The International Monetary Fund (IMF) has forecasted that the introduction of Artificial Intelligence (AI) will impact 40 percent of the global workforce.
While AI has demonstrated improvements in productivity, it is poised to displace numerous jobs in the foreseeable future.
Speaking at the sidelines of the 2024 IMF-World Bank Spring meeting in Washington DC, Managing Director of the Fund, emphasized the permanent presence of AI.
She cited an IMF study revealing that AI’s influence could extend to 40 percent of jobs worldwide, with advanced economies potentially facing a 60 percent impact.
Georgieva highlighted the dual nature of AI, stating it could enhance worker productivity while simultaneously posing a threat to employment. She stressed the importance of investing in digital infrastructure, skills development, and robust social safety nets to shape the pace of AI adoption and its ramifications on productivity.
Furthermore, the IMF’s January report outlined potential ramifications on income and wealth inequality within countries due to AI.
It posited that AI might lead to polarization within income brackets, benefiting workers adept at leveraging AI while leaving others behind.
The report suggested that younger workers might find it easier to capitalize on AI opportunities, while older workers might face challenges in adaptation.
Additionally, the report noted that AI’s impact on labor income hinges on its complementarity with high-income workers.
If AI significantly complements higher-income workers, it could disproportionately increase their labor income and favor high earners. This scenario, coupled with gains in productivity from AI adoption boosting capital returns, could exacerbate inequality.
In light of these findings, the IMF stressed the need for proactive policymaking to mitigate the potential exacerbation of inequality by AI.
It advocated for establishing comprehensive social safety nets and offering retraining programs for vulnerable workers to ensure an inclusive AI transition that safeguards livelihoods and curbs inequality.
“A recent IMF study shows that artificial intelligence could affect up to 40 percent of jobs across the world and 60 percent in advanced economies.
“It could enhance workers’ productivity but also threatens some jobs. Investing in digital infrastructure and skills, as well as in strong social safety nets will determine the pace of AI adoption and its impact on productivity.”
The IMF in January this year also predicted that “AI could also affect income and wealth inequality within countries. We may see polarization within income brackets, with workers who can harness AI seeing an increase in their productivity and wages—and those who cannot falling behind. Research shows that AI can help less experienced workers enhance their productivity more quickly. Younger workers may find it easier to exploit opportunities, while older workers could struggle to adapt.
“The effect on labour income will largely depend on the extent to which AI will complement high-income workers. If AI significantly complements higher-income workers, it may lead to a disproportionate increase in their labour income. Moreover, gains in productivity from firms that adopt AI will likely boost capital returns, which may also favour high earners. Both of these phenomena could exacerbate inequality.
“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. It is crucial for countries to establish comprehensive social safety nets and offer retraining programs for vulnerable workers. In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.”