World Bank jobs council urges 'crisis-era' employment support measures as IMF warns of AI ‘tsunami’
· Policy
IMF warns AI disrupts labor market like slow-moving tsunami, with young workers most exposed to job displacement.
IMF warns AI hits labor market like 'slow-moving tsunami,' with young workers most exposed.
IMF Managing Director Kristalina Georgieva warned Monday that artificial intelligence is disrupting the global labor market like a slow-moving tsunami, with young graduates entering the workforce most vulnerable. She noted that entry-level repetitive jobs traditionally filled by new workers are disappearing, forcing graduates to consider lower-skill positions like barista work.
Singapore President Tharman Shanmugaratnam, co-chairing the World Bank's Jobs Council, called for governments to adopt crisis-era support measures as permanent structural policies rather than temporary responses. These measures, tested during COVID-19 and the financial crisis, should incentivize private-sector hiring of fresh graduates to address declining demand for first-time employment.
The IMF estimates approximately 40% of global jobs could eventually be augmented, downgraded, or eliminated, with exposure at 60% in advanced economies and 23% in low-income countries. Poorer nations face different timing challenges, with AI adoption further away. The squeeze is most visible in tech, where U.S. demand for graduates has declined for the first time in a century.
AI-related investments and trade have become major growth drivers this year, with the IMF estimating AI adoption could boost growth by 0.5 to 1 percentage point in advanced Asia and 0.2 to 0.8 percentage point in emerging Asia. However, growth alone may not guarantee job creation, as China, India, and developing Southeast Asia show weak employment despite strong economic expansion.
Policymakers have shifted from debating AI's labor impact to developing strategies for mitigation, recognizing job displacement will occur task-by-task, providing time for worker retraining if universities pivot toward applied training and workers upskill on the job.
Policymakers are moving from debating AI job disruption to implementing permanent structural support measures for young workers.
Source: CNBC
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