in valuation and usage of their product. And at the same time, they're letting people go. So here's my take on this. And this is why I wanted to do this unique episode today. First take is that this is happening. There's nothing we can do to stop this. And I think there's going to be more and more layoffs in the future.

5:52And definitely as we move towards the second half of 2024 and into 2025, when AI tools will be better deployed and incorporated into the actual processes of companies, this is going to have an even more significant impact. What does that mean to you as an employee or to you as a leader in a company? If you are an employee, what it means to you is that you really need to learn this stuff. You need to be one of those people that reports and can actually prove that using AI is significantly improving their efficiency and the quality of their work, meaning you can do more work faster at a higher quality.

6:30You have a much higher chances of keeping your job than people who are not going to learn it, which are obviously going to fall behind. And they're going to be the ones that are going to be replaced. Because when you think about it, if a company can be X percent more effective, let's say 20%, it has two options. It can either find a way to grow its market share by 20 % or more, meaning grow faster than it's becoming more efficient because now people have capacity to do more stuff. Or it's going to let go of people. And this depends on their ability to grow in their particular niche, in their particular market, depending on a lot of parameters and not just their ability to grow.

7:07but things like demand and competition and the economy and so on. So there's really two options, right? You either grow the business or you're going to let people go or some combination of the two. So if you're going to be one of those people that can show that AI is helping them achieve growth for the business, you are more likely to keep your job. As a business leader, I think the way to look at this is not at the employment level, meaning not at the profession level, but rather at the task level. What tasks your company needs to complete right now? What tasks you think your company will need to complete in a year or two when AI is going to be around?

7:47And then figure out what's the gap between the tasks that you can do today and the tasks that you will need to do in the future. And from those tasks, how much of these AI can help you actually do more effectively and more efficiently and plan your hiring and your training accordingly. So I'm not saying don't hire people. I'm saying if you need to hire people to grow your business, absolutely go ahead and do that. But don't hire based on the past, but hire based on the future. Look for people who actually have the skills and the knowledge and some experience in using AI and that they are somewhat geeks and like this kind of stuff and can adopt very fast to this new technology that will allow you to gain these benefits in the future and maybe in the very near future.

8:31Don't hire people in tasks that AI will most likely be able to replace because then you may hire a lot of people or some people, invest the time and money in finding them, hiring them, paying for headhunters, training them, and then potentially letting them go nine months later when you'll figure it out. So seriously reconsider and have a plan that when it comes to training and hiring your employees, include AI capabilities and skills as part of the equation. That's it for today. I may do another episode sometime in the middle of next week to share with you all the crazy stuff that happened this past week when it comes to specific AI news.

9:13But I thought this is a very important topic to touch, especially that we're still in the beginning of the year. and a lot of companies are still trying to figure out how 2024 is going to look like. I hope you found this information valuable. If you have, I would really appreciate it if you will open your phone right now. Yeah, take it right now out of your pocket or where it is placed next to you when you're listening to this podcast and rate this podcast, give us a review. And also, if you know people that can benefit from this podcast, please share it with them. Just hit the share button and send it to a few people that can benefit from this.

9:44This helps us a lot and I would really appreciate it. And on Tuesday, we have a really interesting episode about going back to the training topic, how you can use ChatGPT to build customized, personalized training plans for your employees or in the education world. So if that's something that's interesting to you and it should if you're a manager in any company or if you're just somebody who wants to find ways to use ChatGPT to learn anything faster, personalized to the way you want to learn, I think you'll find it fascinating. and that's it for now. Have an amazing rest of your week.