Bank of England Governor Highlights AI's Potential Impact on Jobs and Productivity
Bank of England Governor Andrew Bailey has warned that artificial intelligence (AI) is likely to displace jobs in a manner comparable to the Industrial Revolution. He emphasized the importance of training, education, and skills development to help workers transition into AI-enabled roles.
Bailey expressed concern that younger, less experienced workers may find it challenging to secure entry-level positions as AI adoption grows. This has raised questions about the future strength and accessibility of the job pipeline, especially since UK unemployment rose to 5.1% in the three months leading to October. The number of unemployed individuals aged 18 to 24 increased by 85,000, the largest rise since November 2022, according to the Office for National Statistics.
Entry-level roles in sectors such as law, accountancy, and administration are seen as the most affected by AI. PwC has reportedly signaled a reduction in hiring due to AI's capacity to replace some junior tasks typically handled by entry-level staff, thereby accelerating efficiency within firms.
Bailey noted that AI could become the next major driver of UK productivity growth. However, he cautioned that widespread adoption will take time and depends on meeting necessary pre-conditions. The Bank of England, alongside other institutions, is currently experimenting with AI but mainstream adoption remains some way off.
Additionally, the Bank of England has warned about potential AI-related bubbles in valuations. Policymakers will monitor these valuations and any possible unwinding. While some large firms continue to generate cash flow, Bailey indicated that not all will succeed in the evolving landscape.
From a historical perspective, the displacement caused by AI could be similar to that experienced during the Industrial Revolution, characterized by displacement of jobs rather than mass unemployment.
