Risk warnings
Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.
The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.
Artificial intelligence (A.I.) is a set of complex algorithms that enables computers to ‘think’ through and perform a cognitive task in the same way that humans do. Automating decisions previously made by humans could have an exponential impact on improving efficiencies, driving economic growth and solving many of society’s problems today.
Technological advances have been the most significant driver of economic development over the last 200 years, with each industrial age transforming the way people live and work. But the depth and scale of labour displacement from A.I. automation could be much greater than previous industrial revolutions. If mishandled, widespread unemployment and growing social inequality could result.
“By 2025, the time spent on current tasks at work by humans and machines will be equal.”
World Economic Forum, Future of Work, 2020
In practice it is rare that an individual’s entire role could be automated, but rather a proportion of their duties. Although this can make that individual more productive, as they can spend more time doing arguably more valuable work, this also reduces the number of people across a team needed to fulfill a specific level of workload, meaning that headcounts can be reduced.
Through an effective human capital management strategy, companies should look to re-skill their workforce to lower costs, retain talent and minimise workforce disruption.
Companies need to make decisions in this area today in order to not lag behind for the next decade or so. Mishandling this transition will not only create greater inequality, undoing much of the work companies have been doing to combat this over the last few years, but it will also impact their long-term financial performance as they might fail to close the future skills gap with their existing pool of talent.
A.I. technology promises an exciting future of possibilities in a post-pandemic world but companies, policy makers and wider society need to think proactively about its deployment in order to ensure it is truly sustainable.
Risk Disclaimer
Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.
The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.
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