As we stand at the precipice of a technological revolution driven by artificial intelligence (AI), the stakes are high.
Although AI may not immediately solve the pressing global issues of today, like climate change or cancer, its potential is undeniable, and the investment landscape reflects this optimism. Over $110 billion in private equity (PE) was invested in AI in 2024 alone, and even more is anticipated in the coming years.
The AI train has left the station, and no one wants to be left behind!
Antonin Bergeaud
Eric Benoist
Micaella Feldstein
Hadrien Camatte
To discuss the ins and outs of how AI may impact the economy and our working way of life, Natixis CIB hosted a webinar with Antonin Bergeaud, Associate Professor of Economics at HEC Paris, Hadrien Camatte, Senior Economist, Natixis CIB, Micaella Feldstein, Tech & Data Research Specialist, Natixis CIB, and, Eric Benoist, Tech & Data Research Specialist, Natixis CIB.
Here, we outline some of the key themes debated.
The New Workforce Paradigm
The rapid adoption of digital technologies over the last few decades transformed workplaces, and the COVID-19 pandemic served only to accelerate the shift, making remote work and collaborative tools more prevalent. The introduction of generative AI marks a new chapter in this advance; it’s user-friendly and simple in the fact that it does not require specialized skills (such as coding), making it accessible to a broader audience.
Despite some excitement, opinions on AI's impact on jobs and the economy vary widely. While some economists predict significant job destruction, others maintain a more measured outlook. Various industry surveys indicate that many employees are already using AI in some form or another, appreciating in particular its ability to reduce errors, save time, and enhance creativity.
Yet, there are underlying concerns about the future of work—employees express apprehension about becoming overly dependent on AI, and worry they might lose expertise, fearing ultimately for their employability.
Historically, technological changes have profoundly influenced macroeconomics. But perhaps not at the speed to which we anticipate AI to have an impact. The integration of electricity into society, for example, took a good 70 years to fully materialize. And today we see that while investment in AI is surging, its impact on GDP growth has yet to be fully realized.
Granted, we may only be scratching the surface of AI's potential, utilizing a mere 0.1% of its capabilities. The potential for transformation is immense, but it will require time for society to adapt and for businesses to integrate AI into their workflows effectively.
The Workforce of Tomorrow
The deployment of AI agents capable of reasoning and undertaking autonomous action poses unique challenges for the labor market.
While AI has primarily been used to automate repetitive tasks, its capacity to adapt and perform complex tasks could disrupt skilled jobs.
Some analysts argue that skilled roles will be at risk, while others contend that AI will rather enhance these positions by taking over the mundane elements, thus allowing workers to focus on more engaging and meaningful work.
Identifying which jobs are most at risk is a complex question. While certain repetitive jobs may be threatened, many roles in fact involve a variety of tasks, making them less susceptible to complete automation. Further, the economic cost of AI deployment also has to be considered; even if AI can outperform humans in specific tasks, the expense of implementation may keep human workers in demand.
The Inequality Dilemma
The potential for AI to exacerbate economic inequality is a significant concern. While it can act as a levelling force, offering new opportunities to lower-skilled employees, many warn that the most vulnerable jobs are those held by the least educated workers, who are also often the most reluctant to embrace technology.
Preparing for these changes will require proactive human resources strategies. Identifying jobs that are likely to be threatened or transformed by AI is essential, as is anticipating recruitment needs, skill development, and budgeting for future changes. Employees must also be encouraged to embrace AI, alleviating fears of obsolescence while emphasizing the importance of training and adaptation.
Overestimating Productivity Gains?
The debate surrounding productivity gains from AI raises important questions about our ability to accurately measure productivity itself. Traditionally, productivity can be enhanced in two ways: fostering growth and increasing “value-add”, or by reducing the workforce while maintaining output. However, AI introduces a unique dynamic to this
equation, which can lead to a substitution effect, where administrative roles that involve repetitive tasks may be phased out. Conversely, it can also create an enhancement effect, where the reduction of menial tasks allows for an overall increase in productivity.
While the short term impact of AI may lead to job displacement, in the medium to long term, we could see a shift towards job creation as roles evolve and adapt to new technological capabilities.
Embracing the Future
The future of work in an AI-driven economy is uncertain but filled with potential. While there are concerns about job displacement and economic inequality, history has shown us that technological advancements often lead to new opportunities and job evolution.
Watch this space!
