IMF chief warns AI is a ‘slow-moving tsunami’ for jobs

International Monetary Fund Managing Director Kristalina Georgieva warned on Monday, Oct. 12, that artificial intelligence is hitting the global labor market like a "slow-moving tsunami." She said young graduates will be hit first and that government tax revenues are also at risk. "It is a slow-moving tsunami, but tsunami none the less," Georgieva said in her first appearance at the annual meetings of the IMF and World Bank in Bangkok.cnbc+2

Her comments came at a panel on AI and jobs. Singapore President Tharman Shanmugaratnam, co-chair of the World Bank's Jobs Council, used the same session to urge governments to make pandemic-style employment support a permanent policy tool. CNBC described the session as a sign that policymakers have moved past debating whether AI will disrupt jobs and are now deciding how to soften the impact.straitstimes+1

Graduates first in line

The IMF estimates that about 40% of jobs worldwide will eventually be "augmented, downgraded or eliminated." Georgieva put exposure at about 60% in advanced economies and 23% in low-income countries. She said poorer nations are not safer, though: their exposure is lower "just because AI is further away".cnbc

"People to worry about, first and foremost, [are] young people that are coming into the labor market," she said. In the past, new workers started in routine jobs and worked their way up, but "if they're gone, I don't think any young person wants to be a barista in a coffee shop" as a career, she added. Georgieva also said AI is adding low-paying jobs in sectors like construction, which is "not a story to celebrate".japantimes+1

She warned that AI could tilt the economy toward capital and away from labor, which has traditionally been the main source of tax income. "If revenues are shrinking, they would be in a tough spot," she said.straitstimes+1

Making crisis measures permanent

Shanmugaratnam said what governments did during the Covid-19 pandemic and 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 called for incentives for companies to hire fresh graduates. He also said universities, which are now "overwhelmingly academically focused," should shift toward work-study programs and internships. He said that in the U.S., "for the first time in a century, demand for graduates has gone down".straitstimes+1

If young people wait a year for their first job, "you also lose skills, you lose intangible aptitudes, and you lose trust in the future," he said.straitstimes

World Bank President Ajay Banga estimated that 1.2 billion young people will turn 18 over the next 15 years. He said the private sector will have to absorb most of them.cnbc

Growth upside

Georgieva said AI adoption could add 0.5 to 1 percentage point to growth in advanced Asia and 0.2 to 0.8 points in emerging Asia. At the high end, she said, that "would more than offset the loss that comes from aging population". Shanmugaratnam cautioned that growth does not automatically create jobs. He pointed to China and India, which are growing well while job creation stays weak.cnbc+1

"We cannot today imagine what exactly the world of work will be five years from now," Georgieva said. "But most importantly, act on them now".japantimes