Analysis of Artificial Intelligence-Driven Job Replacement in the Service Industry and Unemployment Response Strategies

This paper explores the dual impact of AI in the service industry labor market. Focusing on the service industry, AI fuels productivity by automating mundane tasks, improving customer online service, and generatingadditional jobs, especially in AI administration and digital services. Despite these benefits, AI adoption simultaneously produces severe challenges, including workforce displacement, unequal income distribution, and rising unemployment rates. The unintentional production of AI puts significant pressure on human capital, and traditional jobs are gradually being replaced by AI technology. In order to maintain human labor dominance in the job market, this paper proposes several possible solutions, such as reskilling and upskilling initiatives, education reform, and stronger social safety systems, including targeted unemployment insurance schemes with skill-matching requirements and implementing progressive universal basic income pilots indexed to regional living costs to help reduce the negative effects while maximizing the benefits of AI in the workforce. The paper advocates for a labor market model prioritizing human-centric technological integration, where AI augments rather than replaces human capabilities.