AI puts over half of highly exposed Filipino workers at displacement risk—think tank

Generative artificial intelligence (AI) could put more than half of Filipino workers in highly exposed occupations at risk of displacement, although the Philippines could eventually emerge among the biggest economic beneficiaries of faster AI adoption in emerging Asia, according to think tank Oxford Economics.

In a report on Tuesday, Sept. 15, Oxford Economics lead economist Alexandra Hermann Prasad said labor-market outcomes would depend on whether AI complements or substitutes human labor and whether displaced workers can be successfully retrained then moved into new roles.

Based on Oxford Economics’ task-level assessment, about nine percent of workers across emerging Asia are currently employed in occupations highly exposed to generative AI. However, exposure does not necessarily mean displacement, as AI could complement workers in some occupations while replacing tasks performed by others.

Managers and professionals, for instance, tend to have high exposure but also high complementarity, as AI can analyze data or prepare an initial draft while workers remain responsible for interpreting results, exercising judgment, as well as making decisions.

Clerical occupations are likewise highly exposed but typically have lower complementarity, leaving workers at greater risk of displacement.

For the Philippines, Oxford Economics estimated that 56 percent of workers in highly exposed occupations are also in highly substitutable jobs, making them more vulnerable to displacement if AI substitutes for human labor.

The risks could become more pronounced during the 2030s, when AI adoption and its productivity effects are expected to accelerate.

Under Oxford Economics’ “AI disruption” scenario, unemployment would rise relative to its baseline during the 2030s as AI substitutes for workers in highly exposed occupations. Incomplete retraining and persistent skills mismatches could then raise structural unemployment over the longer term.

A more favorable outcome is possible if displaced workers can be successfully retrained and reallocated to new jobs. Under the think tank’s “AI breakthrough” scenario, stronger economic activity would support labor demand, while displaced workers would quickly move into new roles.

“For labor markets, frictionless adjustment and zero displacement seem optimistic, but evidence of large-scale AI-driven job losses is also patchy,” Oxford Economics said.

Despite the potential labor-market disruption, the Philippines could be among the region’s bigger economic winners from faster AI adoption, according to the think tank.

Oxford Economics said the Philippines ranks among the top three emerging Asian economies excluding China in terms of gross domestic product (GDP) uplift under both its AI breakthrough and AI disruption scenarios, reflecting relatively high labor-market exposure as well as strong AI preparedness.

Malaysia is expected to record the largest GDP uplift in both scenarios, while India remains the relative laggard. Indonesia could benefit from strong spillovers to domestic consumption and investment, while Vietnam’s high trade exposure could allow it to gain from stronger global demand.

Across emerging Asia excluding China, generative AI is expected under Oxford Economics’ baseline to lift total factor productivity by around 0.8 to 1.3 percent over the next decade, compared with a 3.5-percent gain in the United States (US).

With faster adoption and stronger productivity gains, regional GDP could stand 4.5 to 6.2 percent above baseline by 2060. Even with persistent skills mismatches and labor-market disruption, Oxford Economics estimated that regional GDP could still be 3.9 to 4.9 percent above baseline by then.