Impacts of Artificial Intelligence: IMF Predicts 40% Job Displacement and Deepening Inequality

Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), has expressed concerns about the impact of artificial intelligence (AI) on overall inequality. She suggests that, in most scenarios, AI is likely to exacerbate existing inequalities and emphasizes the need for policymakers to address this troubling trend to prevent further social tensions.

The widespread use of AI has brought both its advantages and risks into focus. The IMF estimates that around 60% of jobs in advanced economies are likely to be affected by AI. In half of these cases, workers may experience benefits from the integration of AI, leading to increased productivity. However, in other instances, AI could take over tasks currently performed by humans, potentially reducing demand for labor, affecting wages, and even leading to job losses.

The IMF predicts that AI will impact only 26% of jobs in low-income countries. This aligns with a 2023 report from Goldman Sachs, which suggested that AI could replace the equivalent of 300 million full-time jobs but also anticipated the creation of new jobs and increased productivity.

Georgieva notes that many low-income countries lack the necessary infrastructure and skilled workforce to fully harness the benefits of AI, raising the risk of deepening inequality among nations over time.

The IMF warns of a potential disproportionate increase in wages for higher-income and younger workers who adopt AI, while lower-income and older workers may fall behind. To address this, Georgieva emphasizes the importance of countries establishing comprehensive social safety nets and offering retraining programs for vulnerable workers to make the transition to AI more inclusive, protect livelihoods, and curb inequality.

These insights from the IMF come amid discussions on AI at the World Economic Forum in Davos, Switzerland, where global business and political leaders are gathered. The increased regulation of AI worldwide is also notable, with the European Union, China, and the United States taking steps to establish comprehensive laws and rules governing the development and deployment of AI technology.