Not just upheaval: AI could deliver $120b boost and more jobs

Artificial intelligence is poised to significantly transform Australia's economy, delivering a projected $120 billion boost to productivity and supporting the creation of tens of thousands of new jobs, according to a comprehensive analysis conducted by consulting firm EY. The findings suggest that AI could enhance economic output by between 2.6 percent and 3.2 percent over the next decade, driven largely by advancements in data centres and related technologies. This potential growth is anticipated to result in an estimated 36,000 to 44,000 new jobs, alongside an additional $38 billion in business investment. The current surge in data centre construction, primarily concentrated in New South Wales and Victoria, is being compared to the early 2010s mining boom that revitalized regions such as Western Australia and Queensland. This expansion is expected to surpass previous levels of economic activity, offering a substantial contribution to national productivity. EY’s regional chief economist, Cherelle Murphy, emphasized that AI-driven productivity improvements could reverse the nation's struggles with stagnant productivity, which have been linked to declining living standards and slow wage growth. According to EY’s analysis, the integration of AI into various sectors will lead to shifts in employment demands rather than outright job displacement. While some roles may become obsolete, the research indicates that other areas will experience increased hiring opportunities. For instance, construction, retail, and transportation are projected to see notable job increases, partly due to the infrastructure required to support AI adoption. Financial services, hospitality, and manufacturing are also expected to benefit from these changes. Despite concerns raised by critics who warn of widespread job loss, there is currently limited evidence of such outcomes in Australia. A recent survey by global HR and payroll firm ADP revealed that only a quarter of Australian workers feel secure in their positions against the threat of AI and automation. However, EY’s study counters this by highlighting the potential for job creation in multiple industries. It forecasts nearly 10,000 new jobs in construction, with similar numbers in retail and wholesale trade, along with approximately 6,000 in the transport, postal, and warehousing sector. The research further notes that certain sectors, particularly agriculture and mining, face the risk of job reductions due to their capital-intensive nature and susceptibility to automation. These industries are likely to see a decline of nearly 3,000 jobs each, as technological advances allow for reduced labor requirements and lower operational costs. To ensure the benefits of AI are maximized, Murphy stressed the importance of workforce mobility and targeted reskilling initiatives. Employers and governments must work collaboratively to assist workers in transitioning to emerging sectors experiencing growth. Additionally, the rapid expansion of AI-related activities may contribute to inflationary pressures, akin to trends observed in the United States. Nevertheless, these effects are expected to be mitigated by the deflationary impacts of increased productivity and higher wages.