sharesShare articleAmid growing fears of AI-driven job losses and changing workplaces, a $116 billion question has been raised.Could artificial intelligence actually be the cure for Australia’s decade-long productivity slump?Could artificial intelligence actually be the cure for Australia’s decade-long productivity slump? GettyAdvertisementResearch released by EY-Parthenon estimates AI could pump between $95 billion and $116 billion into Australia’s economy over the next decade – equivalent to a 2.6 to 3.2 per cent increase in GDP.It also forecasts a net gain of 36,000 to 44,000 full-time jobs by 2036.But the report argues the biggest takeaway is a long-awaited lift in productivity.Productivity measures how efficiently an economy turns inputs like labour and capital into goods and services.When businesses generate more value without significantly increasing resources, productivity rises, underpinning higher real wages without fuelling inflation.Australia – and much of the Western world – has struggled on that front in recent years. Productivity growth has averaged just 0.3 per cent a year over the past decade, less than a quarter of the pace recorded during the previous 10 years.EY suggests AI could reverse that trend by taking over routine cognitive tasks, helping workers complete jobs faster, improving decision-making, and encouraging businesses to invest in new equipment and software.AdvertisementIts modelling estimates AI could lift national productivity by between 2.0 and 2.4 per cent by 2036, while boosting business investment by up to 3.9 per cent.However, economists caution that national productivity gains are rarely instant or evenly spread.In the past, major tech changes have suffered from an initial adjustment lag as businesses absorb high upfront costs for hardware, energy, and staff retraining.AdvertisementAdvertisementAnd with much of Australia’s workforce concentrated in health, aged care, and education, unlocking nationwide productivity gains will be far harder than simply automating desk jobs.UNSW economics professor Petr Sedlacek welcomed the report, but warned that long-term AI projections require nuance.“Long-term projections about a fast-moving technology like AI should always be interpreted cautiously because the results depend heavily on the assumptions built into the modelling,” he said.Sedlacek noted that EY’s projected productivity gain equates to at most a quarter of a percentage point in additional growth per year.Advertisement“While any boost in productivity growth is welcome these days, one-quarter of a per cent is still far away from highs of around two per cent growth Australia enjoyed in the past,” he told nine.com.au.UNSW economics professor Petr Sedlacek warned against taking long-term AI forecasts as fact. SuppliedRather than worrying about AI replacing entire occupations, Sedlacek said it was more useful to consider how technology automates specific tasks within jobs – which is hitting the younger workforce particularly hard.“Fresh graduates and young workers in AI-exposed occupations are facing a noticeably weaker labour market, consistent with the idea that AI is particularly good at performing more junior tasks,” he said.AdvertisementAdvertisement“Therefore, the bigger risk may not be mass unemployment, but a hollowing out of the career ladder.Read more‘A cruel blow’: Grim warning ahead of August interest rate call“If AI increasingly replaces junior workers, how are we going to fill mid- to senior-roles down the track when the current experienced workers leave the labour market?”Still, he said the technology’s greatest potential may lie somewhere else entirely.Advertisement“The economic upside of AI may not come from making today’s businesses a little – or a lot – more efficient, but from enabling entirely new businesses that simply do not exist today,” he said.​Contact usrightArrowShare a tip-off, video or photo with usTrump announces $560 million loan for project in tiny NSW country townHalf of Australia braces for wild weather as massive cloud band approachesConsumer Affairs Victoria launches bid to shut down Panda Mart‘I couldn’t open my mouth’: Cost-of-living crisis forces young Australians to skip the dentist