Labour polarisation: How AI will destroy the middle class

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Labour polarisation can have significant implications for income inequality, social mobility, and economic stability.

According to several economic experts, in the coming years, persons with middle incomes, referring to those who are neither extremely wealthy nor extremely poor, may face the prospect of falling into poverty despite being hardworking throughout their lives.

These theories propose a significant rise in inequality within our societies, resulting in a majority of people experiencing a continuous decline in their economic well-being. Concurrently, a small privileged group may amass substantial wealth.

The underlying reasons behind this projected surge in inequality are manifold, and these theories posit that the middle class is particularly vulnerable.

This has happened before, in the 19^th century to be precise. A group of skilled British weavers and textile workers objected to the introduction of mechanised looms and knitting frames.

As highly trained artisans, the new machinery posed a threat to their livelihood and after receiving no support from the government, they took matters into their own hands, by destroying the machines.

The group were known as Luddites named after Ned Ludd. Now the term Luddites refers to someone being opposed to technological progress, or one that is inept in the use of new technology. This scenario, where the middle class is eliminated is called labour polarisation.

What exactly is labour polarisation?

Labour polarisation refers to a socio-economic phenomenon in which the distribution of jobs and employment opportunities becomes increasingly concentrated at opposite ends of the skill and wage spectrum, resulting in a decline in middle-skilled or middle-wage jobs.

This polarisation typically occurs in advanced economies and is driven by various factors, including technological advancements, globalisation, and changes in labour market dynamics.

In a labour-polarised economy, there is a growing demand for high-skilled, knowledge-intensive jobs that require specialised education and expertise, such as those in technology, finance, and professional services.

At the same time, there is also a rise in skilled jobs that are labour-intensive but typically offer lower wages and fewer benefits, such as service industry positions and manual labour in construction or manufacturing.

The middle-ground jobs that traditionally provided stable employment and a pathway to the middle class, like administrative and clerical roles, some manufacturing jobs, or routine tasks susceptible to automation, are often the ones that experience a decline in demand, leading to job losses and wage stagnation for the workers in these segments.

Labour polarisation may lead to a growing income gap between high-earners and low-earners, making it challenging for individuals in the lower-income bracket to move up the economic ladder.

Additionally, it can contribute to social and political tensions as some segments of the population may feel left behind or disempowered due to the shifting economic landscape. Policymakers and economists often study labour polarisation to understand its causes and explore strategies to promote more inclusive and equitable economic growth.

How AI will cause labour polarisation?

AI has the potential to significantly impact labour polarisation, both positively and negatively, depending on how it is implemented and managed. Here is some ways AI could influence labour polarisation:

1. Automation of routine tasks

AI-powered automation can replace certain routine and repetitive tasks, especially in industries like manufacturing, logistics, and data entry. While this can increase efficiency and reduce costs for businesses, it may lead to job losses for workers in these sectors, contributing to polarisation by reducing the availability of middle-skilled jobs.

2. Creation of high-skilled jobs

As AI technology advances, there is an increasing demand for skilled professionals who can develop, implement, and maintain AI systems. These high-skilled jobs typically require advanced technical knowledge and expertise. Thus, AI could contribute to the growth of high-skilled opportunities, potentially exacerbating the divide between high and low-skilled workers.

3. Enhanced productivity and economic growth

AI can augment human capabilities, leading to increased productivity in various sectors. Higher productivity often correlates with economic growth, which, in turn, may create more job opportunities across skill levels. However, the distribution of these new jobs may not be evenly spread, potentially leading to further polarisation.

4. Increased income inequality

The economic benefits of AI might not be distributed equally. Companies and individuals who have access to AI technologies and the resources to invest in them may gain a competitive advantage and accumulate more wealth, while others could be left behind. This could widen the income gap and contribute to labour polarisation.

5. Reskilling and upskilling

To adapt to the changing job landscape due to AI, workers may need to undergo reskilling or upskilling programmes to stay relevant in the job market. Access to these opportunities may be limited for some individuals, potentially leading to further disparities in skills and wages.

6. AI ethics and bias

AI systems can inherit biases from their training data, leading to biased decision-making. If these AI systems are used for tasks like hiring or promotion, it could perpetuate existing social biases, including those related to gender, race, and ethnicity. This could exacerbate disparities in the labour market and contribute to polarisation.

7. AI Regulation and social policies

Effective regulation and social policies can play a crucial role in mitigating the negative effects of AI on labour polarisation. Measures such as ensuring a safety net for displaced workers, promoting accessible education and training opportunities, and addressing AI bias can help create a more inclusive and balanced job market.

While AI has the potential to bring about positive changes to society, it also poses challenges in terms of labour polarisation. How AI impacts the workforce and economic inequality depends on how society, businesses, and policymakers navigate and respond to these technological advancements.

Strategic planning, investment in education and reskilling, and thoughtful policy frameworks are essential to harness the potential benefits of AI while mitigating its adverse effects on labour polarisation.

How labour polarisation will affect the middle class?

Labour polarisation can have significant effects on the middle class, often leading to a decline in its size and economic stability. Here are some ways labour polarisation affects the middle class:

1. Shrinking middle-class job opportunities

 As labour polarisation leads to a decline in middle-skilled jobs, the middle class may face challenges in finding stable, well-paying employment opportunities. Many traditional middle-class jobs that required moderate skills and offered decent wages may be automated or outsourced, resulting in reduced job security and income stagnation.

2. Income inequality

Labour polarisation can widen the income gap between the upper and lower ends of the income distribution. While high-skilled professionals in sectors benefiting from AI and technological advancements might see their incomes rise, those in lower-skilled jobs may experience wage suppression. This disparity can erode the purchasing power of the middle class, making it harder for them to maintain their standard of living.

3. Educational requirements

With a growing demand for high-skilled jobs, the middle class may face pressure to pursue higher education and acquire specialised skills to remain competitive in the job market. This could lead to increased student loan debt and financial strain for middle-class families.

4. Social mobility

Labour polarisation can impact social mobility, making it more difficult for individuals in the middle class to move upward economically. With limited opportunities for middle-skilled jobs and increased competition for high-skilled positions, achieving upward mobility may become challenging.

5. Job insecurity and precarious work

The middle class may experience higher levels of job insecurity as some occupations become more vulnerable to automation and outsourcing. This insecurity can lead to an increase in part-time or contract-based work, reducing the stability and benefits associated with traditional middle-class jobs.

6. Weakened bargaining power

As the middle class faces a reduction in job opportunities, their bargaining power in the labour market may decrease. With fewer alternatives available, workers might find it more challenging to negotiate for better wages and working conditions.

7. Impact on consumer spending

The middle class has historically been a significant driver of consumer spending, contributing to economic growth. However, if labour polarisation leads to income constraints and reduced purchasing power, consumer spending may decline, affecting overall economic activity.

8. Public policy and social safety nets

Labour polarisation can create a need for updated public policies that address the changing job market. Measures such as targeted education and training programmes, affordable healthcare, and social safety nets are essential to support the middle class during times of economic transition.

Addressing labour polarisation’s impact on the middle class requires a multifaceted approach, including investment in education and retraining, policies promoting economic inclusivity, and efforts to reduce income inequality. By focussing on policies that support job creation, upskilling, and social mobility, societies can help strengthen and protect the middle class amid labour market transformations.

How to survive labour polarisation?

Surviving labour polarisation as a recent graduate can be challenging, but with the right approach and mindset, you can position yourself for success. Here are some recommendations to navigate the changing job market:

1. Continuous learning and skill development

Emphasise the importance of lifelong learning. Stay updated with the latest industry trends and technologies. Upskill or reskill yourself in areas that are in demand, especially those related to AI, data science, cybersecurity, and other high-growth sectors.

2. Embrace technology and AI

Rather than fearing AI, embrace it as a tool that can enhance your productivity and creativity. Familiarize yourself with AI applications in your field and find ways to leverage it to your advantage.

3. Cultivate adaptability and flexibility

Labour polarisation may result in shifts in job roles and requirements. Be adaptable to change and be willing to explore new opportunities that align with your skills and interests.

4. Networking and building relationships

Networking is crucial in any job market. Attend industry events, join professional associations, and connect with alumni to expand your professional network. Many job opportunities are not publicly advertised, and personal connections can be invaluable.

5. Gain experience through internships and freelancing

If you are struggling to find a full-time job, consider internships or freelancing to gain practical experience and build your resume. This can open doors to future opportunities.

6. Entrepreneurial mindset

Consider entrepreneurship as an option. Identify problems you are passionate about solving and explore the possibility of starting your own business or becoming a freelancer.

7. Cultural and social awareness

In an interconnected world, cultural and social awareness is essential. Understanding diverse perspectives and being sensitive to different cultures can give you a competitive edge in a globalised job market.

8. Focus on soft skills

While AI can handle certain technical tasks, soft skills like communication, teamwork, critical thinking, and creativity are still highly valued. Cultivate these skills to complement your technical expertise.

9. Seek mentorship

Look for mentors who can guide you in your career journey. Their advice and support can be invaluable in navigating the challenges of labour polarisation.

10. Stay resilient and persistent

Job hunting might take time and effort, and you may face rejection along the way. Stay resilient and persistent, learning from each experience and refining your approach.

11. Stay informed about labour market trends

Keep yourself informed about labour market trends and job opportunities in your chosen field. Understanding where the demand is can help you make informed decisions about your career path.

12. Personal branding

Develop a strong personal brand online. Create a professional presence on platforms like LinkedIn and showcase your skills, achievements, and projects.

Remember, surviving labour polarisation requires a proactive approach and a willingness to adapt. Embrace change, keep learning, and remain positive about the opportunities that lie ahead. By combining your skills with a growth mindset, you can position yourself for success in a dynamic and evolving job market.

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