AI May Not Eliminate White-Collar Jobs as Quickly as Feared: Raghuram Rajan

New Delhi: Concerns that artificial intelligence could rapidly replace a large number of white-collar jobs may be exaggerated, according to former Reserve Bank of India Governor Raghuram Rajan.

In a recent commentary published by Project Syndicate, Rajan argued that the speed at which AI disrupts jobs will largely depend on factors such as how quickly businesses adopt new technologies, the level of competition in the market, and government policies.

He pointed out that technological changes often spread much more slowly across industries than many forecasts predict. According to him, apart from sectors like software, companies usually face several challenges — including operational hurdles and resistance to change — that slow down the adoption of new technologies.

To support his argument, Rajan cited the example of automated telephone exchanges, noting that it took several decades for them to completely replace human operators. He suggested that artificial intelligence could follow a similar path, with its large-scale adoption taking longer than widely anticipated.

Rajan also reiterated these views in a post on LinkedIn, where he emphasized that discussions about AI often overlook the influence of social and political factors.

“Public opinion and political responses will also shape how AI affects jobs and the broader economy,” he noted.

In his analysis, Rajan outlined different scenarios for how the AI-driven economy could evolve. One possibility is that a small number of major technology companies, such as Anthropic and Meta Platforms, could develop highly advanced AI platforms and gain a significant technological advantage.

If that happens, these firms may charge high fees to businesses that depend on their AI systems. In such a scenario, companies across different industries could increasingly rely on AI to automate many cognitive tasks, potentially reducing the need for white-collar employees.

Workers displaced from these roles might shift to service sectors such as retail or hospitality, which could lead to increased competition for jobs and downward pressure on wages in those industries.

However, Rajan also highlighted another possible outcome in which multiple AI systems compete in the market. In that case, the productivity benefits of artificial intelligence could spread more broadly across the economy instead of being concentrated among a few dominant companies.