March 27, 2024. Shanghai – Companies and governments should work together to prepare the workforce for the transitions driven by artificial intelligence and advanced technologies, renowned Nobel laureate in Economics Christopher Pissarides said during a talk at the CEIBS Shanghai campus today.

Currently serving as School Professor of Economics and Political Science at the London School of Economics and Political Science, Prof. Pissarides specialises in the economics of unemployment, labour-market theory, and labour-market policy.

During the event, he walked the packed audience through an overall roadmap of Automation Technologies and Future of Work by examining how they’re transforming labour markets, the challenges ahead, and essential skills for the future.

Whilst many believe that the job market will be disrupted by automation, Prof. Pissarides argues that the main impact is how to transition from one technological state to another.

“The main transition taking place is that people have new roles and new tasks within companies or sectors,” Prof. Pissarides said, adding that the reason for the transition is that technological progress does not affect all jobs equally but particular sectors.

“What happens is that new technology raises productivity in a sector and pushes up demand, but relative prices in that sector fall, such as computers and smartphones,” he continued.

As workers have to move from one sector to another, Prof. Pissarides pointed out that the biggest challenge posed by the transformation is that people have to learn new skills, and to ensure that technology is used to improve the wellbeing of workers and to make them better off, not just to increase profit.

“About 40% of jobs advertised in the UK require technical skills such as IT skills and data processing, operations and logistics, and engineering, whilst 80% of occupations ask for ‘soft skills’, including good communication with your supervisors, peers, or subordinates, reliability and self-discipline, creativity, critical thinking, leadership, and management, as well as advanced communication and negotiation skills,” he explained.

In talking about a potential job shortage brought about by the technological revolution, Prof. Pissarides argued that many industrial economies are suffering from a shortage of workers instead of jobs.

“AI requires labour to work with, especially in IT, data processing and data analytics industries. Non-technical service sectors, such as health and hospitality, will create more jobs as spending on these services increases,” he said.

While Prof. Pissarides remains optimistic about AI’s overall impact on the job market, he raised concerns for the long-term viability of Science, Technology, Engineering, and Mathematics (STEM), careers as most STEM-related tasks can be done by AI.

“If you train in STEM, there’s a high possibility that you might lose your job. AI cannot communicate well and make required decisions, that’s where the future of human work is,” he asserted.

Looking ahead, Prof. Pissarides underscored the enduring importance of collaboration between governments, companies, and employees amid a rapidly evolving job landscape.

“AI is still in its early ages, and we must make sure that it’s applied well. Companies should be providing good jobs, and everyone should be focusing on making the right choices about the direction of change that we’re making,” he concluded.