CEA Anantha Nageswaran’s 5 AI warnings: From job cuts, weaker human judgment to safety risks

India’s Chief Economic Adviser (CEA) Anantha Nageswaran has warned that the rapid adoption of artificial intelligence (AI) could create risks ranging from fewer entry-level jobs and declining human capabilities to safety failures, financial instability and pressure on government finances.

Speaking at this year’s Per Jacobsson Foundation Lecture in Bangkok, Nageswaran said the consequences of AI could extend beyond the labour market, affecting financial institutions, public revenues and the ability of people to think and make decisions independently.

“I am not against technology. I'm against technology that takes away human agency and against finance that hides its own risks,” he said.

Nageswaran cautioned that finance ministries, central banks and households could bear the costs if current optimism surrounding AI proves misplaced. They could also face consequences even if the technology delivers the productivity gains its proponents expect.

“I will set out five risks and then what governments could do about them later,” he said.

1. AI could reduce entry-level jobs and weaken the talent pipeline

Nageswaran identified the potential decline in entry-level employment as the first risk, warning that companies could increasingly rely on AI rather than recruit and train junior workers.

Citing a study covering 41 countries, he said the share of junior workers had fallen in 23 of the 31 countries for which data could be measured. In the United States, employment among 22- to 25-year-olds in the jobs most exposed to AI had fallen about 19% behind that of older workers in the same occupations.

Traditionally, companies could recover the cost of training junior employees through the routine work they performed. However, as AI takes over such tasks at lower cost, employers may find less economic incentive to invest in new recruits.

While individual companies may rationally reduce junior hiring, the collective impact could be a shortage of experienced professionals in the future.