AI ‘tsunami’ will hit job market, young and middle class will suffer most: IMF chief

International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Friday that the ‘artificial intelligence (AI) tsunami’ will hit the labour market soon, and 60% of jobs in advanced economies will be affected by it. The ‘AI tsunami’ will wipe out many entry-level roles, and hence the young will be the most affected, Georgieva said, citing research. Artificial intelligence will be a “tsunami hitting the labour market”, with young people being the worst hit, the IMF chief said at the World Economic Forum in Davos on Friday.

Georgieva told delegates that the IMF’s own research suggested that there would be a big transformation of demand for skills as the technology becomes increasingly widespread.

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“We expect over the next years, in advanced economies, 60% of jobs to be affected by AI, either enhanced or eliminated or transformed–40% globally,” she said. “This is like a tsunami hitting the labour market.”

She further said that one in 10 jobs in advanced economies had already been “enhanced” by AI, tending to boost these workers’ pay, with knock-on benefits for the local economy.

‘AI would wipe out roles taken up by younger workers’

By contrast, Georgieva warned that AI would wipe out many roles traditionally taken up by younger workers. “Tasks that are eliminated are usually what entry-level jobs do at present, so young people searching for jobs find it harder to get to a good placement.”

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Besides, people whose jobs are not directly changed by artificial intelligence will be at risk of being squeezed, and their pay may potentially fall without a productivity boost from AI, she said.

“So the middle class, inevitably, is going to be affected,” Georgieva predicted.

‘AI insufficiently regulated, moving fast but not safe yet’

She further said that her greatest fear was that AI was insufficiently regulated. “This is moving so fast, and yet we don’t know how to make it safe. We don’t know how to make it inclusive. Wake up, AI is for real, and it is transforming our world faster than we are getting ahead of it,” she said.

Georgieva was speaking on a panel alongside the president of the European Central Bank, Christine Lagarde, who warned that the AI boom could be hampered by growing mistrust between rival economies as the US throws up tariff barriers.

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“We are dependent on each other,” she said, pointing out that AI was capital intensive, energy intensive, and data intensive. If countries did not work cooperatively and “define the new rules of the game,” she said, there would be less capital and less data. “We are in a bind, let’s face it,” she said.

‘Disparity getting deeper and bigger,’ says Christine Lagarde

Lagarde also sounded the alarm about widening global inequality, highlighting the “disparity that is getting deeper and bigger”.

The session titled ‘The Great Rebalancing: Artificial Intelligence, Jobs, and the Future of Inclusive Growth’ was held at the UAE Pavilion.

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Earlier, Microsoft chief executive Satya Nadella warned at Davos that AI could lose its “social permission” to compete for resources such as energy, for example, if it failed to generate benefits beyond a few powerful tech firms–such as the rapid development of effective new drugs.