Impact of Artificial Intelligence (AI) on Labour Income UPSC NOTE

The International Labour Organisation (ILO) has reported increasing inequality worldwide due to stagnant labour income.
A significant portion of youth globally remain unemployed, uneducated, or untrained.
These findings are part of the ILO’s ‘World Employment and Social Outlook: September 2024 Update’, released in Geneva.

Impact of Artificial Intelligence (AI) on Labour Income:

The report highlights artificial intelligence (AI) as a major reason for the decline in labour income.

The ILO studied the impact of technological advancements over the past 20 years across 36 countries.
While technological innovations, including AI, have boosted labour productivity and output, they have also contributed to a reduction in the share of income earned by workers.
The ILO notes that automation-driven technological innovations are causing these aggregate effects.
The report cautions that without stronger policy responses, the share of labour income could decline further.

To counter these negative effects, the ILO recommends ensuring that the benefits of technological progress are widely distributed.
The report also reflects slow progress on critical Sustainable Development Goals (SDGs), with the 2030 deadline for these goals approaching.
The global labour income share (the portion of total income earned by workers) fell by 0.6 percentage points from 2019 to 2022.
After this decline, labour income has remained flat since 2022.

The pandemic played a major role in this decline, with 40% of the reduction occurring during the years 2020-2022.

Way forward

The ILO urges countries to take immediate action to address the declining labour income share.
The report recommends policies that promote:

These measures are essential to achieving inclusive growth.
Promoting equitable economic policies is crucial to countering rising inequality and ensuring that technological progress benefits everyone.

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