How will AI affect jobs, skills, wages, and productivity?

How will AI affect jobs, skills, wages, and productivity?

PwC’s 2024 AI Jobs Barometer goes beyond predictions about AI’s impact to find evidence by analysing over half a billion job ads. The Barometer reveals how AI is transforming the world of work, making people and businesses more productive while changing what it takes for workers to succeed.

HEADLINE FINDINGS

Half a billion job ads reveal AI’s impact

Half a billion job ads reveal AI’s impact

AI is the Industrial Revolution of knowledge work, transforming how all workers can apply information, create content, and deliver results at speed and scale. How is this affecting jobs? With the AI Jobs Barometer, PwC set out to find empirical evidence to help sort fact from fiction.

PwC analysed over half a billion job ads from 15 countries to find evidence of AI’s impact at worldwide scale through jobs and productivity data.

PwC tracked the growth of jobs that demand specialist AI skills (such as machine learning or neural networks) across countries and sectors as an indication of AI penetration.

They find that AI penetration is accelerating, especially in professional services, information & communication, and financial services. Workers with specialist AI skills command significant wage premiums, suggesting that their abilities to deploy AI are valuable to companies.

But AI’s impact is not limited to only those workers who have specialist AI skills. Many, if not most, workers who use AI tools in their work do not have or need these specialist skills. For example, a limited number of workers with specialist AI skills may design an AI system or tool for a company that is then used by hundreds or thousands of the company’s customer service agents, analysts, or lawyers – none of whom have specialist AI skills. In fact, one thing that makes a well-known form of AI – generative AI – such a powerful technology is that typically it can be operated using simple everyday language with no technical skills required.

To capture AI’s impact on all jobs, PwC analysed all jobs (and sectors) by their level of ‘AI exposure.’ A higher level of AI exposure means that AI can more readily be used for some tasks. Examples of occupations with higher AI exposure are financial analysts, customer service agents, software coders, and administration managers.

The analysis revealed that sectors with higher AI exposure are experiencing much higher labour productivity growth. At the same time, the skills demanded by employers in AI-exposed occupations are changing fast. 

AI penetration is accelerating

AI penetration is accelerating

The 2022 peak in job postings above represents exceptionally high demand for workers which gradually eased in 2023 as job market conditions returned toward normal.

Knowledge work sectors have higher AI penetration

Knowledge work sectors in particular are seeing growing demand for jobs that require specialist AI skills. The share of job ads requiring these skills is higher in professional services, information & communication, and financial services – precisely those sectors predicted to be most exposed to AI.2 Financial services has a 2.8x higher share of jobs requiring AI skills vs other sectors, professional services is 3x higher, and information & communication is 5x higher.

Knowledge work sectors have higher AI penetration

AI specialist jobs command up to a 25% wage Premium on average

AI specialist jobs command up to a 25% wage Premium on average

AI’s value to companies is made clear by what is happening with the wages of workers with AI specialist skills – the very people who are making the AI revolution possible.

AI specialist jobs command up to a 25% wage Premium on average

As we have seen, growth in jobs demanding AI specialist skills has outpaced growth in all jobs since 2016. What’s more, these jobs carry up to a 25% wage premium on average, underlining the value of these skills to companies.

Below are average AI wage premiums for five countries for which there is sufficient data to perform the analysis. To show how this wage premium can affect individual occupations, wage premiums for selected occupations are given.

AI appears to be driving a productivity revolution

So far this report has discussed jobs which require specialist AI skills like deep learning or natural language processing. But many, if not most, workers who use AI tools in their work do not have these skills. To understand how AI is affecting all jobs, PwC examined jobs and sectors by their levels of ‘AI exposure’ which means the degree to which AI can readily be used for some tasks. PwC’s analysis revealed how higher levels of AI exposure appear to be affecting workers’ productivity, numbers of job openings, and the skills that jobs require. First, let’s see how AI may be affecting productivity.

Labour productivity growth has been sluggish in many nations for years. OECD countries have experienced a lost decade of labour productivity growth with weak average annual rises of 1.1% from 2011 to 2020, followed by declines in both 2021 and 2022.3

AI appears to be driving a productivity revolution

This stagnant labour productivity is a serious problem because it is a drag on economic growth, reducing potential tax revenues, chipping away at investment in public services and flatlining living standards.

Recently there has been much speculation that AI can supercharge workers’ productivity. The good news is there is now evidence to suggest that this is not just wishful thinking, and is already fast becoming reality.

We have seen that three sectors – financial services, IT, and professional services – have higher AI exposure and higher AI penetration. How is this affecting productivity?

The data shows that these three sectors are seeing nearly 5x faster productivity growth than sectors with lower AI exposure (such as transport, manufacturing and construction).

AI_productivity_growth_rate_tecmony

While it is not possible to prove causation, this is an intriguing pattern. Unlike the computer revolution which took significant time to enhance productivity (economist Robert Solow once observed that the impact of the computer age was evident everywhere but in the productivity statistics), the data suggests AI is already doing so, right now. AI may be compressing the ‘productivity J-curve’4 in which new technologies can take significant time to cause a sharp uptick in productivity.

PwC’s 2024 Global CEO Survey confirms that 84% of CEOs whose companies have begun to adopt AI believe it will increase efficiency in their employees’ time at work.

Increasing productivity means more than just doing the old things faster. It also means finding new, AI-powered ways to create value. In fact, 70% of CEOs say that AI will significantly change the way their company creates, delivers and captures value over the next three years.

AI is helping to ease labour shortages

AI is helping to ease labour shortages

It is important to emphasise that job numbers in AI-exposed occupations are still growing. The data suggests that AI does not herald an era of job losses but rather more gradual jobs growth, helping to enable companies to find the workers they need.

Job numbers in AI-exposed occupations are still growing.

What this means for workers: Build skills for an AI age

The skills required by employers in AI-exposed occupations are changing fast. Old skills are disappearing from job ads – and new skills are appearing – 25% faster than in roles less exposed to AI.

AI-exposed occupations
AI-exposed roles

Workers in AI-exposed roles may need to demonstrate or acquire new skills to stay relevant in a jobs market that is fast-evolving. PwC’s 2024 Global CEO Survey makes it clear that 69% of CEOs anticipate that generative AI will require most of their workforce to develop new skills, rising to 87% of CEOs who have already deployed generative AI. Workers need to take ownership of their learning, rapidly developing the skills to remain relevant and to embrace the opportunity AI brings.

There are clues to which skills workers may want to build to prosper in an AI age. Some of the skills rising fastest in demand are those which cannot easily be performed by AI. Below are four of the skills categories rising fastest in demand, and for each category a few examples are provided of specific skills with growing demand. From dam construction to sports instruction, some skills with booming demand are relatively hard for AI to perform.

AI Impact on Jobs

Far from heralding the end of jobs, AI signals the start of a new era in which workers can be more productive and valuable than ever.

Instead of focusing only on how AI can take on some tasks formerly done by people, we should think inventively about how to make the most of AI to create new industries and new roles for people. Embracing AI in this way is one way to bring about continued positive outcomes for workers.

Economist Eric Brynjolfsson observed, ‘If AI is used mainly to mimic humans, to replace humans with machines, it is likely to lead to lower wages and more concentration of wealth. If we use AI mainly to augment our skills, to do new things, then it is likely to lead to widely shared prosperity and higher wages.

Next steps for companies, workers, policymakers

There is no going back to yesterday’s jobs market, but – if carefully managed – the AI revolution could bring a bright future for workers and companies. Below are steps that companies, workers, and policymakers can take to help realise AI’s promise to grow productivity and fuel rising shared prosperity.

AI Future Job Market

Policymakers can encourage the use of AI to grow productivity and prosperity, for example by building the supportive policy environment, digital infrastructure, and skilled workforce to help realise AI’s potential. Countries with the strongest growth in jobs that demand AI skills (an indicator of AI usage and penetration) offer lessons for policymakers in how to create an environment conducive to making the most of AI.

The three countries in this study with the highest proportion of jobs that require AI skills are Singapore, Denmark, and the US. These are the same three countries that top the IMF’s AI Preparedness Index ranking which measures areas such as digital infrastructure, human- capital and labor-market policies, innovation and economic integration, and regulation and ethics. Policymakers who would like their people to benefit from the AI revolution should take note.

Policymakers can support workers with training/retraining and safety nets, and shape the education system to help prepare workers for an AI age in which critical thinking, creativity, and adaptability are likely to be key skills. Finally, policymakers can strive to make sure that growing prosperity from AI adoption is widely shared.

Key areas for action in AI era

Policymakers

  • Encourage the use of Al to grow productivity and prosperity

  • Ensure growing prosperity from Al adoption is widely shared

  • Support the use of Al to augment rather than replace workers

  • Support workers with training/retraining, worker protections, and safety nets

  • Shape the education system to help prepare workers for an Al age

Businesses

  • Embrace, experiment, and pioneer new uses of Al. Think beyond using Al to do existing tasks. Instead, pioneer new ways to create value.

  • Build a climate of confidence and trust in using Al so people are more likely to welcome trying it.

  • Use Al to complement people. Figure out where Al is best used in partnership with people.

  • Hire on the basis of skills rather than only degrees or work history. Upskill workers to make the most of Al

Workers

  • Embrace and experiment.

  • Seek ways to make the most of Al to complement and empower you

  • Build skills to be sought after in an Al-driven jobs market (e.g. skills that complement Al or are difficult for Al to do)

In conclusion
PwC’s analysis of over half a billion job ads worldwide suggests that AI may help make workers more productive, opening the door to rising prosperity for workers and nations.
Like past technological revolutions from electricity to internal combustion engines, AI is changing what it takes for workers to succeed – and those who adapt may enjoy vast new opportunities.