Artificial Intelligence as part of the Solution to the Demographic Deficit
The world has been experiencing a decline in population growth due to the drop in the number of births. According to The Economist magazine, the fertility rate of the population of the 15 largest economies in the world, including Brazil, China, India and Mexico is below 2.1. The number of two children per woman is called “replacement rate” because it only guarantees the same number of people who gave birth to each child. And Artificial Intelligence (AI), accused of taking jobs, could prove to be a solution to the global problem.
The demographic crisis – nicknamed the “baby crisis” – is a global concern because a rate of less than 2 children indicates a tendency for population reduction. In South Korea, for example, the rate was 0.8 in 2022, indicating that the next generation will have less than half the members of the current generation.
China, for the first time since the 1960s, experienced a reduction in demographic growth, as a result of its “one baby” per family policy. It is estimated that, in the last three years, that Asian country has lost 40 million workers due to Covid-19 and aging. To give you an idea, the number is greater than the entire population of Canada.
Germany has sought to attract immigrants, including Brazilians, to fill the shortage of workers caused by the aging population and low birth rate. The country estimates that by 2035 it will reach a deficit of 7 million jobs.
The decrease in the fertility rate in the long term reduces the supply of labor and brings other economic consequences. With increasing longevity, the number of active workers for every retiree, whose current ratio is 3 to 1 in the developed world, is expected to fall to less than 2 to 1 by 2050. Experts predict that there will also be negative impacts on productivity.
Versão em português aquiResearchers maintain that the so-called “fluid intelligence” is more present in young people. Reduced fertility in parallel with longer life will create generations with more senior scientists than junior ones. Therefore, the ability to solve problems and implement disruptive solutions would be compromised, leaving incremental solutions that are less innovative.
Furthermore, a new trend regarding working hours will add another challenge to maintaining productivity. An NGO called 4 Day Week is inviting Brazilian companies to participate in an experiment to reduce weekly working hours. The participating company applies a model known as 100 -80-100, that is, 100% of wages, with a reduction in working hours to 80% (4 days) and maintenance of 100% of productivity.
Similar experiments were applied, between 2019 and 2022, in Iceland, Belgium, Great Britain and also in New Zealand and Japan, with encouraging results. Experts in the tourism sector expect to sell more, with the increase in trips on weekends, which will be longer. The increase in demand will generate investments and new jobs in segments directly and indirectly linked to the sector, such as transport, hotels, bars and restaurants, entertainment and leisure, etc.
In the meantime, since the emergence of ChatGPT, at the end of 2022, the topic of Artificial Intelligence has sparked debates inside and outside corporate environments. And what is most discussed are the risks that AI brings to people's lives and the maintenance of jobs.
A state of alert set in when a group of executives and AI experts led by Elon Musk asked to “take a 6-month break” from developing AI-based systems. The request, made in March 2023 through an open letter, called for caution due to the potential risks to society.
Goldman Sachs published a report in March 2023 that predicts that 18% of global work could be automated, impacting up to 300 million jobs. For economists at the famous financial conglomerate, Artificial Intelligence platforms like ChatGPT mainly threaten “white collar” jobs, affecting developed countries more than emerging ones.
In June 2023, IMF Deputy Director Gita Gopinath spoke at the University of Glasgow (Scotland) on the occasion of the 300th anniversary of the birth of Adam Smith, Scottish economist and author of the classic “The Wealth of Nations”. Gopinath explained that Artificial Intelligence could affect jobs, not as previous waves of automation did, but in the way predicted by Goldman Sachs.
The same Goldman Sachs study predicts that AI in ten years could increase global production by 7%, that is, the equivalent of the combined economies of India and the United Kingdom. To start this virtuous cycle, the IMF executive suggests regulating Artificial Intelligence in order to classify and mitigate risks. In addition to ensuring that AI is used for the benefit of Humanity, Gopinath prescribes the adoption of public policies that protect the vulnerable and facilitate their requalification and replacement in the job market.
According to research published by the World Economic Forum through the Future of Jobs Report, artificial intelligence will affect the job market in at least 3 different ways: more creation of new jobs (43% of the 803 responding companies) rather than job replacement (23%); companies will prioritize skills in using AI and big data; tasks will be augmented rather than automated by AI, especially when it comes to management skills.
A decrease in the fertility rate tends to reduce the workforce and negatively impact production volumes. The challenge is finding solutions that minimize or overcome the problem. The Government of China, for example, plans to raise the retirement age and fill the labor shortage with the use of robotics and Artificial Intelligence.
In turn, reducing working hours carries the risk of compromising productivity. Artificial Intelligence, seen by some as yet another threat in the modern world, could become an essential part of the solution. Effective regulation and workforce requalification policies combined with the responsible use of AI can achieve good results. They could be critical success factors in the search for productivity gains, with an improvement in society’s quality of life.
* Antonio Carlos Ferreira has a Master's degree in International Relations, Specialist in Strategic Planning and Public Policies, Administrator, Life and Career Coach and Business Consultant.