AI is bringing unemployment to the middle class

Here are two predictions.
The first is that the employment figures that come out a year from now (for the fourth quarter of 2026) will show an accelerating decline in office jobs in the country.

The second prediction is that these job losses will be top of the 2027 State of the Nation Address agenda as they signal a deeper threat to middle-class jobs. This imminent threat didn’t even crack a mention in an otherwise all-encompassing Sona last week.

What the hell, I’ll make a third, fourth and fifth prediction for February 2027.

Three: even our austerity-obsessed Treasury will react with urgency and budget to the imploding white collar job numbers, particularly those at the entry level.
Four: the Reserve Bank will suddenly find it necessary to factor unemployment into rate setting (like the US, Canada, Australia and New Zealand central banks already do).
And five: a noticeable, if superficial, shift will be taking place in the country towards “we are all in this job-pocalypse together”.

I have been writing in these pages for some time about the social catastrophe caused by South Africa’s inability to create jobs. The job numbers out yesterday show a small improvement in the headline figure of unemployment at 31.4%. But, our unemployment is still more than six times the international average of 4.9%.

The headline figure also masks that extremely little has changed in our ability to create jobs to keep up with population growth. As a percentage of the working-age population (aged 15 to 64), only 41% are in work. This figure is 18% below the average for upper-middle-income countries. For South Africa to be average-compared with our income peers, there should be 24.8 million people in work instead of the current 17.1 million.

Youth unemployment

There are several large government programmes in the country that seek to address youth unemployment in particular. Kate Philip, the designer and lead of the best such programme, the Presidential Employment Stimulus, reports that budget, focus and clarity of purpose are lacking to match our catastrophically high unemployment. It is hard to avoid the conclusion that the government is not grappling with the situation as the social emergency it is, because of who is unemployed.

At 10.3%, graduate unemployment in the country is very high by international standards, but just one-third the level of our overall unemployment. That graduate figure has risen sharply since a low of 6.6% in 2020. There are also strong signs that new graduates looking for their first job are already suffering from the adoption of AI by firms. A Harvard study on this topic, covering the period from 2015 to 2025, looked at 62 million workers across 285,000 firms in the US. It found that, starting in early 2023 (ChatGPT’s breakout moment), junior-level hiring declined sharply in firms that adopted AI.

AI models are improving incredibly quickly. I’m currently using them to code an app, and can report that the ones I was using in the middle of last year (the latter part of that study) are far less capable than the ones I’m using today. The leading AI firms, Anthropic, OpenAI, Google, Microsoft and xAI, are racing each other for revenue to pay for their enormous data centre spends. The key to this revenue is integration of their models into the work of every industry in order to capture human wages. Several Chinese firms are hot on the heels of these US firms, with cheaper models that are just about as capable.

Major job losses in cognitive work imminent

One should be wary of commentators and entrepreneurs who have a terrible track record in predicting the speed of progress of new technologies – Elon Musk being an obvious example. But, listen here to an expansive interview two months ago with Demis Hassabis, Google DeepMind’s CEO and Nobel Prize winner in chemistry for Alphafold, DeepMind’s AI solution to protein folding. Or listen here to this somewhat more technical, long-form interview five days ago with Dario Amodei, CEO of Anthropic. These two men are specific, sober, actually quite cautious, and very connected to the development of their AI models, their capabilities and penetration into industries.

They are telling us, and imploring governments, to prepare for major job losses in cognitive work. Any aspect of a job that can be done remotely or entirely with a laptop is at the most imminent risk of being done better and cheaper by AI. There are still two breakthroughs needed before AI models become so productive and productivity-enhancing that they go beyond reducing entry-level work to replacing more complex, longer timeframe tasks typically done by more senior workers. One breakthrough will be learning new skills and efficiently incorporating them into how they operate. The other is longer-term autonomy – working hours to days without needing human intervention. However, if you listen to Hassabis and Amodei, both of these are likely to be solved within one to three years.

Next steps for SA

The big question is, of course, what can we, as a country on the global periphery of AI developments, do about it?

Should we try to attract data centres? Yes, for the jobs, value and know-how.
Should we incorporate AI into secondary and tertiary education while trying to ensure students still understand the basics? Yes, they’re going to need it to stand a chance in the future job market.
Should South African firms and professions adopt AI as early and quickly as possible? Yes, if they want to remain competitive.

AI is coming first for middle-class jobs, which is likely to create an urgency around unemployment that South Africa’s persistent, tragic and anomalously high working-class unemployment never has had. So, the most important question for me is: should the civil service, in all spheres and at all levels of government, adopt AI as fast as possible because they are most responsible for socially beneficial activities and safety nets? Absolutely! DM

Ayal Belling is a founder of the unemployed movement Organising for Work. He previously worked in finance and technology in London and Cape Town. He is now an organiser for Progress, a new party registered with the IEC, which wants a massive expansion of proven socially and economically productive public employment to guarantee every unemployed South African a work opportunity.