Productivity vs inequality | IMF warns of impending 'AI tsunami' impacting the global labor market

IMF warns of impending 'AI tsunami' impacting the global labor market

In a stark warning, International Monetary Fund Managing Director, Dr. Kristalina Georgieva, has cautioned of an impending "tsunami" hitting the global labor market as businesses increasingly adopt artificial intelligence technologies.

Speaking alongside Professor Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, Georgieva underscored the gradual yet significant impact of AI on nearly all industries.

She emphasized that despite the prevailing hype surrounding AI technology, its full ramifications are yet to be fully realized.

However, its presence is unmistakably on the rise, with junior programmers already witnessing the displacement of roles by AI assistants like GitHub's Copilot.

Georgieva's projections indicate that AI is likely to affect nearly half of all jobs worldwide, with a staggering 60% of jobs in advanced economies such as the US and UK expected to be impacted.

However, she stressed that proactive management is crucial in mitigating the potential negative consequences, stating that both businesses and populations need to prepare for the transformative effects of AI.

"It could bring a tremendous increase in productivity if we manage it well, but it can also lead to more misinformation and, of course, more inequality in our society," Georgieva cautioned, as reported by Reuters.

Economist David Autor offered a contrasting view, suggesting that fears of AI job displacement might be overblown.

He highlighted the potential of generative AI as an “assistive tool to enhance workforce productivity, particularly in economies experiencing slowing population growth rates”.

Autor's remarks centered on AI's capacity to empower a broader segment of the workforce with the necessary skills to undertake high-stakes decision-making tasks, traditionally reserved for elite professionals.

Despite these contrasting perspectives, the rapid advancement of AI technology in recent months has fuelled speculation about its widespread implications.

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Companies like Microsoft have integrated AI tools like Copilot across their product portfolios, while OpenAI recently unveiled its latest multi-modal machine learning model, GPT-4o, showing the continued evolution of AI capabilities.

According to IMF data, while approximately 60% of jobs in advanced economies will be touched by AI technology, only half are likely to benefit from its implementation.

The remaining half, however, faces the risk of potential elimination.

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