Artificial Intelligence to Impact 40% of Global Jobs, Warns IMF Managing Director at Davos

New Delhi: An analysis by the International Monetary Fund (IMF) has revealed that Artificial Intelligence (AI) is poised to impact nearly 40% of global jobs, with advanced economies facing a more significant exposure compared to emerging markets and low-income countries. 

According to a report published in The Hindustan Times, IMF Managing Director Kristalina Georgieva expressed her concerns in a blog post, stating, "In most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers must proactively address to prevent the technology from further stoking social tensions."

Georgieva emphasised that the income inequality effect of AI will depend on how much the technology complements high earners. She urged countries to implement "comprehensive social safety nets" and retraining programs for vulnerable workers to mitigate the widening wealth gap. She stated, "The more you have higher skilled jobs, the higher the impact."

The analysis suggests that while there is potential for AI to replace some jobs fully, the more likely scenario is that it will complement human work. More than emerging and low-income countries, advanced economies are expected to witness approximately 60% of jobs being affected.

The IMF chief's remarks coincided with the meeting of global business and political leaders at the World Economic Forum in Davos, where AI was a prominent topic of discussion. Companies have been heavily investing in AI, raising concerns among employees about the future of their roles. Buzzfeed Inc. announced plans to use AI for content creation, resulting in layoffs in its core news department.

Georgieva's call for proactive measures aligns with the European Union's tentative deal on AI safeguards reached in December while the United States continues to deliberate on its federal regulatory stance.

Despite the potential risks to job security, Georgieva highlighted the "tremendous opportunity" AI presents to boost productivity levels and fuel global growth. The IMF chief stressed the need to help low-income countries catch the opportunities that AI will offer, balancing the concerns with the potential benefits.

In a separate interview in Washington, Georgieva expanded on the impact of AI on jobs, stating, "About 40% of jobs globally are likely to be impacted." She noted that while some jobs may disappear, others could see increased productivity and income levels due to AI integration.

The IMF is set to publish updated economic forecasts later this month, indicating that the global economy is on track to meet previous projections. However, Georgieva cautioned that 2024 is likely to be a "very tough year" for fiscal policy worldwide as countries grapple with debt burdens accumulated during the COVID-19 pandemic and face the challenge of rebuilding depleted buffers.

With approximately 80 countries holding elections this year, Georgieva expressed concerns about the pressure on governments to either raise spending or cut taxes to gain popular support. She warned against undermining progress in the fight against high inflation and emphasised the delicate balance needed in monetary and fiscal policies.

As her term at the IMF's helm ends this year, Georgieva remained focused on her current responsibilities, stating, "I have a job to do right now, and my concentration is on doing that job." She acknowledged the privilege of leading the IMF during turbulent times and expressed pride in how the institution coped with the challenges.