About this episode
Our Head of European Sustainability Research Rachel Fletcher talks about how AI’s is quickly reshaping employment and productivity across key industries and regions.Read more insights from Morgan Stanley.----- Transcript -----Rachel Fletcher: Welcome to Thoughts on the Market. I am Rachel Fletcher, Head of European Sustainability Research at Morgan Stanley. Today, how AI is shaking up the global job market. It's Friday, February 20th at 2pm in London. You've probably asked yourself when all the excitement around AI is going to move beyond demos and headlines, and start showing up in ways that matter to your job, your investments, and even your day-to-day life. Our latest global AlphaWise AI survey suggests that the turning point may already be unfolding – especially in the labor market where AI is beginning to influence hiring, productivity, and workplace skills. Our survey covered the U.S., UK, Germany, Japan, and Australia, across five sectors where we see a significant AI adoption benefit. Consumer staples, distribution in retail, real estate, transportation, healthcare, equipment and services, and autos. We found that AI contributed to 11 percent of jobs being eliminated over the past 12 months, with another 12 percent not backfilled. These job cuts were partially offset by 18 percent new hires, which results in a net 4 percent global job loss. It's important to note that the survey focused on companies that had already been adopting AI for at least a year. In fact, most of the companies in our survey had been adopting AI for more than two years. So, this is likely the most significant downside case in terms of the impact of AI on jobs, but it is still an early signal of potential job disruption. In Europe, the picture is nuanced. The UK saw the highest net job loss at 8 percent. This was primarily driven by a lower level of new hires in the UK compared to other countries that we surveyed, as well as a high level of positions not backfilled. This compares to Germany, which posted a 4 percent net job loss in line with the all-country average. There could be some other factors amplifying the impact in the UK. For example, broader labor market weakness driven by higher labor costs and higher levels of unemployment amongst younger workers. Ultimately, disentangling AI from macro forces remains challenging. Moving to sector impacts in Europe, autos experience the largest net job loss at 13 percent, and this compares to a 10 percent global average for the sector. It's possible these numbers reflect persistent sales weakness, and AI driven cost cutting. Transportation was least affected at 3 percent, whilst other sectors clustered around 6 to 7 percent. If we look at the top quintile of European companies redu
