The International Monetary Fund (IMF) predicts that the expansion of artificial intelligence (AI) could affect approximately 40% of global employment, a trend anticipated to worsen existing inequalities.
To combat the effects of AI, IMF chief Kristalina Georgieva urged nations to create social safety nets and provide retraining opportunities in a blog post published on Sunday.
She wrote this in advance of the World Economic Forum (WEF) in Davos, Switzerland, where the topic is expected to be high on the agenda. “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 predicts that as AI becomes more widely adopted by companies and workers, its impact on the labor market will be a combination of positive and negative effects.
Georgieva echoed earlier advisories from other specialists, predicting that advanced nations would experience a more severe impact than emerging ones, in part due to the perception that manual labourers are less vulnerable than white-collar professionals.
For instance, AI may have an impact on up to 60% of jobs in more developed economies. She estimated that about half of them might profit from the way AI increases productivity.
“For the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring,” wrote Georgieva, citing an IMF analysis.
“In the most extreme cases, some of these jobs may disappear.”
AI is predicted to impact 40% and 26% of occupations in emerging markets and lower-income countries, respectively. Georgieva predicts that as AI becomes more widely adopted by companiesLow-income countries refer to developing nations characterized by per capita incomes falling below a defined threshold, exemplified by countries like Burundi and Sierra Leone.
On the other hand, emerging markets encompass regions experiencing sustained economic growth, illustrated by countries such as Brazil and India. and workers, its impact on the labor market will be a combination of positive and negative effects.
“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,” noted Georgieva.
She cautioned that the application of AI would raise the likelihood of social upheaval, especially if younger, less seasoned workers embraced the technology to help increase productivity while older workers found it difficult to stay up.
With ChatGPT taking the globe by storm last year, AI became a major issue at the WEF in Davos. Because it can produce articles, speeches, poems, and more, the generative AI-powered chatbot phenomenon has generated discussions about how it can alter how people operate all across the world.
Since then, technological advancements have increased the application of AI chatbots and systems, bringing them into the mainstream and generating significant funding.
AI has already been mentioned explicitly by a few tech companies as the reason they are reevaluating their workforce levels.
According to a March 2023 estimate by Goldman Sachs experts, widespread adoption of AI could ultimately raise labour productivity and boost global GDP by 7% annually over a 10-year period, even though workplaces may change.
In her blog article, Georgieva also mentioned how using AI may increase productivity and earnings globally.
“AI will transform the global economy,” she wrote. “Let’s make sure it benefits humanity.”