Will AI take Asian youths’ jobs?

Artificial intelligence is progressing rapidly, and concerns about its effects on employment, particularly for young people entering the job market, are growing. Tasks that generative AI can perform—such as coding, summarizing documents, analyzing data, and answering customer inquiries—are often the first roles new workers take on.

However, some AI industry experts have warned that entry-level white-collar jobs could be largely eliminated in a few years, claims that seem to surpass the available evidence. While AI is starting to impact certain entry-level positions, its impact is still limited and uneven, with little indication of widespread job displacement.

For instance, a recent study in the US found no overall decline in employment due to AI exposure. Instead, it's entry-level hiring in AI-exposed jobs that has weakened, falling 19% below what it would have been if it had kept pace with less-exposed sectors. This shift is primarily due to weaker hiring, not layoffs, which can be explained by factors like rising interest rates, post-pandemic adjustments, and the rise of remote work.

While this evidence warrants caution, it should not be dismissed. The decline in entry-level hiring by tech companies since 2024 may be linked to AI, though strong demand for tech workers outside the industry suggests otherwise. In many cases, AI usage complements workers rather than substituting for their tasks, leading to flat or rising employment.

More broadly, data from the US does not suggest a youth employment crisis; the unemployment gap between 20-24-year-olds and the overall workforce is at a multi-decade low. This suggests not all jobs are exposed to AI, and those that are do not mean displacement is inevitable. This is especially true in developing economies outside the US, where lower AI adoption, weak digital infrastructure, and a greater share of manual work limit AI's immediate potential for job displacement.

In Asia, AI's impact on labor markets varies greatly. In South Korea, youth employment fell in industries with high AI exposure between 2022-25, while workers in their 50s saw an increase. However, it's impossible to attribute this solely to AI without considering other economic, demographic, and labor market changes. In the ASEAN economies, there is some exposure to AI, with online job postings in vulnerable occupations dropping by 5.8% compared to less-substitutable occupations since ChatGPT's release.

But only 3.3% of workers in the region are in jobs with the highest AI exposure. There are signs of weaker employment growth among young workers in some exposed occupations and entry-level jobs in these economies, but no overall deterioration in labor market outcomes for this age group. In China, rapid AI deployment is creating displacement pressures for workers—from taxi drivers to white-collar professionals.

This could exacerbate challenges for young people entering the workforce, but China has faced high youth unemployment before the AI boom, which is linked to slowing growth, private-sector weakness, and skills mismatches. India, on the other hand, sees greater risks concentrated in the IT and business services sectors. While industry leaders dispute claims that AI is causing mass layoffs, there have been workforce reductions in major IT firms, and cross-country evidence suggests that economies specializing in digitally deliverable services may be at greater risk of employment pressure.

Japan presents a different scenario, with rapid population aging leading to labor shortages. Here, AI may be seen more as a solution than a threat. Generative AI use remains relatively limited, suggesting a need to expand productive adoption and worker training. For young people across Asia, it is crucial to have the tools to engage productively with AI.

Updating education and training programs to teach AI skills and digital literacy, as well as fostering complementary skills that are harder to automate, like analytical reasoning, judgment, communication, creativity, and teamwork, is essential. AI should enhance learning, not replace it. For those already in the workforce, firms should offer periodic retraining opportunities, and schools and universities must ensure this is done effectively.

As one OECD study showed, retraining, worker consultations, and clear workplace guidelines can greatly help harness AI-driven productivity gains.

Thus, while AI will undoubtedly transform Asia's labor markets, and young workers may be among the first to feel its effects, the shift is likely to be complex and nuanced. The challenge lies in ensuring that this transformation strengthens human capital rather than undermining it. Robust labor market institutions, sound economic policies, and efforts to create productive jobs will be essential for navigating this change.