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S&P Global — 4 December 2024

Daily Update: December 4, 2024

The Impact of AI on Jobs and Labor

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy

Discussions about AI’s impact on labor become very personal very quickly. A factory worker might wonder if AI will complete the job eliminations that robotics began. A doctor might question if medical school and internships were time ill-spent. A daily newsletter writer might contemplate whether a large language model will soon replace them. (Not today, Skynet.) Understanding AI’s impacts on different jobs and industries requires examining both the skills needed for a role and the adoption and understanding of AI over time. These perspectives can allow for a reasonably dispassionate evaluation of likely impacts, beyond personal self-interest. A group of researchers at S&P Global has explored AI’s impact on labor in these two ways in a recent article: “AI and labor: Change is inevitable, but human capabilities remain essential.”

As understanding of AI grows more sophisticated, its application in various industries will advance. S&P Global’s analysis of AI's effects on labor breaks adoption patterns into three periods: the short term (one to three years), the medium term (four to six years) and the long term (seven to 10 years). As the timeline progresses, AI will impact jobs in several ways, including efficiency and productivity, emerging roles, transformative collaboration, the impact of autonomous systems, and labor redistribution and reskilling.

In the short term, AI applications will likely focus on enhancing labor efficiency and productivity in existing workflows. A modest productivity bump is expected due to improved efficiency, knowledge acquisition and automation. In the medium term, AI will significantly reshape labor markets, driven by increased investment in and knowledge of AI systems and by competitive dynamics that should reduce AI's implementation costs. AI-augmented roles will expand dramatically as agentic models continue to take on repetitive or administrative tasks from human workers. New job categories will emerge as AI governance, training and ethical application become important for business functions.

The longer term is hard to predict. Certainly, there will be further transformation due to the technology’s advancing maturity, humanity’s growing expertise in effective implementation, and the regulatory landscape’s increasing clarity. If and when the cost-effectiveness of AI surpasses human labor, autonomous systems and data analysis will grow. AI combined with the internet of things should enable predictive maintenance. Another paradoxical potential impact is that human skills will become more valuable. Empathy and communication may generate more value and allow human workers to thrive in an increasingly automated environment.

 S&P Global’s analysis breaks down individual job functions into skills and then evaluates the potential disruption of those skills by AI. This yielded a composite score of 1-10 for a range of jobs, where 1 represented the lowest level of disruption and 10 the highest. It is important to note that disruption does not mean elimination. Instead, disruption indicates that these jobs will make the heaviest use of AI. Among the most disrupted professions are scientists, mathematicians, intelligence analysts and computer programmers. Low-disruption jobs tend to be the high-touch professions of “essential workers,” to use a pandemic-era phrase. This category includes manicurists, bartenders, contractors and waiters. Between these two extremes are jobs that will be subjected to moderate disruption — information security analysts, medical practitioners, fraud examiners, financial analysts and writers of daily newsletters.

Today is Wednesday, December 4, 2024, and here is today’s essential intelligence.

Listen: Why Singapore's Sovereign Wealth Fund Takes a Nuanced Approach to Sustainability

Throughout 2024, ESG Insider has been talking with financial institutions around the world about their approach to sustainability and climate finance. Finance was also a big focus of the UN’s COP29 climate conference that just wrapped up in Baku, Azerbaijan, and in this episode of the ESG Insider podcast, we talk with De Rui Wong, Senior Vice President in the Sustainability Office of GIC, Singapore's sovereign wealth fund.

—Listen and subscribe to the podcast from S&P Global Sustainable1

Economic Research: Global Economic Outlook Q1 2025: Buckle Up

The global macroeconomic outlook is hostage to the policy implementation of the new US administration. The recent macro pattern featuring an outperforming US economy continues. But potentially large changes in fiscal, trade and immigration policy from the US are significant unknowns at this juncture. Specifically, it is unclear to what extent campaign promises will translate into policy, and when.

—Read the article from S&P Global Ratings

Australian Banks Rely on Capital to Offset Margin Pressures, Profit Declines

Australia's biggest banks demonstrated resilience in their financial results for the recently concluded fiscal year, reflecting robust capital levels amid intense competition. The country's four major lenders reported a decline in their net profits for the fiscal year ended Sept. 30, as net interest margins narrowed with the Reserve Bank of Australia maintaining its benchmark cash rate at 4.35%. Despite this, three of the four banks improved their common equity tier 1 ratios over the past two years.

—Read the article from S&P Global Market Intelligence

Auto Industry Buckles Up for Trump's Proposed Tariffs on Car Imports

This report discusses how additional US import tariffs on LVs imported from Europe, the UK, Mexico and Canada could affect the earnings of European and US carmakers, as well as Toyota Motor Corp. (Toyota) and Hyundai Motor Co. (Hyundai-Kia). The scope, magnitude and timing of new tariffs are uncertain and are therefore not part of the base-case scenarios for the issuers covered in this article.

—Read the article from S&P Global Ratings

Russia's Gazprom Cuts Investment Budget for 2025, China Remains Focus

Russia's Gazprom on Nov. 28 set its draft investment budget for 2025 at some Rb1.52 trillion ($14 billion), a reduction of some 7% compared with this year's planned spending. In a statement, Gazprom said next year's investment budget would provide funds for financing priority projects, including the expansion of the Power of Siberia gas pipeline. Funds would also be used for the further development of gas production centers in eastern Russia and on the Yamal Peninsula, as well as the continued gasification of Russian regions.

—Read the article from S&P Global Commodity Insights

BriefCASE: OEMs’ Balancing Act — The Resurgence of Hybrids as BEVs Hit Brakes

The new car registrations data from the European Automobile Manufacturers' Association (ACEA) indicates that hybrid electric vehicles (HEVs) will remain prevalent longer than the industry anticipated. In January-October 2024, battery-electric vehicle (BEV) registrations in the EU dropped by 4.9% year over year. Their market share also fell from 14% last year to 13.2%. Interestingly, HEV registrations increased 17.5% in October, with their market share rising to 33.3% from 28.6% last October.

—Read the article from S&P Global Mobility

Webinar: Global Credit Outlook 2025 — Americas/EMEA Session (Dec. 5, 2024)

As a key risk to the continuation of favorable credit conditions and general economic resilience, policy uncertainty is blurring the picture for 2025 — against a backdrop of coalescing geopolitical risks.

S&P Global Ratings’ Global Credit Outlook 2025 will present our macroeconomic and credit outlooks for the year ahead, including our base-case forecasts and key risks for what promises to be another perilous period for the global economy and markets.

Join our leading researchers, analysts and economists on Thursday, Dec. 5, 2024, to explore our perspective on the year ahead at our upcoming webinar.

—Register for the webinar from S&P Global Ratings