The Impact of AI on Work and EmploymentJune 2024 This publication was produced with the financial support of the European Union. Its contents are the soleresponsibility of the International Organisation of Employers (IOE) and do not necessarily reflect the viewsof the European Union. Table of contents I. Factsheet4 II. Introduction6 III. Trends in AI and Employment8 IV. Trends in AI and Labour Management12 V. Policy Challenges and Responses on AI at Work14 VI. Recommendations and Priorities for Employers’ Organisationsand Governments 17 VII. References 20 I. Factsheet Artificial intelligence (AI) refers to systems that can process information,learn from it, and use that learning to generate outputs and achieve goals(Kaplan and Haenlein, 2019). Generative artificial intelligence involves usingvarious models to create content such as text, images, video, or sound. GenerativeAI has the potential to contribute between $2.6 trillion and $4.4 trillion annually tothe global economy, highlighting its positive economic effects(McKinsey & Company, 2023). The key impacts of AI on employment are related to job displacement,augmentation, and creation.While some jobs may be displaced, others willsee growth due to AI implementation, particularly in fields like AI modelling andbusiness intelligence (WEF, 2023a). There is strong potential for the creation of newjobs, as can be observed over recent years. Generative AI models may increasethe value of jobs requiring social interactions, while the augmentation potentialof AI is deemed larger than its automation potential, affecting a wide range oftasks across various job types (Gmyrek, Berg and Bescond, 2023). Globally, mostCEOs (69 per cent) recognise the need for their workforce to develop new skills toleverage generative AI effectively (PwC, 2024). Among the benefits associated to this technology, AI can enhance productivityacross industries, with potential annual global productivity increases of 0.2per cent to 3.3per cent (McKinsey & Company, 2023). In relation to job quality,while ethical concerns about AI-based monitoring exist, AI can also improve jobsthrough reduced tedium, greater engagement, and enhanced safety, exemplifiedby its use in predicting workplace accidents (Luo et al., 2023) and in personalisingtraining through AI-based virtual tools (Chen, 2023). Adoption rates vary, with larger companies leading the way and smallerones still in the exploration phase.Globally, it is projected that 74.9 per cent ofcompanies will have adopted AI by 2027, with 59 per cent foreseeing its growingsignificance in their business strategies (WEF, 2023a). AI is increasingly used inhiring processes, performance management, conflict resolution, and downsizinginitiatives across various industries. While it offers benefits, ethical concernsregarding data validity, privacy, and bias in decision-making require carefulconsideration. Global AI policies have aimed to establish normative frameworks andprinciples.The ILO Centenary Declaration for the Future of Work, OECD AIPrinciples, UNESCO AI Recommendation are examples. Regional organisationsare developing guidelines for AI governance with a focus on human-centredapproaches. The EU’s AI Act, agreed in December 2023, introduces hard-lawregulation based on risk classification for AI systems, applicable to both publicand private entities in the EU market. It will have phased implementation andenforcement by EU countries. Governments have created national AI strategies focused on competitivenessand fairness.Initiatives have concentrated on creating institutional capacity,stimulating adoption in public and private sectors, and addressing AI ethics andtransparency. Firms have been targeted through direct and indirect supportmeasures such as R&D investment, skills strategies, and data protection legislation(OECD, 2024). II. Introduction Artificial intelligence (AI) technologies hold great promise as catalysts for social andeconomic change in a broader context of digital transformation. AI technologies havethe potential to transform businesses, industries, labour markets, and society at large.While there are still obstacles to its application, generative AI systems can provide valueto customers, optimise processes, supplement human knowledge by providing insightsand solutions, and help businesses develop or maintain a competitive advantage. As theneed for more strategic involvement and adaptation becomes a reality, employers musthave the necessary tools and insights to make informed decisions on the right pathwaysthat develop businesses and enhance employment. In this scenario, the purpose of this report is to synthetise existing research about theimpact of AI on work and employment, providing strategic knowledge for employers tonavigate its development. While the effects of technology on labour markets are complexand ever-changing, there is a significant body of research that can guide employers’decision-making and offer insi