AI Labor Policy: Job Displacement and Workforce Retraining

In a busy warehouse, robots now handle tasks that once required dozens of workers. Forklifts guided by artificial intelligence (AI) move products, while automated systems track inventory. For many employees, these changes mean fewer jobs and new skills to learn. This scene is not unique. Across industries, AI is reshaping work, raising concerns about job losses and the need for new labor policies.

AI is changing how people work². Machines now perform tasks once done by humans². Some jobs will disappear, while others will emerge². This shift creates challenges for both workers and policymakers. To reduce harm, labor policies must focus on retraining, reskilling, and supporting workers.

Workers undergoing retraining alongside advanced AI robots, highlighting the impact of automation on employment and the need for adaptive labor policies.

The Scope of AI-Induced Job Displacement

AI affects industries in different ways. Jobs with routine tasks, like those in manufacturing, transportation, and customer service, face the highest risk. A 2023 report by the World Economic Forum estimates that AI may displace 83 million jobs by 2027 while creating 69 million new ones¹. This shows that AI can both disrupt and create opportunities¹.

Some groups face greater risks. Low-skilled workers, older employees, and people in regions that rely on manufacturing are most vulnerable. Without support, they may struggle to find new work.

Policy Approaches to Mitigate AI Disruption

Governments use different strategies to manage AI's impact on jobs. Effective policies focus on three areas:

1. Workforce Retraining and Reskilling Programs

   • Large-scale retraining helps workers gain skills for new jobs. In Singapore, the government offers lifelong learning programs to support career changes³.

   • Public-private partnerships align training with industry needs. In Germany, the "Pact for Skills" connects businesses, unions, and schools to offer targeted training⁴.

     
     

2. Social Safety Nets and Income Support

   • Expanding unemployment benefits and wage subsidies can support workers during job loss. Some countries are testing universal basic income (UBI) as a safety net.

   • Updating worker protections, like portable benefits for gig workers, helps those in non-traditional jobs stay secure.

     
     

3. AI Regulation and Corporate Responsibility

   • Requiring companies to assess how AI affects workers can reduce harm. The European Union's AI Act requires human oversight for high-risk AI systems⁵.

   • Tax credits and subsidies can encourage companies to keep and retrain employees.

     
     

Global Examples of Labor Policy Innovation

Different countries offer useful models for handling AI-driven changes:

• Singapore: The "SkillsFuture" program gives citizens credits to pay for job training throughout their careers³.

• Canada: The "Future Skills Centre" funds research and new ideas to help workers adapt⁶.

• Sweden: Strong labor unions and social programs help workers transition to new roles through collective bargaining and public support⁷.

  
  

Challenges and Future Directions

Several challenges remain:

• Skills Mismatch: Technology changes fast, and training programs may not keep up.

• Funding and Access: Long-term retraining requires steady public investment and fair access for all workers.

• Global Coordination: AI affects labor markets worldwide. Countries must work together to manage cross-border impacts and set shared standards.

  
  

Conclusion

AI will continue to reshape the labor market. Policymakers must focus on retraining, protecting workers, and holding companies accountable. With clear policies and cooperation, societies can support workers while embracing technological change.

¹ World Economic Forum. "Future of Jobs Report 2023." ² Brynjolfsson, Erik, and McAfee, Andrew. "The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies." 2014. ³ SkillsFuture Singapore. "Annual Report 2022." ⁴ European Commission. "Pact for Skills: Joining Forces to Upskill Europe." 2020. ⁵ European Union. "Artificial Intelligence Act." 2021. ⁶ Future Skills Centre. "About Us." 2023. ⁷ International Labour Organization. "Collective Bargaining and Labor Relations." 2022.