In a recent report, the International Monetary Fund (IMF) sounded an alarm, forecasting that nearly 60% of jobs worldwide will be affected by the rise of artificial intelligence (AI).

The international monetary body noted that AI is expected to impact a larger share of jobs, particularly in advanced economies. In about half of these cases, employees can anticipate positive outcomes as AI integration enhances their productivity.

Conversely, in certain situations, AI is poised to take on essential tasks currently carried out by humans. This shift has the potential to decrease the demand for labor, potentially influencing wages and leading to job displacement.

IMF Managing Director Kristalina Georgieva said there is potential exacerbation of overall inequality due to AI, stating in a blog post that policymakers need to proactively address this concern to prevent the technology from heightening social tensions.

“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 said in a blog post on the study.

Georgieva acknowledged the nuanced impact of AI on income inequality, highlighting that its effects will hinge on the extent to which the technology complements high earners. She explained that increased productivity from high-income workers and companies utilizing AI could widen the wealth gap.

To counteract these potential repercussions, Georgieva urged countries to establish “comprehensive social safety nets” and implement retraining programs for vulnerable workers, according to a Bloomberg report.

Contrary to the notion that AI might outright replace jobs, Georgieva’s analysis suggests that a more likely scenario is the augmentation of human work by AI. However, the advanced economies are expected to bear a more substantial impact, with around 60% of jobs potentially affected compared to emerging and low-income countries.

This revelation comes amid discussions at the World Economic Forum in Davos, Switzerland, where global business and political leaders are addressing the challenges and opportunities presented by AI. Companies, in a bid to stay competitive, have been investing heavily in AI, raising concerns among employees about the future of their roles.

One notable example is Buzzfeed Inc., which recently announced plans to leverage AI for content creation and subsequently closed its core news department, leading to the layoff of over 100 staffers. The concerns surrounding AI have prompted the European Union to reach a tentative deal in December on legislation outlining safeguards for AI, while the United States continues to deliberate on its federal regulatory stance.

Beyond the economic implications, the Basel Committee on Banking Supervision has stressed the need for a coordinated global response to address the challenges posed by AI. Pablo Hernández de Cos, the chair of the Basel Committee and governor of the Bank of Spain, cautioned that the rapid evolution of AI could alter the course of history, not necessarily in a positive way.

In an interview, De Cos urged global leaders to consider financial regulation as a model for addressing AI-related issues, drawing attention to the remarkable cooperation that allowed financial watchdogs to stabilize the world’s financial system during crises. He emphasized the need for international institutions to collaborate in finding solutions, particularly in the face of increasing geopolitical challenges.

As part of these efforts, the Basel Committee plans to publish a report in the coming months outlining the financial stability implications of AI. De Cos expressed concern about the difficulty in reaching common agreements at the geopolitical level, noting the need for proactive measures to navigate the challenges posed by AI and ensure a stable and inclusive future.

Meanwhile, the IMF forecasts that the impact of technology on jobs in low-income countries will be notably lower, affecting only 26% of employment.

This aligns with a 2023 report from Goldman Sachs, which projected that AI could potentially replace the equivalent of 300 million full-time jobs. However, the report also suggested the possibility of new job creation alongside increased productivity.

IMF Managing Director, Ms. Georgieva, highlighted a concern that many low-income countries lack the necessary infrastructure and skilled workforces to fully harness the benefits of AI. This raises the risk that over time, the technology could exacerbate global inequality among nations.

“Many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations,” Ms Georgieva said.

LinkedIn Summary

The surge in artificial intelligence applications and their implications for the workforce is expected to be a hot topic of discussion at the World Economic Forum in Davos, Switzerland, this week. Kristalina Georgieva, the head of the International Monetary Fund (IMF), issued a warning that nearly 40% of jobs globally could be affected by developments in artificial intelligence, for better or for worse. A new IMF analysis shows the effects are likely to be particularly acute in advanced economies, where about 60% of positions could see an impact, compared with about a quarter in low-income countries.

• About half affected jobs may benefit from AI through higher productivity, while the other half could see AI taking over tasks performed by humans, reducing labor demand or even replacing jobs in some cases.
• A new global survey from Deloitte’s AI Institute shows top executives are “far from ready” to deal with the implications of generative AI, reports Axios.
• Citing anonymous sources, Bloomberg reports that Apple is shutting down an AI-related team in San Diego, “leaving many employees at risk of termination.”