Analysis from the International Monetary Fund (IMF) finds AI will affect up to 40% of jobs globally, potentially leading to job loss and deepening inequality.
The report, released on 14 January 2024, finds that AI will especially impact labor markets across the global economy. AI will hit advanced economies first, where the proportion of affected jobs may rise to 60%, due to a greater proportion of knowledge worker roles.
IMF’s analysis identifies older workers as at risk of being less able to adapt to AI technology. It also finds labor income equality may increase if there is a strong connection between AI and high-income workers.
Authors Cazzaniga, Jaumotte, Li, Melina, Panton, Pizzinelli, Rockall, and Tavares recommend emerging markets focus on “upgrading regulatory frameworks and supporting labor reallocation while safeguarding those adversely affected.”
IMF Chief Kristalina Georgieva released a blog post, also on 14 January 2024, calling on policymakers to act as AI looks likely to widen inequality and threaten inclusivity.
“The net effect is difficult to foresee, as AI will ripple through economies in complex ways,” says Georgieva. “What we can say with some confidence is that we will need to come up with a set of policies to safely leverage the vast potential of AI for the benefit of humanity.”
Re-shaping jobs, organizations, and economies
In advanced economies such as the U.S., the IMF estimates half of the 60% of jobs affected by AI may benefit from the technology, including productivity gains. Close to one-third of jobs, however, are at risk of replacement.
“AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring,” explains Georgieva.
Companies including Duolingo have already announced AI-related lay-offs due, in part, to AI. The language learning app announced layoffs for around 10% of its translation contractors on 9 January 2024 in a shift to AI-led content production.
Whilst targeted AI legislation is not yet part of U.S. federal law, several bills have been introduced into Congress to address topics such as the impact of AI on U.S. workers.
Several cities and states in the U.S., however, do have formal AI legislation. New York City’s Local Law 144 prohibits employers from using automated employment decision tools unless the tool has been subject to a bias audit within one year of the use of the tool, information about the bias audit is publicly available, and certain notices have been provided to employees or job candidates.
Threatening inclusion, widening inequality
The IMF finds that AI could widen existing inequalities in capability and pay. Workers such as less experienced employees may better adapt to AI technology, thereby increasing their productivity, capability, and pay.
Conversely, other groups such as older workers may struggle to keep pace, potentially disproportionately impacting their income, and widening inequality.
The IMF report encourages institutions in advanced economies and more developed emerging markets to focus on improving policies. It also encourages businesses to support employees with safeguarding and labor reallocation when AI leads to job replacement.
“It is crucial for countries to establish comprehensive social safety nets and offer retraining programs for vulnerable workers,” echoes Georgieva. “In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.”
The report estimates AI may impact 40% of jobs in emerging markets and 26% of jobs in low-income countries, emphasizing developing digital infrastructure and digital skills as priorities for organizations looking to protect workers within these economies.
IMF’s report comes ahead of the World Economic Forum (WEF) summit in Davos, Switzerland, where AI is one of four key agenda themes for 2024.
As AI brings opportunities for productivity and prosperity, alongside threats to equality and inclusivity, Georgieva pushes organizations and policymakers to work together to ensure all workers benefit.
“The AI era is upon us,” says Georgieva. “It is still within our power to ensure it brings prosperity for all.”