The rise of artificial intelligence in the workplace may lead to job redundancies and displacements.

The “godfather” of AI himself, Professor Geoffrey Hinton, made this warning as more organisations adopt AI into their operations.

According to McKinsey, at least 72% of organisations are already using some form of AI, a significant jump from the consistent 50% adoption rate seen in the past six years. The increase is attributed to the rise of generative AI, with 65% of respondents reporting regular use of this technology.

The immediate impact of AI on jobs hasn’t yet been felt on a larger scale, but Hinton said it will be in the near future. The British-Canadian computer scientist and cognitive psychologist said in order to counteract this effect, the government must establish a Universal Basic Income (UBI) for workers.

“I was consulted by people in Downing Street and I advised them that universal basic income was a good idea,” he told the BBC. He added that although he knew AI would boost productivity and wealth, the money would go to the rich “and not the people whose jobs get lost and that’s going to be very bad for society”. But would a universal basic income really work?

Also Read: Why humans are relying on AI more than ever

What is universal basic income?

Universal Basic Income, or UBI, provides a regular, unconditional sum of money to every adult, regardless of income or employment status. This social safety net aims to alleviate poverty, reduce income inequality, and provide financial stability.

UBI is a guaranteed income floor, allowing individuals greater freedom to pursue education, entrepreneurship, or caregiving without the fear of losing essential financial support.

Opponents argue that UBI’s high cost could strain public funds, potentially leading to cuts in essential services. They also contend that UBI may not effectively address poverty, as it could discourage work and inflate prices without guaranteeing improved outcomes for recipients.

A new study funded by OpenAI’s Sam Altman offers valuable data on the potential impact of UBI. This research sheds light on the possible outcomes if UBI were to be implemented, providing evidence for ongoing discussions about this social policy.

Altman believes UBI could mitigate widespread job losses caused by AI automation. However, the study’s findings present a nuanced picture, challenging some of the assumptions held by UBI proponents.

Also Read: How to train for jobs that don't exist yet

UBI in practice

Unlike traditional means-tested benefits, UBI provides a fixed sum of money to every adult regardless of income or employment status. This removes the bureaucratic hurdles and stigma associated with traditional welfare programs.

However, implementing UBI is a significant financial undertaking. A 2019 study estimated that providing a UBI equivalent to New Zealand’s jobseeker support rate would cost US$41.3 billion annually.

Despite this, proponents argue that the simplified system could generate savings by streamlining bureaucracy and potentially replacing existing welfare programs.

Several countries have previously explored UBI through pilot programs. Finland conducted a two-year experiment from 2017 to 2018, providing €560 monthly to 2,000 unemployed individuals.

The study revealed positive effects on wellbeing, with recipients reporting increased life satisfaction and reduced mental strain. While the impact on employment was minimal, it did show a slightly positive trend.

More recently, England launched a two-year UBI trial in 2023, granting £1,600 monthly to 30 participants. This study focuses on the effects of UBI on mental and physical health, with results expected next year.

These ongoing experiments provide valuable insights into the potential benefits and challenges of implementing UBI on a larger scale.

How UBI affects employment

Altman's study examined the effects of a guaranteed basic income on low-income households in the US. About 1,000 participants aged 21 to 40 received $1,000 per month for three years, a significant increase to their income. A control group of 2,000 received $50 per month.

This large-scale, long-term study provides valuable data on how substantial, sustained cash payments impact employment and earnings.

This $1,000 monthly payment represented a substantial 40% boost to the average participating household's income. The study stands out for both the generous amount of cash provided and the extended three-year timeframe, making it the largest and longest study of its kind.

Should UBI be implemented?

UBI presents a compelling solution to potential poverty caused by technological unemployment, but its implementation requires careful consideration. While evidence suggests UBI can improve wellbeing and provide a safety net, its impact on employment remains inconclusive.

The potential for reduced work incentives and the substantial financial burden necessitate a cautious approach.

Targeted implementations and pilot programs are crucial to assess UBI’s long-term effects and refine its design.

Ultimately, a successful UBI may require a multifaceted approach, combining direct cash transfers with investments in education, job training, and social support systems to ensure a robust and adaptable workforce in the face of evolving economic realities.