If there's a labour market revolution under way, it's a quiet one

Artificial intelligence has now become so advanced that it is causing serious concern – including among those developing the technology.

One of them is Dario Amodei, co-founder and CEO of Anthropic, who has warned that artificial intelligence will disrupt the labour market and that we must prepare for unemployment to rise to 10–20 per cent as knowledge workers are outcompeted by AI agents.

But according to IDA’s chief economist, Anders Overvad, there is insufficient evidence to support claims of this magnitude.

‘There is a great deal of discussion about the risk of unemployment, but it would be unfortunate if it caused too much unnecessary concern.

‘At the moment, we are hearing some fairly dramatic claims, and I can understand why they are causing concern,’ he says.

‘At the same time, some companies are using AI as an explanation when they make redundancies, even though it is probably not the real reason. This can make it difficult to distinguish facts from assumptions about what AI can actually do.’

Unemployment will be unchanged in five years

Unemployment among IDA members is slightly higher than it was a year ago, but Anders Overvad says there are more obvious explanations than the adoption of AI.

He points to rounds of redundancies at major Danish companies such as Novo, Ørsted and Vestas, noting that it is not unusual for the labour market to take time to absorb so many people with similar professional backgrounds.

‘The level of unemployment we are beginning to see among members is actually quite expected. The labour market has simply shifted down a gear after the pandemic, when employment was surging,’ says IDA’s chief economist.

According to Anders Overvad, if AI were genuinely beginning to make inroads into the labour market, we would probably see a high number of redundancies in particular industries where AI adoption was moving fastest. Yet employment has actually risen since AI tools were introduced in two professions considered especially vulnerable to AI: software developers and lawyers.

‘So, to repeat a quote I heard the other day: if there is a revolution under way in the labour market, it is certainly a quiet one.’

Anders Overvad therefore does not expect unemployment to be higher in five or ten years’ time – either among IDA members or across society as a whole.

It may even be slightly lower, because AI can boost productivity and create new jobs.

‘In any case, it is difficult to find historical evidence that new technology has led to permanent increases in unemployment. Historically, it has always led to new types of jobs being created, with unemployment subsequently returning to normal,’ says Anders Overvad.

According to him, the mechanism is quite simple: when the price of a product falls, demand for it will typically increase.

This means that if, in future, one software developer can use AI agents to deliver the same output as ten developers, large companies may reduce the size of their development teams. In return, however, more small and medium-sized businesses may be able to employ developers of their own.

He also points out that entirely new types of jobs are likely to emerge – roles that do not exist today.

Graduates need not be concerned either

Nor is Anders Overvad particularly concerned by a new analysis from Danmarks Nationalbank showing that companies using AI recruit fewer new employees than companies that do not. According to the analysis, the effect is particularly pronounced among younger people and those with a higher education.

‘My assessment is that some companies begin looking at AI-based solutions when they struggle to recruit. We can see that the effect is driven particularly by companies with fewer than 100 employees. These are probably businesses that find it difficult to increase salaries enough to attract the people they need,’ he says.

‘Overall, Danmarks Nationalbank estimates that 5,700 jobs in Denmark have not been advertised or filled as a result of AI. That is, after all, a limited number in a labour market of more than three million people,’ Anders Overvad explains.

He notes that Danmarks Nationalbank itself concludes that AI has no measurable effect on overall employment. And although the analysis highlights graduates with advanced qualifications as being particularly vulnerable to AI adoption, he does not believe they need to be overly concerned either.

‘Finding your feet in the labour market as a recent graduate can feel overwhelming, and it may take some time to land a job. AI skills are in demand in many places, but AI cannot, of course, replace professional expertise. My advice would therefore be to understand how AI can support your field of expertise, while remembering that this expertise still provides the value employers are looking for.’

Do not focus on becoming better at Excel

Although Anders Overvad is not concerned about mass unemployment, the adoption of AI is likely to bring significant changes to the labour market as we know it.

This will affect individuals whose roles no longer include tasks they may have spent years mastering, or tasks they simply enjoy. And that creates concern.

Jakob Gradel is a career adviser at IDA. He is increasingly meeting members who are worried about losing their jobs because of AI. Their concern is compounded by the uncertainty they also see among company leaders about how to adopt AI.

However, he believes that employers will continue to need the skills of IDA members. In his conversations with concerned members, he therefore encourages them to keep their expertise up to date rather than letting worry take over.

‘The labour market increasingly needs employees who can connect technology, business and organisation. I therefore encourage members to strengthen their commercial awareness and their ability to see connections and the bigger picture, rather than focusing too narrowly on technical depth and detail,’ says Jakob Gradel.

For a software developer, for example, this may mean spending less energy on becoming the very best coder. Or, as Anders Overvad puts it in relation to his own work: ‘As an economist, I should not focus on being the best at building spreadsheets and writing formulas in Excel.’

Both the chief economist and the career adviser point out that, although the technology is new, the need to maintain and develop your value in the labour market is not.

‘In that sense, nothing has changed. It has always been a good idea to consider how you can stay up to date and attractive to employers,’ Anders Overvad explains.

Both also encourage IDA members to stay curious about AI and embrace the technology.

‘Be curious about which AI tools work in your field. Engage openly with the changes, while accepting that uncertainty is part of working life at the moment,’ Jakob Gradel concludes.