IMF's stark warning: AI threatens 40% of global jobs

Immediate action needed to prevent worsening inequality

The International Monetary Fund (IMF) has sounded the alarm on AI's potential impact on the global job market, predicting that nearly 40% of jobs worldwide could be affected.

In a new report, the IMF highlighted that high-income economies are particularly vulnerable to AI risks, urging immediate action to prevent growing inequality.

IMF chief Kristalina Georgieva said she is concerned over the "troubling trend," and called on policymakers to proactively address AI challenges, to prevent the technology from further escalating social tensions.

"We are on the brink of a technological revolution that could jumpstart productivity, boost global growth, and raise incomes around the world. Yet it could also replace jobs and deepen inequality," Georgieva said.

The IMF's analysis indicates that high-skilled jobs, predominantly in advanced economies, are most likely to be affected by AI: approximately 60% of jobs in these markets are at risk.

While the IMF believes AI could enhance productivity for around half of the affected jobs, key tasks could be taken over in the other half, leading to lower labour demand, reduced hiring and potential job eradication.

Emerging markets, such as Brazil, are expected to face lower disruption, with around 40% of jobs affected, while low-income nations like Bangladesh are expected to see a 26% impact. However, the IMF notes that the lack of a skilled workforce in many of these countries raises concerns about the potential worsening of inequality.

The IMF warns that AI could further polarise income brackets. Those who can harness its benefits may experience higher productivity and wages, but those who cannot may fall behind - particularly lower-income and older workers who are more vulnerable to job displacement.

This comes in the wake of previous warnings by financial institutions. Goldman Sachs, for example, estimated that generative AI alone could impact up to 300 million jobs globally.

While acknowledging the potential for job displacement, Goldman Sachs also recognised the technology's ability to spur labour productivity, contribute to economic growth and increase GDP by as much as 7%.

World leaders look at AI risks

With the world standing on the brink of a revolution, global leaders and policymakers face the challenge of balancing the benefits and risks of AI implementation. The emphasis, says the IMF, must be on mitigating the potential fallout on jobs and inequality.

In the USA, President Biden signed an executive order in October requiring developers to share safety results related to AI with the government. Shortly afterwards, the UK hosted an AI Safety Summit in November, where multiple countries signed a declaration on the safe development of AI technology.

And just last month, the European Union reached a provisional agreement on the world's first comprehensive laws to regulate AI.

Industry leaders are also acknowledging the AI's transformative potential, and highlighting the importance of adapting to the changing nature of work.

Speaking at an event hosted by the Chatham House thinktank in London, Satya Nadella, CEO of Microsoft, said AI can facilitate mid-career transitions and make expertise more accessible.

"I think this is the age where this is about expertise at your fingertips," Nadella said.

"So if anything, anyone can become an expert in anything because you have the AI assistant helping you."