A study by the Economic and Social Research Institute (ESRI) has found that the adoption of artificial intelligence (AI) among Irish businesses is expected to result in job losses, particularly affecting highly educated workers, reports RTE.
This trend reflects the significant exposure of high-skilled roles to AI-driven technologies, reports RTE.
According to the findings, approximately 7% of existing jobs could be displaced over the short to medium term.
The joint report by the ESRI and the Department of Finance concluded that AI adoption in Ireland is likely to cause moderate increases in income inequality, reports RTE.
This shift is expected to stem from job displacement among workers whose roles can be partially performed by AI, wage growth for employees who become more productive through AI use, and rising capital income such as returns from business investments.
For those who remain employed, average earnings are expected to increase due to productivity improvements enabled by AI tools, reports RTE.
“Returns to capital are also expected to increase, modestly on average, but with disproportionate benefits accruing to the highest-income households who hold most capital assets,” the report said,
“Taken together, these forces produce an overall decline in average household disposable income in the short-term,” reports RTE.
The report explored both the risks and opportunities that AI presents for income inequality and public finances.
“AI adoption will create winners and losers, at least in the short to medium-term,” the study found, reports RTE.
“For Ireland, a country with a highly educated workforce and a strong technology sector, AI adoption presents a unique challenge and opportunity,”
“The research focuses on the current occupational structure and could not take into account what new jobs or increased opportunities AI might generate in certain sectors,” the ESRI said, reports RTE.
Physically demanding jobs least at risk
Regarding roles most vulnerable, the report points to occupations involving tasks that can be efficiently handled by AI, such as image recognition and translation.
Jobs with higher risks of displacement include information and communications technicians, customer service clerks, and clerical support workers, reports RTE.
The report found that roles involving direct customer interaction or physical labour face a lower likelihood of being replaced.
Occupations with reduced risk include health professionals, agricultural workers, construction workers, and refuse collectors, reports RTE.
“All AI adoption scenarios considered result in a small to moderate increase in household income inequality as job losses, wage increases and capital income increases together widen the gap between rich and poor,” the study said,
Impact on the Exchequer
The report found that Ireland’s tax and welfare system is relatively well-equipped to offset much of the income loss for lower-income households in the short term through increased welfare supports and reduced tax burdens, reports RTE.
It also noted that fiscal outcomes will vary significantly depending on the scenario.
If employment losses are limited or workers are quickly reallocated, government revenue could increase due to productivity gains, reports RTE.
However, if job displacement is substantial, income tax revenues are expected to decline compared to baseline projections, while welfare spending would rise, placing pressure on public finances.
“The effect of AI on the labour market and the distribution of income is still highly uncertain,” said Karina Doorley,
“Income inequality, measured by the Gini coefficient, is likely to rise in any AI adoption scenario as job losses and wage and capital income increases result in income polarisation,” reports RTE.
“Ensuring a speedy digital transition will minimise the inequality effects,” reports RTE.
Sorcha O’Connor of the Department of Finance said the findings underline the importance of upskilling, retraining, and lifelong learning to ease the transition to AI, reports RTE.
“The widespread adoption of AI will likely boost productivity and raise living standards in the long-term,” Ms O’Connor said, reports RTE.
“However, it’s important that these benefits are widely dispersed and that everyone benefits, This research offers valuable insights for consideration into how this transition is managed,” reports RTE.
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