Discuss the relationship between technological advancements and labour-market inequality. What measures can be taken to mitigate the adverse effects of AI on vulnerable job sectors?

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PocketIAS · Accepted Answer

INTRODUCTION

Technological advancements, particularly automation and Artificial Intelligence (AI), have transformed production processes and labour markets. While they enhance productivity and growth, they also risk widening labour-market inequalities through uneven distribution of gains.

RELATIONSHIP BETWEEN TECHNOLOGY AND LABOUR-MARKET INEQUALITY

Skill-Biased Technological Change

Technology disproportionately benefits high-skilled workers while displacing routine, low-skilled jobs
Leads to wage polarisation and a shrinking middle-skill segment

Job Polarisation and Informalisation

Growth of high-end jobs and low-paid gig work, with erosion of stable middle-income employment
In countries like India, exacerbates informal sector vulnerabilities

Capital vs Labour Dynamics

Returns to capital (owners of technology) rise faster than wages
Increases income and wealth inequality

Digital Divide and Access Inequality

Unequal access to education, digital infrastructure, and skills deepens disparities
Marginalised groups face barriers in adapting to technological shifts

MEASURES TO MITIGATE ADVERSE EFFECTS OF AI

Skilling and Reskilling Initiatives

Large-scale investment in digital literacy, AI skills, and vocational training
Focus on continuous learning and mid-career transitions

Strengthening Social Security Systems

Expand unemployment benefits, insurance, and income support mechanisms
Adapt welfare systems to gig and platform workers

Inclusive Innovation Policies

Promote labour-augmenting technologies instead of labour-replacing ones
Incentivise MSMEs to adopt technology without large-scale job displacement

Regulation of Gig and Platform Economy

Ensure fair wages, job security, and social protection for gig workers
Recognise new forms of employment legally

Public Investment in Human Capital

Improve quality of education and healthcare
Bridge rural-urban and gender gaps in workforce participation

CONCLUSION

Technological progress is inevitable but not distribution-neutral. Proactive policy interventions focusing on skills, social protection, and inclusive growth are essential to ensure that AI-driven transformation does not exacerbate labour-market inequalities but instead fosters broad-based prosperity.

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