AI impact on labor markets and productivity gains in Latin America
The International Monetary fund released and article, based on an in depth report, analyzing the Artificial Intelligence (AI) impact on labor markets and productivity in Latin America and Caribe. The high proportion of informal businesses and jobs in the region will prevent a disruption in the labor markets like the one that could occur in other advanced economies (United States or United Kingdom), but at the same time, it will hinder fully leveraging the economic benefits of this technology.
Main findings of the report:
- Latin America is a region with one of the most informal labor markets in the world. Overall, in the region, more than half of all jobs are informal. In some countries, like Bolivia, Peru and Honduras and the share of informal jobs exceeds two-thirds.
- Informal business are less likely to adopt new technologies. They are typically low tech dependent so they have relatively low exposure to AI and this may help the region avoid more immediate labor market disruptions. According to the IMF, less than half of the region’s jobs are likely to be highly impacted by AI. This is lower than for advanced economies like the United Kingdom or United States, where around 60% of jobs are at risk.
- Low exposure to AI in the region put some countries at risk of missing out on the full benefits of AI-driven economic growth. This will be another setback for the region, where small informal businesses currently struggle to attract investment.
- How to encourage new business to transition towards the formal economy: the article suggests different general measures such as expanding access to finance and streamlining and easing regulatory burdens providing enhanced education, training and social safety nets.
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