The AI Tsunami Could Hit 40% of Jobs Worldwide, IMF Warns

Artificial intelligence could eventually affect about 40% of jobs worldwide, the head of the International Monetary Fund warned today, as policymakers urged governments to expand employment support and encourage companies to hire young graduates amid mounting concerns about automation.

IMF Managing Director Kristalina Georgieva described AI as a “slow-moving tsunami” hitting labour markets, with young people entering the workforce particularly vulnerable as companies automate routine tasks.

“People to worry about, first and foremost, [are] young people that are coming into the labor market,” Georgieva said during a panel discussion.

“Normally, they would get into these routine, repetitive jobs and then grow up the ranks. But if they’re gone, I don’t think any young person wants to be a barista in a coffee shop as … professional future.”

Singapore President Tharman Shanmugaratnam, who co-chairs the World Bank’s Jobs Council, called for governments to make emergency employment measures introduced during the COVID-19 pandemic and, in some cases, the global financial crisis, a permanent part of economic policy.

What governments did during the Covid-19 pandemic and, in some cases, the global financial crisis “now has to be thought of not as a crisis measure, but as part of the structural, the menu of structural policies,” he said.

Governments should work with businesses and offer incentives to recruit young people, he said, as demand for entry-level positions declines.

“the first rung in employment, your first job upon graduation, is now seeing less demand,” Shanmugaratnam said.

The warnings reflect a shift in the policy debate from whether AI will disrupt employment to how governments can cushion its effects while preserving productivity gains from the technology.

World Bank President Ajay Banga has estimated that 1.2 billion young people will turn 18 over the next 15 years, putting pressure on economies to generate sufficient employment. The private sector already creates between 75% and 85% of jobs in most countries, he said, leaving businesses central to efforts to absorb new entrants into the workforce.

Governments should help attract investment by improving infrastructure, establishing supportive policies and reducing risks for investors, Banga said.

“It is private capital that creates jobs,” he said.

The IMF estimates that about 40% of jobs worldwide will eventually be “augmented, downgraded or eliminated” by AI, Georgieva said. Exposure rises to about 60% in advanced economies and stands at 23% in low-income countries, she said, partly because adoption of the technology is less advanced in poorer nations.

The impact is already visible in the technology sector, Shanmugaratnam said, citing declining demand for some graduate roles in the United States and a shrinking wage premium associated with university degrees.

Without action, graduates could lose valuable opportunities to develop workplace skills, he said, adding that “you lose trust in the future.”

AI offers growth potential

AI investment and trade have helped support global economic growth this year, offsetting some of the impact of an energy supply shock, Georgieva said.

“Love it, hate it, or fear it. It [AI] is here, and we are already seeing the first wave of impact,” she said.

AI adoption could raise growth by 0.5 percentage point to 1 percentage point in advanced Asian economies and by 0.2 percentage point to 0.8 percentage point in emerging Asian economies, Georgieva said. At the upper end of those estimates, the gains could more than offset the economic drag from ageing populations, she said.

However, faster growth does not necessarily translate into stronger employment, Shanmugaratnam said, pointing to China, India and developing Southeast Asia, where economic expansion has not always generated enough jobs.

China, India and developing Southeast Asia are “growing quite well, but job creation is weak,” he said, adding that AI “is going to widen that divergence if we are too passive about it.”

AI-related displacement is likely to occur gradually as companies automate individual tasks rather than eliminate entire occupations at once, Shanmugaratnam said.

AI-induced job displacement will come “task by task,” he said, “and that gives us time” to prepare workers through on-the-job training and education systems that place greater emphasis on practical skills.

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