IMF: AI may boost Philippine labor productivity

IMF: AI may boost Philippine labor productivity

By Keisha B. Ta-asan, Reporter

THE SHIFT to artificial intelligence (AI) technologies could increase labor productivity in the Philippine service sector, the International Monetary Fund (IMF) said. 

“Because of the Philippine economy’s early structural transformation to a service-based economy, raising the level of service sector labor productivity through digital skills and portability will be essential,” IMF Resident Representative to the Philippines Ragnar Gudmundsson said in an e-mail. 

“This will require upskilling of the labor force to leverage artificial intelligence tools and continue to move up value chains, as well as efforts to develop the country’s digital infrastructure especially outside urban centers,” he added.

Mr. Gudmundsson said the IMF is working on a study on how AI technologies could affect the Philippines.

Last week, the IMF said AI could affect nearly 40% of global employment. While it is seen to complement human work, it might replace other jobs and would likely worsen economic inequality. 

It said about 60% of jobs in advanced economies are exposed to AI. About half of these jobs will benefit from AI integration by boosting labor productivity.

But the other half showed that AI could perform tasks done by humans, effectively lowering labor demand and leading to lower wages and reduced hiring, the IMF said.

In emerging markets and low-income countries, AI exposure is expected at 4% and 26%, respectively.

“These findings suggest emerging market and developing economies face fewer immediate disruptions from AI,” IMF Managing Director Kristalina Georgieva earlier said.

“At the same time, many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations,” she added. 

Senti AI Founder and Chief Executive Officer Ralph Vincent J. Regalado cited risks in jobs that can be automated with technology.

“Given the rise of generative AI technologies, we’ve seen that adoption has increased and most observed that it aids productivity,” he said in an e-mail. “It’s important that we invest in the education of our people, teaching them how to use these technologies to boost their work and be competitive in the job market.”

Mr. Regalado noted that companies and organizations should support affected employees by helping them acquire new skills.

AI would likely affect several industries including the technology, banking and the pharmaceutical and medical product sector, he said.

“The sectors identified by the IMF in high-income countries would also be the same here in the Philippines,” he said. “Mid- and high-level positions can definitely increase their productivity by using AI tools to offload some of their tasks.”

AI can enhance public services, modernize finance and boost the agriculture and healthcare sectors, according to the IMF report.

Regardless of the industry, any job that requires menial, low-level tasks that can be digitalized will be affected the most by AI, Mr. Regalado said. These include sales, customer service and data encoding jobs.

“This is not to say that all workers in these lines of work will be removed,” he said. “Companies that use conversational AI to handle inbound calls or customer chats may employ fewer workers to just monitor the logs and intervene if the customer requests a human agent.”

“Finance and accounting departments can spend less on staff manually encoding paperwork and just have them double-check the accuracy of data extracted through Document AI,” he added.

However, the Philippines is behind advanced economies due to the lack of infrastructure and manpower, Mr. Regalado said.

Businesses might also find it more expensive to invest in a new system versus relying on human labor, he added.

The Philippines fell 11 places to 65th out of 193 countries in the 2023 Government AI Readiness Index by Oxford Insights. It scored 51.98 out of 100, higher than the 44.94 global average.

Mr. Regalado said the government should lead in advocating AI adoption.

“Investing more in AI companies and research is one way,” he said. “The public sector shouldn’t shy away from collaborating with the private sector to look into ways the Philippines can benefit from increased AI adoption.”

The government should improve infrastructure to accommodate AI, including stable energy and internet connections.

“Mandating and even providing incentives to encourage businesses and government agencies to adopt and use tools that can improve productivity is another good idea,” Mr. Regalado said.