How AI is Reshaping the Labor Market

The impact of GenAI on online labor markets is already discernible, and this suggests potential shifts in long-term labor market dynamics.

This was the conclusion of a report on Harvard Business Review, which talked about how GenAI is already impacting the labor market and is based on research that will be published soon.

In a nutshell, some jobs are going away forever, and employees with GenAI skills will have a substantial advantage over those who don’t.

GenAI is replacing jobs

The authors analyzed almost 1.4 million job posts from a leading global online freelancing platform. By using machine learning, job posts were sorted into different categories: Manual-intensive jobs, automation-prone jobs, and image-generating jobs.

Unsurprisingly, the introduction of ChatGPT and image-generating tools led to nearly immediate decreases in posts for online gig workers across job types, but particularly for automation-prone jobs.

ChatGPT caused a 21% decrease in the weekly number of posts in automation-prone jobs compared to manual-intensive jobs. Writing jobs were affected the most (30.37% decrease). This is followed by software, app, and web development (20.62%) and engineering (10.42%).

The same thing happened with image-generating AI tools: Within a year of introducing AI-based image-generating tools, demand for graphic design and 3D modeling freelancers decreased by 17.01%.

Crucially, there are no signs of demand rebounding – the jobs are effectively replaced. This is concerning, especially when one considers how a 20-percentage-point increase in robot adoption in French manufacturing led to only a 3.2% decline in industry employment.

How businesses can get ahead

So how should employees react? For a start, employees must engage in continuous learning and upskilling to stay competitive, embracing GenAI for job augmentation and productivity gains.

On their part, companies should adopt a proactive, balanced approach to AI integration that focuses on both technological advancement and workforce development. Instead of viewing AI as a simple replacement for existing roles, organizations should invest in reskilling programs that enable workers to leverage AI tools effectively.

Ultimately, jobs are becoming more complex and commanding higher salaries when they incorporate AI capabilities. Companies should therefore prioritize upskilling current employees, redefine job roles to emphasize AI integration skills, and develop clear career pathways that combine human expertise with AI proficiency.

This will help organizations maintain competitiveness while supporting workforce adaptation. By fostering a culture of continuous learning, companies can ensure that their workforce remains agile and prepared for the evolving demands of the AI age.

The authors of the report summed it up this way: “GenAI will continue transforming job market dynamics by automating a wide range of tasks. For organizations to succeed, they must invest in developing a workforce capable of integrating AI into daily operations.”