Stating that hiring of workers in AI-substitutable jobs has slowed sharply while the hiring for Artificial Intelligence (AI) complimentary skills has increased, she told CNBC-TV18’s Abhimanyu Sharma that the South Asian labor market is pivoting towards skills that can be amplified by AI.
Describing efforts by governments to encourage AI adoption as the right strategy to boost growth in the medium-term to make use of the global technology shock, she noted that a one of the biggest challenges for South Asia is to “create more and better jobs,” which she said is becoming difficult.
Highlighting cross-cutting measures which lay foundation for broad based growth including infra investment and skilling as a priority for South Asia, she said that the best industrial policies for certain strategic sectors are the ones that address market failures directly.
Noting that services exports from South Asia, especially in the BPO sector, have grown rapidly; she said that job growth prospects in the short-term are weakening even as the services sector is facing both risks and opportunities from AI adoption.
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Stating that though growth is expected to slow down from 7% last year to 6.3% this year, largely due to headwinds from global energy markets disruptions, she said that over the medium term the region has promising growth potential partly due to trade reforms underway.
Projecting that the recent Free Trade Agreements (FTAs) finalized by India with the European Union (EU) and the United Kingdom (UK) have doubled preferential access to global markets, she said that new FTAs bring much more than tariff cuts, like visas, Mutual Recognition Agreements (MRAs) and less friction from non-tariff barriers.
Noting that the World Bank’s past reports showed bigger gains in GDP in such deeper FTAs than trade deals with just tariff cuts, she highlighted that South Asian governments have made use of industrial policy to tackle the issue of job creation with better jobs at twice the pace of other emerging markets, with half of such policies targeted at manufacturing and sectors with more jobs and higher wages.
Calling for cross-cutting measures by South Asian economies to lay the foundation for broad-based growth including infrastructure investment and skilling, she batted for industrial policies that address market failures directly in strategic sectors where governments want to steer the economy in a narrow area.
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