Goldman Sachs: Artificial Intelligence is starting to reduce labor demand in developed economies

Artificial intelligence is starting to affect labor demand in some of the world's most developed economies, and early-career workers appear to be the most vulnerable, according to a Goldman Sachs analysis cited by CNBC. The most visible effects are in call centers, software, management consulting and advertising, where employment has fallen significantly below historical trends.

• Hiring slowed in sectors exposed to automation

Goldman Sachs analyzed the evolution of labor markets in several developed economies and found that sectors with higher exposure to automation through artificial intelligence generally saw slower job growth starting in the second half of 2022. The link between AI use and the slowdown in hiring is particularly visible in Germany, Australia, and the United States.

One of the affected areas is information and communication services. Growth in the number of employees in this sector slowed in almost all major developed economies after 2022. Outside the United States, however, employment remains close to or even above the long-term trend. The differences are more pronounced in industries where technology can already take over a significant part of the work performed by humans.

• Call centers, among the most affected

Call centers are recording the largest differences from historical trends. The number of employees in this sector is 39% below trend in the United States, 33% in Canada and 27% in Germany. Goldman Sachs believes that these data indicate that the pressures generated by artificial intelligence on jobs have already become visible in areas where there are tools capable of automating a significant part of tasks.

• Early career employees most vulnerable

The impact is more pronounced for people trying to enter the job market. Goldman Sachs analyzed more than 800 occupations and found that the negative effects associated with artificial intelligence are strongest among early career employees. A negative, but smaller, effect is also observed in professions considered very vulnerable to replacement by AI. At the level of the entire labor market, the impact remains relatively small for now. A 10% exposure of an occupation to AI is associated with a 0.1 percentage point decrease in the annual growth rate of the number of employees in France, Canada and the United States.

For employees at the beginning of their careers, however, the effect is more pronounced: it exceeds 0.6 percentage points in Australia and 0.2 percentage points in the United States. Goldman Sachs concludes that the effects of AI on employment can already be identified in the global data, but are currently concentrated in a relatively small number of industries and categories of employees.

• AI adoption reaches 15%-20% in developed economies

Labor market pressures are emerging in parallel with the rapid expansion of the use of AI. Goldman Sachs combined the results of 11 surveys on AI adoption and estimates that the rate of use in major developed economies is already around 15%-20%. France, the United States, the Netherlands, and the United Kingdom are among the leaders in AI adoption, while Italy, Japan, and New Zealand have lower levels. In large emerging economies, the estimated rate of AI adoption is around 10%-15%. The analysis thus indicates an increasingly visible relationship between the expansion of AI use and employment dynamics.