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With the growing emergence of artificial intelligence, organisations globally are on the brink of industrial transformation 4.0. As organisations race to harness this transformation, artificial intelligence will impact almost 40% of employment globally, according to IMF (International Monetary Fund) President Kristalina Georgieva.
In a blog post, the IMF chief says the net effect of artificial intelligence is difficult to foresee, as the technology will ripple through economies in complex ways. Amongst economies, advanced economies will witness a 60% impact on employment because of artificial intelligence, as per the blog post. “As a result, advanced economies face greater risks from AI—but also more opportunities to leverage its benefits—compared with emerging market and developing economies,” says Georgieva.
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“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 labour demand, leading to lower wages and reduced hiring. In extreme cases, some of these jobs may disappear,” she adds.
Meanwhile, in emerging and low-income economies, the impact of artificial intelligence is expected to be 40% and 26%, respectively. “Emerging markets and developing economies face fewer immediate disruptions from AI. At the same time, many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations,” the blog post says.
Georgieva observes that the impact of AI on labour markets would largely depend on the extent to which the technology complements high-income workers. “If AI significantly complements higher-income workers, it may lead to a disproportionate increase in their labour income. Moreover, gains in productivity from firms that adopt AI will likely boost capital returns, which may also favour high earners. Both of these phenomena could exacerbate inequality,” she says.
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Apart from employment, AI’s impact will be witnessed significantly in the income and wealth of countries. As per the blog post, the usage of AI in the workplace will lead to polarization in productivity levels and income brackets. “We may see polarization within income brackets, with workers who can harness AI seeing an increase in their productivity and wages—and those who cannot fall behind,” says the blog post.
Meanwhile, the usage of AI will be more prevalent amongst young and less experienced employees, who will use the technology to exploit opportunities thus enhancing productivity more quickly. The older workers would, however, struggle to adapt to AI.
Cautioning nations about the impact of AI that could lead to overall inequality, Georgieva advises policymakers to proactively address the troubling AI trends, in order to prevent the technology from further stoking social tensions. “It is crucial for countries to establish comprehensive social safety nets and offer retraining programs for vulnerable workers. In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality,” says Georgieva.
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