AI Reshaping Global Labor Markets: US, Singapore Leading the Way, But Many Risk Falling Behind, Finds New Report Launched at Davos

DAVOS, Switzerland, Jan. 23, 2025 /PRNewswire/ -- Whiteshield released the 9th edition of the Global Labour Resilience Index (GLRI) in collaboration with Google Cloud, in an exclusive event held on the sidelines of the World Economic Forum (WEF) Annual Meeting in Davos. Published in partnership with the Community of European Management Schools (CEMS) and drawing on a decade of data covering over 70 indicators, the report reveals important insights into how 118 nations respond and adapt their labour markets to different types of external shocks, including the rise of AI. The report finds that while some countries are well positioned to capitalize on AI, a majority are at risk of falling behind.

The event, titled, "The Transformative Impact of AI on Global Economies & Labour Markets," was chaired by Nobel Laureate Sir Christopher Pissarides, Special Advisor and Director at Whiteshield, alongside Anna Koivuniemi, Head of Google DeepMind Impact Accelerator,  and brought together more than 50 senior policymakers, CEOs, academics and international organizations.

The report highlights that the most resilient labour markets combine traditional labour policies with strategic investments in AI and personalized, data-driven strategies. Leading the 2025 GLRI rankings are the United States and Singapore, recognized for their strong entrepreneurial ecosystems, flexible labour markets, and leadership in AI adoption and innovation. Sweden follows closely, demonstrating resilience through substantial investments in education and R&D. Notably, some countries in South Asia and the Middle East and North Africa (MENA) region have shown significant advancements, with India, the UAE, and Saudi Arabia benefiting the most from AI investments.

The Impact of AI on Labour Markets: Opportunities and Challenges

The rapid evolution of AI presents both significant opportunities and challenges for the global workforce. AI has the potential to boost workforce availability, quality, and efficiency, leading to the emergence of new skilled occupations such as AI data architects, human-AI interaction designers, and AI ethics officers. However, the impact of AI on labour markets also raises concerns about job insecurity, displacement, and increased wage inequality. Proactive and forward-looking policies are crucial to ensure labour markets remain resilient, adaptable, and capable of distributing AI's benefits equitably across society.

Key Findings of the GLRI:

According to the GLRI report, the US leads in AI investment and innovation, boasting 60% of global AI investments over the last ten years and a quarter of the world's AI startups. America's success is attributed to integrating innovation with economic flexibility to foster dynamic job creation, with California, Massachusetts, and Washington identified among the front running states. Rising inequality, both between and within countries, is identified as a major challenge exacerbated by AI that will need to be addressed with appropriate policies. The gap between top-performing and lower-ranking countries has widened, with Sub-Saharan Africa particularly at risk. European countries, including the UK and Germany, hold six of the top 10 positions, showcasing strong overall performance. However, some, like Denmark, Austria, and Luxembourg, are slipping, having dropped out of the top 10.

The report outlines three approaches to labour market resilience: the "Traditional Pathway" (e.g., Sweden, Norway, Netherlands) emphasizing robust social safety nets, education, and stable economic policies; the "AI and Innovation-Driven Pathway" (e.g., the US) prioritizing a dynamic, entrepreneurial environment with a strong focus on R&D, especially in AI; and the "Blended Pathway" (e.g., Singapore) combining traditional strengths like strong governance with strategic AI investments. The GLRI emphasizes a shift from "one-size-fits-all" to personalized, citizen-centric policies enabled by AI, big data, and advanced analytics. It also highlights the use of AI, blockchain, and IoT across the labour lifecycle, from education and job searching to workforce productivity and lifelong learning.

Regional Performance Highlights:

Europe demonstrates significant labour market resilience, with six of the top ten most resilient economies. However, significant disparities exist. Northern and Western European nations consistently outperform others, often surpassing North American benchmarks, while Eastern and Southern European countries generally show lower resilience. Over 80% of European nations rank in the global top 50 for overall labour market resilience, but this masks variations.  For example, Germany (5th globally) excels in AI integration, while Moldova (113th) lags significantly. Europe leads in adaptive resilience, with 80% of countries maintaining strong performance in AI regulation, penetration, and entrepreneurship, yet nearly one-third rank outside the global top 50 in transformative capacity.

Sub-Saharan Africa remains in last place among regional rankings, facing persistent challenges across all dimensions of labour market resilience. The region includes 12 of the 20 lowest-ranked countries globally, with the lowest scores in both traditional and AI-related metrics. Despite this, the region's young and rapidly growing population offers significant potential for an AI-driven leap in labour resilience. Six of the top 10 countries globally for demographic potential are in this region. However, most Sub-Saharan economies suffer from structural and policy gaps, hindering their ability to harness this potential. Challenges include labour protection, inclusiveness policies, education, and training.

The Middle East and North Africa (MENA) region, ranking fourth globally among different regions, presenting a complex and varied landscape. While showing progress overall, significant disparities persist between GCC and non-GCC countries in labour market resilience. The region demonstrates strength in AI-related metrics and strategic AI investments, but nearly half of its countries lag in AI cyclical adaptive resilience, reflecting challenges in AI penetration and entrepreneurship. Despite these weaknesses, over half of the region's countries rank in the top 50 for transformative capacity, providing a strong foundation for harnessing the potential for AI.

The Asia-Pacific (APAC) region maintains its third-place ranking, with a balanced performance and approximately two-thirds of its countries in the top 50 globally. Leading economies like Singapore (1st regionally, 2nd globally), China (2nd regionally), and South Korea excel in AI and technology. Singapore is a global leader in governance, business environment, and digital skills, also ranking highly in AI entrepreneurship and investment. China leads in firm-level AI adoption and ranks among the top three in AI equipment capacity and research, though lower scores in governance and institutional capacity hinder its overall performance. Japan (17th globally) shows strong AI capabilities, while New Zealand and Australia's high rankings are primarily due to traditional economic strengths.

In a comment about the transformative role of AI, Karan Bhatia, Google's Global Head of Government Affairs & Public Policy said, "As AI reshapes the global workforce, the GLRI offers a roadmap for countries to navigate this new era. It highlights pathways for inclusive, forward-looking policies that will not only address the challenges of automation but also harness the potential of AI to create opportunities for all."

"As AI continues to transform industries, the GLRI 2025 highlights the urgency for governments, businesses, and individuals to build resilient labour markets," stated Sir Christopher Pissarides. "This year's report provides actionable insights to address the challenges of technological disruption, economic inequalities, and global crises, ensuring inclusive and sustainable economic growth. By understanding how labour markets adapt and evolve, we can drive innovation and create opportunities that benefit everyone."

The Call to Action:

The GLRI concludes with a call to action for policymakers to proactively shape the future of labour markets by embracing AI-driven, personalized strategies and investing in digital infrastructure and literacy. The report stresses the urgency of this shift, highlighting the substantial costs of inaction, including growing inequality, displacement of vulnerable populations, and missed opportunities for sustainable growth. The time is now to move from reactive measures to proactive strategies that harness the transformative potential of AI for the benefit of all.

The full report can be accessed at https://whiteshield.ai/insights/resilience-of-jobs/whiteshield-google-davos-2025/

About Whiteshield:

Whiteshield is a global public policy and AI economics firm known for their ability to respond to global challenges rapidly and incisively. By integrating public policy and AI economics expertise with cutting edge tools and technology, our team of leading international experts engage decision makers to tackle society's most significant challenges. Whiteshield is recognized for rapid decision support, innovative solutions, data science algorithms, and deep policy knowledge. Their specialty is in connecting the dots between policy, business, and enhancing the lives of citizens.

About Google Cloud:

Google Cloud is the new way to the cloud, providing AI, infrastructure, developer, data, security, and collaboration tools built for today and tomorrow. Google Cloud offers a powerful, fully integrated and optimized AI stack with its own planet-scale infrastructure, custom-built chips, generative AI models and development platform, as well as AI-powered applications, to help organizations transform. Customers in more than 200 countries and territories turn to Google Cloud as their trusted technology partner.

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