Gen AI Set To Transform Local Job Markets Unevenly Across OECD Regions: Report

The employment boom has also resulted in regional labour shortages, particularly in densely populated urban areas like Lombardy (Italy) and Hamburg (Germany)

The impact of Generative Artificial Intelligence (AI) on local job markets will vary significantly across its member countries, according to a new report by the OECD (Organisation for Economic Co-operation and Development). This could potentially widen existing income and productivity disparities between urban and rural areas and deepen regional digital divides.

The "Job Creation and Local Economic Development 2024" report highlights that, after a decade of employment growth, more than half of OECD regions had achieved employment rates exceeding 70 per cent by 2023. Additionally, there has been a notable increase in female labour force participation, with 84 per cent of OECD regions reporting progress in narrowing the gender gap in the workforce.

The employment boom has also resulted in regional labour shortages, particularly in densely populated urban areas like Lombardy (Italy) and Hamburg (Germany). At the same time, regions facing population decline and ageing demographics are experiencing significant gaps in the workforce.

In this context, Generative AI holds the potential to address labour shortages and enhance productivity. However, the report reveals substantial regional differences in how AI impacts jobs. In urban areas like Stockholm (Sweden) and Prague (Czechia), up to 45 per cent of workers are exposed to AI, while in rural regions such as Cauca (Colombia), the figure is just 13 per cent.

Urban workers are more likely to be affected, with an average of 32 per cent already exposed to Generative AI, compared to only 21 per cent of rural workers. This disparity could exacerbate existing urban-rural income and productivity gaps and widen the digital divide between regions.

According to the report, regions that were once considered at low risk of automation are now among the most exposed to the effects of Generative AI. Traditionally, automation has impacted non-metropolitan and manufacturing areas, but now, in metropolitan regions, high-skilled workers and women are facing greater exposure as Generative AI proves highly effective at performing cognitive and non-routine tasks.

"The rapid adoption of Generative AI is reshaping local job markets, offering solutions to labour shortages and boosting productivity. But it also risks widening the digital divide between urban and rural areas. To harness its potential for all, policymakers must prioritise digital infrastructure, boost digital literacy, and support SMEs to ensure AI's benefits reach everyone and help tackle local skills bottlenecks,” OECD Secretary-General Mathias Cormann said.