Finance Ministry says impact of Artificial Intelligence on jobs needs watching

Three months after the Economic Survey for 2023-24 warned of workers being impacted due to Artificial Intelligence (AI) taking over their jobs, the Finance Ministry has in its latest report said there is evidence of AI displacing workers.

According to the Finance Ministry’s Monthly Economic Review for September 2024, the overall labour market is steady. The overall unemployment rate for 2023-24, it says, remain unchanged at 3.2 per cent, driven by a rising female workforce. The report says high-frequency indicators, such as the net payroll additions under the Employee Provident Fund Organisation (EPFO), Purchasing Managers’ employment sub-index and NaukriJob Speak index, also highlight a rise in formal employment generation.

However, the review adds, “All that said, anecdotal reports of the deployment of Artificial Intelligence displacing workers are beginning to emerge. That needs watching.”

The Economic Survey in July had said, “The advent of Artificial Intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels – low, semi and high”, adding that "This will create barriers and hurdles to sustained high growth rates for India in the coming years and decades. Overcoming these requires a grand alliance of union and state governments and the private sector."

Although there is some good news as well. The review cites the Naukri JobSpeak index which witnessed a year-on-year expansion of 6 per cent in September 2024, driven by a resurgent IT sector. Sectors such as FMCG and Oil & Gas also underwent significant growth and created more Artificial Intelligence/Machine Learning roles.

The review shows that employers generally preferring experience over fresh inductees. “Hiring trends were largely favourable for experience-holders, while professionals with 0-3 years of experience saw a 7 per cent decline in job opportunities vis-à-vis September 2023,” the September economic review says.

The jobs market also indicate a strong outlook for the Oct-Dec quarter. Signalling a rebound in formal job creation, the Employees’ Provident Fund Organisation (EPFO) added 9.3 lakh new members in August 2024. A significant 59.3 per cent of new members added in August 2024 were in the 18-25 age group, indicating that most individuals joining the organised workforce are youth, mainly first-time job seekers. The purchasing managers’ employment sub-index also remained historically strong, continuing to be in the expansionary zone for the seventh consecutive month in September, though employment in the manufacturing sector softened due to a reduction in part-time and temporary workers.

Overall, the September review says the outlook for the Indian economy remains good. This is on the basis of a stable external sector, positive agricultural outlook, expected improvements in demand supported by the festive season, and the likelihood of an increase in Government spending, which will boost investment activity. The review maintains the Indian economy is likely to grow between 6.5 and 7.0 per cent in the current fiscal year.