Three months after the 2023-24 Economic Survey warned that workers would be affected by Artificial Intelligence (AI) taking over their jobs, the Ministry of Finance said in its latest report there was evidence that AI was displacing workers.

According to the Ministry of Finance’s September 2024 Monthly Economic Review, the overall labor market is stable. According to the report, the overall unemployment rate for 2023-24 remains unchanged at 3.2 percent, driven by the increasing female workforce. High-frequency indicators such as net payroll additions under the Employees Provident Fund Organization (EPFO), Purchasing Managers employment sub-index and NaukriJob Speak index also point to an increase in formal employment creation, the report said.

But the review adds: “All this said, anecdotal reports are beginning to emerge about the deployment of AI replacing workers. This needs to be monitored.

“The emergence of AI creates a huge pall of uncertainty regarding its impact on workers at all skill levels – low, semi and high,” the Economic Survey in July said, adding: “This will create barriers and hurdles to achieving sustainable high levels.” “Overcoming India’s growth rates in the coming years and decades requires a grand alliance of union and state governments and the private sector.”

Although there is some good news. The review cites the Naukri JobSpeak index, which witnessed a 6 percent year-on-year increase in September 2024, driven by the resurgent IT sector. Sectors such as FMCG and Oil & Gas have also seen significant growth and created more AI/Machine Learning roles.

The review shows that employers often favor experience over new employees. “While hiring trends were largely positive for those with experience, professionals with 0-3 years of experience saw a 7 percent decline in job opportunities compared to September 2023,” the September economic review says.

The labor market also points to a strong outlook for the October-December quarter. Signaling a recovery in formal job creation, the Employees’ Provident Fund Organization (EPFO) added 9.3 lakh new members in August 2024. A significant 59.3 percent of new members added in August 2024 were in the 18-25 age group; Individuals joining the organized workforce are mostly young people looking for work for the first time. The purchasing managers’ employment subindex also remained historically strong, remaining in expansion territory for the seventh consecutive month in September; however, manufacturing employment softened due to a decline in part-time and temporary workers.

In general, it is stated in the September evaluation that the outlook for the Indian economy continues to be good. This is based on the prospect of a stable external sector, positive agricultural outlook, expected improvements in demand supported by the festive season and an increase in Government spending, which will boost investment activity. The review suggests that the Indian economy is likely to grow between 6.5 and 7.0 percent in the current financial year.