Despite the recovery from COVID-19, regional and local economies in OECD countries continue to undergo significant transformations. An ageing workforce, sluggish productivity growth, persistent regional disparities, pervasive labour shortages across even more regions, and the rapid advancement of new technologies will require comprehensive transitions for both individuals and communities. These shifts underscore the need for adaptive strategies that support workforce resilience and help regions remain competitive and resilient.
Employment, education and training systems are not keeping pace with the changing demands for new skills. Technological advancements like artificial intelligence as well as structural shifts such as the decarbonisation of economies imply greater need for new tools to facilitate job transitions and investments in upskilling and reskilling initiatives. Just as people will need to adapt to these changing requirements to find jobs where they live, places must also seize emerging opportunities for local economic development and job creation.
The rapid rise of new AI technologies could offer a strategic tool to OECD regions to address critical economic and labour market challenges, including labour shortages or labour productivity growth. Providing access to AI tools and training can help regions to access untapped talent and raise productivity. However, this requires the right enabling conditions, such as investments and deployment of AI in firms and preparing larger segments of the workforce with the skills to use AI tools effectively to complement their work.
This 6th edition of Job Creation and Local Economic Development closely examines the current health and recent evolution of regional labour markets in the OECD. It documents the uneven rise of labour shortages that hold back local economies, especially in jobs that are critical for the green and digital transition. Against this context, the report offers novel insights into the geography of the labour market impact of Generative AI. It explores which jobs and which types of places are already exposed to Generative AI, meaning that AI could be a complement to boost productivity in a job or potentially render some jobs no longer necessary. The report discusses the potential implications of increased adoption of Generative AI for urban and rural communities and workers and zooms in on place-based actions as well as policies to seize the opportunities that these technologies could yield to boost productivity growth and address labour shortages in ageing societies.
This publication contributes to the work of the Co-operative Action Programme on Local Economic and Employment Development (LEED), created in 1982 to provide practical solutions about how to build vibrant communities with more and better jobs for all. It was approved by the Local Economic and Employment Development Directing Committee via written procedure on 13 November 2024 [CFE/LEED(2024)14/REV1].