AI and the globalization of labor markets

Globalization has been one of the forces that have contributed to the transformation of the world over the past few decades. One of the most notable manifestations of this phenomenon is the globalization of labor markets. Despite the geopolitical tensions and supply chain disruptions we have experienced in recent years, the ability to produce at lower labor costs in other countries, technological advances, demographic and social trends, and international agreements have facilitated the movement of companies and people across borders, creating a more interconnected and diverse workforce. Employers are no longer limited to seeking and hiring workers in the country where they are headquartered, just as people are no longer limited to looking for jobs in the city where they reside.

Now, the accelerated arrival of artificial intelligence (AI) to the world of work may alter the course and speed of this trend. In this article, we will explore the effects of this technological change on issues directly related to the globalization of labor markets, such as language barriers, remote work, the automation of physical tasks, workers’ training, and some challenges posed by these changes.

The Globalization of Labor Markets Before AI

The current degree of globalization of labor markets is the result of several forces converging over the past few decades. Technological advances such as the internet and the development of mobile communication networks have radically increased the ability of companies to coordinate operations across different time zones with minimal friction, while other innovations, such as container transport and the reduction in the cost of air transport, have facilitated the movement of goods and people.

In parallel, international treaties and customs agreements have reduced barriers to trade and investment, allowing freer circulation of capital, goods, services, and workers across borders. Organizational design solutions such as outsourcing and offshoring have also played a significant role by allowing companies to take advantage of more favorable labor costs or the availability of a specialized workforce in other countries. However, this process also has its downsides. For some countries, globalization has led to economic growth and new job opportunities for their citizens, but in others, it has caused job displacements, wage stagnation, economic inequalities, and social tensions.

Continuing with the history, perhaps the latest major event contributing to the globalization of labor markets has been the rise of remote work following the Covid-19 pandemic. Hundreds of thousands of people realized then that they could work from home for employers from any corner of the world, sometimes earning salaries well above market wages in their countries of residence. At the same time, many companies discovered the advantages of this work modality, particularly in a scenario where having the best professionals in the world can be critical to their competitiveness but often finding the talent they need is not easy.

And suddenly AI arrived.

But first, a bit of demography…

Where Will the Workers of the Future Be?

When we think about how the globalization in labor markets may evolve in the coming years, it is important to keep some demographic trends in mind. Over the last 100 years, the planet’s population has quadrupled, but different regions of the world experience very different demographic realities. While in Japan or Europe we suffer from a serious aging population problem that creates tensions in our labor markets and social security systems, most developing economies in Africa and South Asia have much younger populations that can provide them with a valuable “demographic dividend” if managed properly.

In looking to the future, we must consider that connectivity resulting from the development of mobile communications and the proliferation of online training platforms have democratized access to education, allowing anyone with internet access to acquire the knowledge and skills companies most demand today. 

We must also consider future migration movements, a key factor in the globalization of labor markets. Traditionally, people tend to move from areas of the world with little work opportunities, low wages, and high insecurity to safer countries with labor shortages and higher wages. These migratory movements alleviate tensions in the labor markets of destination countries, while the economies of origin countries can benefit through remittances that migrants send to their families and the experience they acquire, should they decide to return home someday. However, they also pose challenges, such as the “brain drain” that can compromise the economic development of the migrants’ home countries, or the integration of migrants in destination countries, a process that is not always easy and has given rise to political movements advocating for stricter requirements for admitting foreign workers.

In this context, what impact could the rapid arrival of artificial intelligence have on the globalization of labor markets? 

I will dare to make some predictions:

Language Will No Longer Be a Barrier (or at Least Not as Much)

For a long time, language differences have been an obstacle to the globalization of labor markets, limiting communication, collaboration, and the free flow of talent across borders. However, advances in artificial intelligence are bringing us closer to a future where language will no longer be a barrier.

AI-powered automatic translation tools are transforming the way we interact, work, and do business globally. Recently, these technological tools have experienced significant advances driven by machine learning and artificial intelligence. Neural Machine Translation (NMT) solutions have particularly favored this evolution, offering faster, more accurate, and efficient translations, allowing almost instant translation of extensive content. Models like the recently introduced GPT-4o by OpenAI support inputs and provide outputs in real-time in over 50 different languages, preserving the tone and emotion of the translated content. Or Meta’s Seamless model, an advanced multilingual and multimodal translation and transcription system that allows text-to-text, text-to-speech, speech-to-text, and speech-to-speech translations in up to 100 languages, which Meta has made available to the research community to foster innovation and accelerate its development.

Not so long ago, when Russia invaded Ukraine in February 2022, many Ukrainian refugees managed to understand and even find jobs in their host countries thanks to the Google Translate app installed on their mobile phones at the time. Imagine the opportunities that this new generation of much more powerful automatic translation solutions opens for both workers and employers and the impact they can have on the globalization of labor markets, as well as in managing population displacements caused by wars or climate change.

These AI-powered translation tools allow companies to recruit talent from anywhere in the world without worrying about language barriers, facilitating the search for the best candidates regardless of their linguistic origin. Natural language processing algorithms increasingly understand context, idiomatic expressions, and cultural nuances, producing more accurate translations every day, while voice assistants can provide support in multiple languages, improving collaboration between people from different backgrounds. For example, they can transcribe and translate multilingual meetings almost in real-time, enabling effective and inclusive collaboration while helping build more diverse teams capable of generating more innovative solutions from a broader range of perspectives.

However, the widespread use of such tools in workplaces also presents significant challenges. Today, accuracy remains an issue, especially with specific context nuances, idiomatic expressions, and cultural references. This is crucial in professional and technical communications, where human oversight is necessary to verify and refine AI-generated translations. On the other hand, excessive reliance on these tools can reduce the incentive to learn other languages, limiting the deep cultural understanding that language knowledge provides. 

As always, it is a matter of finding a balance, but if we weigh all the advantages and disadvantages on the same scale, how much will we hold back the use of these technologies in our organizations? And for how long?

AI Will Propel Remote Work

A second trend associated with the globalization of labor markets that may accelerate with the arrival of AI is remote work.

To begin with, artificial intelligence allows companies to overcome geographical barriers when seeking talent. Through advanced algorithms, AI facilitates resume scanning, matching candidates with job requirements, and automating initial interviews. This capability allows companies to access a much larger pool of candidates worldwide than they previously considered in their selection processes. All this, moreover, in a scenario where, as we have just seen, language barriers likely have their days numbered.

On the other hand, new virtual onboarding tools and virtual reality (VR) create immersive integration experiences that help new remote employees build relational and emotional bonds with their teams and organizations, as well as accelerate their learning curve. This ensures that employees feel like an integral part of the team from day one, regardless of their physical location.

Once at work, AI also powers project management platforms that facilitate real-time collaboration, task tracking, and assignment. These platforms can predict project timelines, identify potential bottlenecks, and suggest the best way to allocate resources. This ensures that projects stay on track and teams can work efficiently and cohesively.

Communication platforms like Microsoft Teams use AI to prioritize messages, summarize conversations, and provide context for ongoing projects. This ensures that important information is always accessible to all team members, facilitating asynchronous work and collaboration between people in different time zones. Thus, teams can work together regardless of time differences, maintaining productivity and cohesion.

AI can also analyze individual work patterns and suggest personalized workflows and productivity tips, helping remote workers optimize their schedules, reduce distractions, and maintain a healthy work-life balance. Machine learning algorithms can identify the best times for focused work, meetings, and breaks, based on employees’ productivity peaks and troughs.

Moreover, AI can facilitate the creation of flexible work schedules tailored to employees’ personal commitments. This is especially beneficial for those who need to balance work with other responsibilities. Predictive analytics help managers foresee workload demands and assign tasks in a balanced way, avoiding employee overload or underutilization. Along the same lines, AI can monitor work patterns and detect potential risks of burnout, overload, or stress, even recommending the best interventions for these situations.

If all this were not enough, AI can also help people find remote secondary jobs without having to leave their current salaried positions. Thanks to artificial intelligence, job search platforms can identify and suggest secondary job opportunities that match workers’ skills and availability, even if those jobs are located in different parts of the world. In fact, this can be advantageous for these individuals, as it allows them to diversify their sources of income without geographical restrictions. Additionally, AI can help them efficiently manage time and tasks between both jobs, ensuring they maintain an appropriate balance between their work and personal responsibilities.

Who would have thought that this would be the case four years ago when the Covid-19 pandemic prompted what someone once called “the largest remote work experiment in history”?

AI and the Automation of Physical Jobs

In June 2021, a year and a half before the launch of ChatGPT, Sam Altman, co-founder and CEO of OpenAI, tweeted:

“Prediction: AI will cause the price of work that can happen in front of a computer to decrease much faster than the price of work that happens in the physical world. This is the opposite of what most people (including me) expected and will have strange effects.”

Three years later, we see that artificial intelligence is not only impacting the demand of digital jobs but also accelerating the automation of physical jobs, with significant implications from the perspective of the globalization of labor markets.

AI-powered robots are becoming increasingly common on production and assembly lines, performing tasks such as welding, painting, and assembly with high precision and consistency, reducing the need for human intervention. Solutions like autonomous forklifts and robotic sorting systems are revolutionizing warehouse and distribution operations, and companies like Amazon and Alibaba are leveraging these technologies to optimize their supply chains and improve efficiency. The development of autonomous trucks and delivery vans also promises to revolutionize the transportation and logistics sectors. These vehicles, guided by algorithms, can operate 24/7 with minimal breaks, significantly reducing transportation costs and delivery times, while the use of AI-powered drones for tasks ranging from package delivery to monitoring agricultural operations or inspecting infrastructure in hard-to-reach areas is also on the rise.

Additionally, AI-driven machines and robots are being developed to perform construction tasks such as bricklaying and earthmoving, reducing project execution times, labor costs, and increasing safety on job sites. Meanwhile, in agriculture, autonomous equipment such as robotic tractors and harvesters are optimizing farming practices, increasing crop yields, reducing waste, and minimizing the need for labor, while advanced manufacturing technologies employing AI, such as 3D printing and custom automation, allow localized and on-demand production, shortening supply chains and improving responsiveness to market demands.

From the perspective of the globalization of labor markets, this acceleration in the automation of physical tasks due to the application of AI technology in robotics reduces the need for low-skilled labor in industries such as manufacturing, logistics, and agriculture, and may lead to changes in migration patterns. In most developed economies, these jobs are primarily performed by immigrant workers, and their automation may lead some of these individuals to return to their home countries. On the other hand, automation also reduces the advantage companies gain by relocating production to countries with cheaper labor. As a result, companies may decide to repatriate their manufacturing operations to their home countries or closer to where their consumers are, which may not necessarily coincide. This can lead to early deindustrialization in the countries that have been manufacturing these products so far and encourage migration to advanced economies in search of jobs that have not yet been automated due to their complexity, because customers prefer humans to perform them, or because it is still cheaper to assign the task to a human than a robot.

AI and Workers’ Training

Finally, the possibilities offered by artificial intelligence to massively personalize training and reskilling processes make it easier for workers to acquire the necessary skills to adapt to technological and economic changes, while also giving companies greater freedom to decide where to locate their operations.

For example, AI can analyze vast amounts of data on workers’ performance and needs to create personalized training programs tailored to individual strengths and weaknesses. AI-driven learning platforms can offer specific content, practical exercises, virtual tutoring, and continuous assessments that allow workers to progress at their own pace and focus on areas where they need the most improvement. This massive personalization not only increases the effectiveness of learning but also motivates workers by seeing tangible and relevant progress in their skills.

In sectors such as manufacturing, logistics, and agriculture, the rapid adoption of advanced technologies requires a workforce capable of handling and maintaining these innovations. AI facilitates training in using robots, autonomous machinery, and advanced management systems through simulations and virtual reality environments that replicate real work situations. These immersive training methods allow workers to gain hands-on experience with processes and tools without the risks and costs associated with live training.

Moreover, as automation reduces the demand for low-skilled jobs, AI can play a crucial role in the reskilling of these workers so they can take on more complex and better-paid roles. For example, by identifying transferable skills and providing learning pathways that allow workers to transition to new industries or functions.

Back to our topic—the globalization of labor markets—this new possibility of providing personalized training to workers at any time and place allows companies to recruit and develop talent without being limited by geographical location. Companies can establish operations in regions with access to a young and growing workforce, such as many areas in Africa and South Asia, without worrying about a lack of local skills, as AI can now help quickly equip these workers with the necessary competencies.

Conclusion

In this article, we have examined the impact of the advent of artificial intelligence on the globalization of labor markets. From eliminating language barriers to enhancing remote work and automating physical tasks, AI will reshape the global labor landscape. Automatic translation tools, project management platforms, and automation solutions will enable companies to operate more flexibly and efficiently without worrying about geographical boundaries. AI will also facilitate the massive personalization of training and professional reskilling, helping workers adapt to technological and economic changes while allowing companies to access a more diversified global talent pool. However, this technological revolution also presents significant challenges, such as the reduction of low-skilled jobs and changes in migration patterns. Therefore, AI offers enormous opportunities, but its implementation must be managed prudently to maximize its benefits and minimize its drawbacks. The globalization of labor markets, driven by AI, has the potential to create a more interconnected, efficient, and fair world, but it requires all involved parties to pay constant attention to the ethical, cultural, and social aspects of this transformation.