Is AI going to be a knight in shining armour or a grim reaper for us?

Imagine a Bangladesh where robots sew clothes, chatbots handle customer service, and algorithms automate tasks across industries. This isn't science fiction - it's the imminent future powered by Artificial Intelligence. The question isn't whether AI will arrive, but how Bangladesh will weather the storm. Will it be a land of soaring productivity or a nation drowning in job losses?

Artificial Intelligence will boost productivity and incomes, but it could wipe out millions of jobs and widen inequality. The world cannot stop AI from reshaping the global economy and jobs. It needs to prepare itself for adopting AI to spur economic growth and prepare policies to cushion the disruptions in the labour market.

In fact, the International Monetary Fund, in its latest study, says that emerging and low-income countries are not going to be the first and worst victims. But the bad news is these economies are neither equipped to adopt new technology to broaden the gains, nor capable of withstanding whatever job loss they may incur.

The IMF says advanced economies will experience the benefits and pitfalls of AI sooner than emerging markets and developing economies largely due to their employment structure focused on cognitive-intensive roles.

IMF's research suggests generative AI could shed 18% jobs in low-income countries, 24% in emerging and 33% in advanced economies.  

"Most emerging market economies and low-income countries have smaller shares of high-skilled jobs than advanced economies, and so will likely be less affected and face fewer immediate disruptions from AI. At the same time, many of these countries lack the infrastructure or skilled workforces needed to harness AI's benefits, which could worsen inequality among nations," IMF economist Giovanni Melina writes in a blog post.

The global lender's new AI Preparedness Index (AIPI) Dashboard tracks 174 economies based on their digital infrastructure, human capital, labour policies, innovation, integration and regulation.

Where does Bangladesh stand?

It reveals Bangladesh stands higher than low-income countries in AIPI but below the level required for emerging countries—better placed than Pakistan but much lower than neighbouring India.

Of the four indicators measured for the preparedness index, Bangladesh fairs better in innovation and economic integration, and regulation and ethics. But the country falls short of scores set for emerging economies for digital infrastructure, and human capital and labour market policies.

This is where countries like Bangladesh need to work. They should prioritise developing digital infrastructure and digital skills to maximise the gains from the new techs. At the same time, they need to focus on upgrading regulatory frameworks and supporting labour reallocation, while safeguarding those adversely affected.

And the advanced economies?

Advanced economies also face job losses from technology adoptions, but they are able to safeguard those affected with social schemes such as unemployment insurance and upskilling.

Evidence shows increased use of industrial robots wiped jobs and cut wages in the United States and Europe. Robots drove down employment and wages in manual and routine jobs and displaced workers into low-paying occupations. But workers adapted over time with new positions in the service sector as young workers adjusted education choices and skills training. Social protections also helped mitigate long-term effects of industrial robots on employment and wages, it was found in IMF staff discussions in the course of their latest study.

"Fiscal policies can cushion the negative labor market and distributional effects of generative AI and help distribute the gains more evenly. This calls for adequate social protection systems (social insurance, labor market programs, social assistance)," says an IMF staff note.

Wise to be prepared

Since new technological invasion is inevitable it is wise to get prepared to embrace it and maximise gains, instead of harping on potential job loss and wage cut.

Innovative approaches and generous policies can help countries secure the gains from emerging techs and minimise the negative impacts on the labour markets, particularly the informal sectors.

"Most countries have scope to broaden the coverage and generosity of unemployment insurance and consider forms of wage insurance. Combined with active labour market policies, this can help workers manage the transition while adapting to changing skill requirements," an IMF staff discussion note reads.

It suggests education and training policies of emerging markets and developing economies must adapt to new realities, help prepare workers for the jobs of the future. Sector-based training, apprenticeship, and upskilling and re-skilling programs could play a greater role in helping workers transition to new tasks and sectors, it feels.

More jobs will be created than lost

Bangladesh's industrial and service sectors are also adopting new technologies to cut costs and enhance productivity. Though not on a massive scale yet, impacts are being felt in some industries, especially the apparel sector creating fewer jobs in recent years compared to a decade back.

Economist Ananya Raihan of local think tank DataSense says the full implications of application of AI in an economy is under scrutiny.

"Throughout the history of technology adoption during several industrial revolutions many jobs became obsolete and new jobs emerged. More jobs were created than lost over a period of time. Adoption of AI is no exception," he tells The Business Standard on possible impacts of AI on jobs in Bangladesh.

The problem is the faster pace of job restructuring, he says, as AI poses higher risk for the countries, which are less prepared.

Referring to automation in the RMG sector of Bangladesh, Ananya Raihan said women suffer more from new technology adoption. During the last one decade, the ratio of number of jobs per million-dollar investment in automation was reduced from 1,907 in 2011-12 to 1,384 in 2020-21. In just one year, female worker participation reduced from 64% in 2015 to 60.8% in 2016, he pointed out.

Unfortunately, there are no current statistics in this regard.

"The IMF index shows that we are less prepared than other competing economies due to negligible investment in R&D and poor human capital," he added.

Bangladesh's position is 105 among 132 countries in the Global Innovation Index, just ahead of Nepal among the South-Asian countries. There is no data available on R&D spending of Bangladesh in the World Banks' R&D Spending database.

For the existing workforce, there is an urgent need for assessment of the need for reskilling and upskilling and adequate investment in minimising the impact of job loss. The education system and skills development sector need revamping the curriculum and preparing teachers and trainers to build a new workforce, the economist suggests.