AI workplace policy should drive job transformation, not displacement, MTI says

Lower prices due to reduced costs will allow firms to expand output, the study said.

Workplace policy in using artificial intelligence (AI) should focus on job transformation and worker training, and need not translate to job displacement, the Ministry of Trade and Industry (MTI) said.

In a feature article, MTI recognised the advantages that AI brings to businesses, which includes reduced demand for workers in jobs made up of tasks that AI can automate.

Task-level substitution does not mean job-level displacement, MTI wrote in the article, which was based on data from online job postings.

MTI said that workers may shift to tasks that require human judgement or relationship management. For example, accounting workers can focus on problem solving and judgement if AI takes over basic bookkeeping tasks, it said.

“AI can therefore augment workers and raise demand for jobs with complementary task content. The skills required in such jobs would also change,” MTI said.

“AI may automate some tasks while increasing the demand for workers that are performing complementary and/or newly created tasks,” it added.

For Singapore, MTI said that it is important to study the impact of AI use on different groups of workers, as many resident workers’ occupations are highly exposed to AI.

Jobs exposed to AI are half in high-complementarity occupations like managers, science and engineering, health and legal professionals, and half in low-complementary occupations such as clerical support workers, the MTI said.

Lower costs
Firms investing in AI and implementing complementary organisational changes may see improvements in operational efficiency and cost reductions.

“If demand is sufficiently elastic, lower prices due to reduced costs will allow firms to expand output,” the MTI said.

MTI also expects more jobs created as firms expand production evan if they use fewer workers per unit of output due to AI automation. However, the study recognised that impact on profit and labour productivity remains ambiguous in the short term.

“[Firms] may face large investment costs upfront while labour productivity improvements may only materialise with a lag,” MTI said.

MTI’s study said that firms must strengthen their foundational digital capabilities to aid in AI adoption.

MTI said that support for AI use should be differentiated by sector and firm size.