Impact of Artificial Intelligence on Jobs and Global Inequality

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Artificial intelligence (AI) is projected to impact nearly 40% of all jobs, as per a recent analysis by the International Monetary Fund (IMF). Kristalina Georgieva, the Managing Director of the IMF, warns that in most scenarios, AI is likely to exacerbate overall inequality. Georgieva emphasises the need for policymakers to address this “troubling trend” to prevent technology from further contributing to social tensions.

The IMF’s analysis suggests that AI is expected to affect approximately 60% of jobs in advanced economies, with workers benefiting from enhanced productivity in half of these cases. However, in other instances, AI may take over tasks currently performed by humans, potentially reducing demand for labor, affecting wages, and even eliminating jobs.

Conversely, the IMF projects a lower impact of AI on jobs in low-income countries, affecting only 26%. This aligns with a 2023 report from Goldman Sachs, estimating that AI could replace the equivalent of 300 million full-time jobs but acknowledging the possibility of new job creation and increased productivity.

Georgieva underscores that many low-income countries lack the necessary infrastructure and skilled workforce to harness AI’s benefits, posing a risk of worsening inequality among nations. The analysis also highlights potential disparities in wage increases, with higher-income and younger workers experiencing a disproportionate rise, while lower-income and older workers may lag behind.

To address these challenges, Georgieva stresses the importance of countries establishing comprehensive social safety nets and offering retraining programs for vulnerable workers. This approach aims to make the transition to AI more inclusive, protecting livelihoods and mitigating inequality.

The IMF’s analysis coincides with discussions at the World Economic Forum in Davos, Switzerland, where global business and political leaders are gathering. AI is a prominent topic, particularly with the increasing regulation of the technology worldwide. The European Union recently reached a provisional deal on comprehensive laws to regulate AI, while China has implemented some of the world’s first national regulations on AI. Additionally, President Biden signed an executive order in October compelling developers to share safety results related to AI with the US government, and the UK hosted an AI Safety Summit the following month, where multiple countries signed a declaration on the safe development of AI technology.