India could weather ‘AI jobs apocalypse’ by tapping its bountiful human capital

“Prepare for an AI jobs apocalypse,” the Economist warned on May 14. It went on to explain: “Never before in modern history has technological progress hurt the overall demand for labour.”

This is a warning that is of special relevance to India.

Until the advent of Artificial Intelligence, all technological advances displaced humans only from some forms of work, not all. In the early part of the 20th century, mechanisation reduced demand for manual labour in agriculture and manufacturing to produce material goods. Humans moved up the value chain to more skilled work in manufacturing and into the service sector. “Blue collar” work was reduced, “white collar” work increased.

In the next wave of technological progress towards the end of the 20th century, computerisation advanced into services, and improved the productivity of white-collar workers also. Then the “knowledge economy” grew. Humans moved further up the value chain into work requiring human intelligence.

The “productivity” of a country adopting technology, defined as its total economic output divided by the number of its citizens, went up with every major technological advance. With each wave, wages increased and lifestyles improved. After each technological disruption, employment stabilised and at higher levels of wages.

AI has changed the relationship between a country’s rate of adoption...

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