Science & Technology (Commonwealth Union) – Artificial Intelligence (AI) has emerged as a transformative force across various industries, promising increased efficiency, innovation, and convenience. While the benefits of AI are undeniable, there is a growing concern about its potential to disrupt the job market by automating tasks traditionally performed by humans. As AI technology advances, it raises questions about the future of employment and the skills needed to thrive in an increasingly automated world.
Kristalina Georgieva the Managing director of the International Monetary Fund recently indicated that the influence of AI is poised to impact nearly 40 percent of global jobs, involving both replacement and complementation of existing roles. Achieving an optimal outcome requires a delicate equilibrium in the formulation of policies to harness the full potential of AI.
As indicated in an IMF analysis AI holds the potential to transform the global economy, particularly in the domain of labor markets. The impacts of AI are expected to manifest sooner in advanced economies, given their concentration on cognitive-intensive roles. This shift will bring both advantages and challenges. Notably, women and individuals with higher education are likely to face increased exposure to AI, presenting opportunities for them to benefit from its advancements. Conversely, older workers may encounter challenges in adapting to this new technological landscape.
The analysis also indicated that the introduction of AI has the potential to amplify labor income inequality, especially if there is a strong complementarity between AI and high-income workers. Additionally, it may contribute to an increase in wealth inequality through higher returns on capital. However, if the gains in productivity are substantial, there is a prospect for a significant rise in income levels across the workforce.
In this dynamic scenario, it is crucial for advanced economies and well-developed emerging markets to concentrate on enhancing regulatory frameworks and facilitating labor reallocation. This approach aims to support individuals adversely affected by AI while ensuring a smooth transition. On the other hand, emerging market and developing economies should prioritize the development of digital infrastructure and the cultivation of digital skills in the global landscape according to the analysis.
“In advanced economies, about 60 percent of jobs may be impacted by AI. Roughly half the exposed jobs may benefit from AI integration, enhancing productivity. For the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear,” said Ms Georgieva.
She also indicated that in contrast, it is anticipated that exposure to AI will be 40 percent in emerging markets and 26 percent in low-income countries. These results indicate that emerging market and developing economies may experience fewer immediate disruptions from AI. However, a significant challenge lies in the lack of infrastructure and skilled workforces in many of these countries, hindering their ability to fully leverage the advantages of AI. This raises the concern that, over time, AI could exacerbate inequality among nations.
Income and wealth inequality within countries may also be influenced by AI. There is a potential for polarization within income brackets, as individuals who can effectively utilize AI may experience heightened productivity and increased wages, whereas those unable to do so may lag behind. Studies indicate that AI can expedite productivity improvements for less experienced workers. Younger individuals might find it easier to capitalize on opportunities presented by AI, while older workers may face challenges in adapting to these changes, as indicated by said Ms Georgieva.
“It is crucial for countries to establish comprehensive social safety nets and offer retraining programmes for vulnerable workers,” added Ms Georgieva.
