The President of the European Central Bank, Christine Lagarde, said that artificial intelligence could undermine the social model of the region if countries do not nurture the skills necessary to harness such technologies.
The mentioned statement was made at the conference of the specified financial regulator on AI on Tuesday, April 1, in Frankfurt. It is worth noting that Christine Lagarde recognized the prospects for productivity improvement that the latest advances in the area of artificial intelligence development can provide. At the same time, she drew attention to the problems associated with AI.
Christine Lagarde said that even if artificial intelligence augments more than it automates, there will probably be an increase in inequality in the labor market. She also expects that the demand for higher-skilled workers who will be able to use machine intelligence most effectively will increase. In her opinion, those who are less able to learn new skills can suffer.
It is worth noting that such a large-scale technology as artificial intelligence, which has many possibilities useful for various industries, is most likely to become a factor of fundamental impact on the labor market sooner or later. Such an assumption is logical since AI can be used as a working tool and as a means of production. Artificial intelligence has the potential to eventually become what can be called a platform for high-tech-driven economic growth. Implementing such an assumption would mean scaling up automation. Artificial intelligence can also become an impetus for the robotization of production. Recently, the opinion has been increasingly circulating among experts that machine intelligence will become a kind of consciousness of robots. This assumption provides for a leap in the area of robotics, which has been an advanced technological idea for many years but has not yet become a large-scale objective reality.
It is worth noting that the state of affairs in the labor market has long been largely dependent on the development of technology. In this case, among other things, it implies the necessary level of qualification of employees, which is changing against the background of breakthroughs in the mentioned area. Technology is also transforming the very concept of the workforce in certain industries, contributing to the shift towards automation. People don’t always respond positively to this. In the relevant context, Luddites are a representative example. In this case, it means representatives of the social movement of workers that arose in the early 19th century in England. They were against the deployment of machines in the textile industry, seeing this process as a threat to their jobs and traditional craft.
At the same time, technology is contributing to the emergence of new professions. In this context, programmers are one example. For a person, the development of technology in the context of the impact on the labor market means, rather than a threat, but the need for retraining. At the same time, the adoption of certain advanced functional systems in some industries at the initial stages can provoke the problem of unemployment. Sometimes the implementation of innovations is faster than the retraining of employees.
According to media reports, Christine Lagarde’s statements signal that central banks are having difficulty forming an assessment of the impact artificial intelligence will have on the economy. It is worth noting that currently many of the world’s economic systems are already trying to adapt to numerous long-term changes, including, among others, the transformation of the demographic situation and the climate passage.
Christine Lagarde cited an analysis conducted this year, according to which in European countries from 23% to 29% of jobs are highly exposed to artificial intelligence-enabled automation. According to her, the European social model and traditionally high levels of job protection make it hard to see how a transition that leads to massive job reallocations could avoid a major backlash. Christine Lagarde also stated that she sees a path for Europe to adopt artificial intelligence without fracturing its social model. According to her, this will require massive complementary investments in skills to prevent a rise in inequality.
Christine Lagarde also mentioned her recurring theme of the need for Europe to achieve more autonomy in an increasingly fragmented world. According to her, artificial intelligence also poses questions in that regard. She stated that Europe is facing a new geopolitical environment where there is no longer any certainty that the region will have frictionless access to new technologies developed abroad. According to her, the mentioned reality strengthens the case for Europe to establish itself at the technological frontier.
The European Central Bank, like many other financial institutions, is closely monitoring the technology sector’s progress. The financial regulator adheres to the fair point of view that the results of the mentioned progress can become an impact factor on inflation, monetary policy, and a neutral level of interest rates. At the same time, the European Central Bank notes that technology may pose new risks to financial stability.
Last year, the Bank for International Settlements said that central banks should get a better grip on the mentioned issue to gauge economic impact and to harness technology for themselves.
Christine Lagarde stated that it is necessary to remove all barriers that will prevent the European Union from being at the forefront of the technological revolution. She also noted the need to prepare for the human and climate impacts of this transition. According to her, it is necessary to start now.
It is worth noting that against the background of the active development of artificial intelligence and the scaling of the practice of using AI, the issue of cybersecurity has become more relevant. Scammers also have access to machine intelligence tools. For this reason, their activities have become more sophisticated. To counteract the corresponding threat in the virtual space, personal awareness of users is important. For example, an Internet search query such as how to know if my camera is hacked will allow anyone to get information about signs of unauthorized access to the device. Digital literacy is an effective tool for countering cybercrime. At the same time, relevant knowledge should be updated periodically, as criminals seek to use the most advanced technologies in their activities.
