AI is often framed in binary terms: either as an existential threat that will replace workers, or as a tool that will usher in the next wave of growth and productivity. The reality is likely to be more nuanced.
The impact in South Africa will probably differ from what we are seeing in economies like the US. But developments there provide some clues about what we could expect locally.
Research from the International Monetary Fund suggests that around 40% of global employment is exposed to AI in some way. In advanced economies, that figure rises to about 60%. Goldman Sachs has estimated that some 300 million full-time jobs globally will be affected by AI over the next decade.
Interestingly, widespread job losses are not what we are seeing at the moment. Instead, AI appears to be changing how people enter and progress through the labour market. The pressure is most visible in the services sector and in entry-level roles, where companies may be creating new positions more cautiously than before.
The impact will also vary depending on the composition of the labour market. Jobs that are heavily administrative, repetitive, routine and process-driven are at greater risk. By contrast, higher-level roles appear to be more insulated. These are jobs where experience, judgment and oversight are important – particularly roles that involve evaluating AI-generated outputs and determining whether the results are accurate and appropriate.
New jobs
There is also an argument that, while AI may eliminate some jobs, the technology is likely to create new ones. Roles such as programmers, engineers and process designers could all benefit.
In the US, graduate absorption has weakened as companies create new positions less aggressively than they once did. Research from IESE Business School found that wages for junior workers at AI-exposed firms declined following the launch of ChatGPT. Even for those who do secure employment, wage growth has not been favourable.
Read: The AI utopia South Africa can’t afford
The same pattern is emerging locally: South Africa’s technology sector is already squeezing junior developers, with entry-level pay falling in some industries even as demand for senior engineers intensifies.
In a country like South Africa, which already faces a significant youth unemployment challenge, many graduates struggle to secure meaningful first opportunities. If AI reduces the need for entry-level roles, or slows the creation of those roles, it could make an already difficult transition from education to work even harder.
This is both a social concern and a business issue. Many organisations are understandably investing in technology to improve margins, but they also need to look beyond short-term efficiency gains. Succession planning, knowledge transfer and capability building remain crucial. If businesses stop bringing in and developing younger talent, they risk weakening the very pipeline that will produce future leaders and provide oversight of increasingly complex systems – a generational risk that is already visible in software engineering.
The same applies as AI begins to converge with robotics. In manufacturing, the future is not robotics alone but the integration of robotics and AI. That shift could increase demand for high-skilled technical oversight while reducing the number of routine roles available. For a country already grappling with inequality, the issue will shift from the jobs technology displaces to how workers are prepared and equipped for the roles it creates.
For workers, technical familiarity with AI will matter, but so will the human capabilities that are more difficult to automate, including judgment, relationship building, accountability and the ability to interpret outputs in context.
From an investment perspective, investors should look for businesses that do not focus solely on margin expansion. There is a natural limit to cost savings, whereas growth is less constrained. AI strategies should increasingly be evaluated in terms of their contribution to top-line growth.
Read: The real reason SA graduates can’t get hired into tech jobs
The winners will not be the companies that automate the most, but those that use AI to grow while preserving the judgment, accountability and talent pipelines that sustain a business over time.
- The author, Adriaan Pask, is chief investment officer at PSG Wealth
- Subscribe to TechCentral’s daily newsletter
- Get breaking news alerts on WhatsApp