AI – Risks and opportunities for the West Midlands?

Artificial Intelligence (AI) has been disrupting industries across the globe and the West Midlands is no exception. Since the publication of the last Birmingham Economic Review, we have seen the trend accelerating further.

In November of last year Rishi Sunak (the former Prime Minister) and Elon Musk discussed the risks of AI with Elon deeming AI “the most disruptive force in history”.

Matthew Lyons discusses how AI may disrupt the West Midlands and how the unique characteristics of the region present a different package of risks and opportunities for the region. The piece draws on research conducted for and published by the Midlands Engine “Megatrends in the Midlands”.

 The West Midlands Regional Characteristics 

 The West Midlands (and Birmingham) have characteristics that set the region apart from other UK regions. These characteristics can give the region a competitive advantage but also expose the region to structural vulnerabilities. An awareness of these regional factors can help improve the shaping of a regionally tailored policy response to AI and technological disruption. 

 AI – The Risks 

 The increasing capabilities in AI and its adoption is leading to more people being directly and indirectly impacted. On the negative side, there are three main risks, jobs being lost through automation, widening inequality and economic disruption. 

 Economic and employment disruption 

AI is a hugely disruptive force, but its impact is uneven. Some tasks can be automated relatively easily, while others are much less at risk. The consequences of this mean that job security and wages are impacted differently across sectors and in turn regions with different sectoral mixes are disrupted to differing extents. The IPPR reports, AI poses a risk to 8 million jobs in the UK unless the Government acts. The report finds 11 per cent of jobs are at risk now rising to 59 per cent if companies integrate AI more deeply.  

Widening inequality 

 AI could widen inequality through different avenues. The IPPR reports that AI is disproportionately impacting back-office work, part-time work, and entry-level roles. The report also finds that these are roles that are more likely to be filled by women. There is also the concern of AI exacerbating the digital divide. The digital divide refers to the gap between individuals and communities in access to IT. This could mean those with lower digital skills and without access to the latest technology such as superfast broadband fall further behind. 

AI – The Opportunities 

Increase the competitiveness of the West Midlands 

The West Midlands has a series of nascent high-tech industrial clusters which stand to be beneficiaries of AI. The region is home to a business services and fintech cluster, a space cluster, and MedTech and Life Sciences clusters.  

 Improving productivity and wellbeing 

AI is leading to innovations in healthcare, eand ducation and boosting the productivity of some sectors. Innovations in healthcare can lead to earlier detection and better treatments through personalised health plans. There is also emerging evidence of AI being useful in supporting mental health. There is the potential more broadly that automation could lead to a two-for-one benefit reducing the quantity of poor-quality jobs and increasing the productivity of others.  

 Policy recommendations 

There is a role to play for local, regional and national policy to better prepare the region for the impacts of AI and technological disruption. 

1. Facilitate digital literacy and transformation for businesses: Offer resources for technological adaptation, and advocate for supportive policies in the digital realm. This can help all businesses benefit from advances in technology and reduce the risk of smaller businesses becoming less productive. 
2. Skills Agenda: The data on which tasks and roles are most disrupted by AI is improving. With this data policy policymakers at all scales should be ensuring the workforce; new graduates, school leavers and those retraining are sufficiently educated and prepared. Some sectors will need support in preparing for falling labour demand. This could be achieved through targeted reskilling programmes produced in collaboration with government, industry and education institutions.  
3. Legislation and planning: Legislation has an important role to play in ensuring worker protections are up to date with emerging trends. Furthermore, global cooperation in legislation is needed to provide a framework for accountability and fairness. Strategy and planning for AI disruption are critical to minimizing risks (job losses) and maximizing benefits (productivity gains). This may include investing in technological infrastructure such as high-speed internet and improving digital literacy to ensure greater inclusion.  
4. Public Awareness: Public awareness about AI has rapidly increased over the past year with nearly 75% of the population able to provide a partial explanation of the concept (ONS, 2023)6. However, AI use in day-to-day activities remains low with just 5% reporting using AI regularly and 50% reporting not using AI at all. Public outreach about AI and its potential uses will increase digital literacy and engagement. 

Read the full Birmingham Economic Review

This blog was written by Dr Matt Lyons, Research Fellow at City-REDI, University of Birmingham.

Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI / WMREDI or the University of Birmingham.

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