AI Tsunami Warning: IMF Chief Says Young Workers Face Biggest Job Threat

AI's Impact on the Labour Market

Artificial intelligence is set to be a "tsunami hitting the labour market", with young people expected to be the worst affected, according to Kristalina Georgieva, head of the International Monetary Fund. Speaking at the World Economic Forum in Davos, she highlighted that the IMF's research indicates a significant transformation in demand for skills as AI becomes more widespread.

The Scale of Disruption

Georgieva revealed that 60% of jobs in advanced economies will be affected by AI, either enhanced, eliminated, or transformed, with 40% globally facing similar impacts. She described this as a tsunami that will reshape employment landscapes.

Kristalina Georgieva speaking in Davos. Photograph: Denis Balibouse/Reuters

Winners and Losers

In advanced economies, one in 10 jobs has already been enhanced by AI, leading to higher pay for these workers and benefits for local economies. However, Georgieva warned that entry-level jobs typically taken by younger workers are at high risk of being eliminated. "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," she said.

Meanwhile, workers whose jobs are not directly changed by AI could face pay cuts without productivity boosts from the technology, potentially squeezing the middle class.

Regulatory Concerns

Georgieva expressed her greatest fear that AI is 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 urged.

Broader Perspectives from Davos

Christy Hoffman, general secretary of the UNI global union, emphasized that the business goal of AI is to increase productivity and lower costs, which often means cutting jobs. She called for fair distribution of productivity benefits across the economy and urged employers to discuss AI tools with workers before implementation.

Microsoft CEO Satya Nadella warned that AI could lose "social permission" to compete for resources like energy if it fails to generate broader benefits beyond a few tech firms.

European Central Bank President Christine Lagarde highlighted that the AI boom could be hampered by mistrust between economies and tariff barriers, stressing the need for cooperative rule-making.

Lagarde also raised alarms about widening global inequality, noting a "disparity that is getting deeper and bigger."

While Canadian Prime Minister Mark Carney spoke of a permanent "rupture" in the global economic order, Lagarde offered a more nuanced view, suggesting "alternatives" rather than rupture.