Goldman chief economist | AI will 'destroy employment in some areas'

AI will 'destroy employment in some areas'

Goldman Sachs’ chief economist has offered a stark forecast on the initial impact of AI on the labor market, predicting it will ‘destroy employment in some areas.’

Jan Hatzius, the economist in question, has risen to prominence after previously making several successful predictions about the global economy, including forecasting the 2008 financial crisis.

In an interview with CNN, Hatzius said he expects there to be a short-term hit to jobs, but believes that the long term picture is brighter.

“There will be parts of the labor market where tasks can be replaced,” Hatzius said. “And to a degree, that is going to result in reduced employment there. But then you’ll also find other ways of innovating and creating more jobs somewhere else.”

Goldman Sachs has previously estimated that AI could automate nearly 300 million full-time jobs across the world.

Read more from us

The chief economist argues that over time, AI will result in efficiency gains for organizations with a positive impact on economic growth.

“I see it as a productivity enhancer,” Hatzius noted. “A large number of workers in the economy will become more productive. That is very, very likely.”

He does admit that, to an extent, the short and medium-term future is unclear for employers.

“This is the story of economic growth and innovation for hundreds of years: You have an innovation that is basically labor saving and that reduces employment in some areas, but then boosts it in others,” Hatzius explained. “How that balance is going to work out in the short term, it’s difficult to say. But where I’m much more confident is that it can significantly add to growth over time.”

What others are saying about the impact of AI

Hatzius is not alone in his prediction that AI will fundamentally reshape the workforce. As employees, employers, and other institutions mull over the potential impact of AI, there are concerns about what it means for workers.

According to EY’s 2023 AI Anxiety in Business Survey, based on findings from 1,000 employed U.S workers at least somewhat familiar with artificial intelligence (AI), 75% of employees are concerned AI will make certain jobs obsolete and 65% say they are anxious about AI replacing their job.

Employers such as Duolingo and Klarna, for example, are among the major companies in 2024 to have replaced roles with AI, in content translation and customer service respectively.

Analysis from the IMF predicted in January that AI will affect up to 40% of jobs globally, potentially leading to job loss and deepening inequality. The report makes some similar observations to Hatzius, estimating that in advanced economies such as the U.S., half of the 60% of jobs affected by AI may benefit from the technology, including productivity gains – but close to one-third of jobs are at risk of replacement.

Amid these predictions, it is up to HR to manage concerns and think about strategies for protecting the workforce as job roles are replace in full, or in part, by AI.

In an interview with HR Grapevine, Dan Black, Global Talent Acquisition Leader at EY, has said of IMF’s research to “keep in mind that it's rarely entire functions or entire jobs; it's pieces of jobs.”

“It's the question we get all the time from our people,” Black explained. “First and foremost, I say this: The robots are not coming for your jobs, they’re coming for your tasks… So much of the automation is for mundane, routine work that people don’t want to make the time for.

Black added that EY is attempting to mitigate the jobs that will be lost to AI through reeducation and upskilling.

“Companies need to be responsible and proactive in building those learning opportunities for people to upskill and focus on the human elements of their jobs, and by the end, be more comfortable with the AI technology,” he concluded.

You are currently previewing this article.

This is the last preview available to you for the next 30 days.

To access more news, features, columns and opinions every day, create a free myGrapevine account.