IMF warns of AI's labor market impact; World Bank council urges permanent employment support

AI's Impact on Global Labor

International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated that artificial intelligence is impacting the global labor market like a "slow-moving tsunami." She highlighted that young graduates are particularly susceptible, as AI is expected to eliminate many routine, repetitive jobs typically held by new entrants.

The IMF estimates that approximately 40% of jobs globally will be affected by AI, either augmented, downgraded, or eliminated. This exposure is higher in advanced economies (around 60%) compared to low-income countries (23%), though Georgieva noted this is because AI adoption is less prevalent in poorer nations.

Call for Permanent Employment Support

Singapore President Tharman Shanmugaratnam, co-chair of the World Bank's Jobs Council, urged governments to make "crisis-era" support measures a permanent part of their structural policies. These measures, similar to those implemented during the Covid-19 pandemic and global financial crisis, would aim to help young people secure employment.

Shanmugaratnam emphasized the need for governments to collaborate with the private sector and provide incentives for firms to hire fresh graduates, as demand for entry-level positions is decreasing.

Role of Private Capital and Government

World Bank President Ajay Banga projected that 1.2 billion young people will turn 18 in the next 15 years, with the private sector expected to absorb most of them, as it currently generates 75% to 85% of jobs globally.

Banga stated that governments' role is to facilitate this by building infrastructure, establishing supportive policies, and "de-risking" private capital to encourage investment. He stressed that private capital is the primary driver of job creation.