Reshaping the nature of work

In a new analysis, IMF staff examine the potential impact of AI on the global labor market. The analysis predicted the likelihood that jobs will be replaced by AI and what kind of fields that AI is likely to complement human work.

IMF head Kristalina Georgieva shared that almost 40% of global employment is exposed to AI. In particular, AI can impact high-skilled jobs. Advanced economies, therefore, are facing greater risks from AI. But there are also more opportunities for them to leverage its benefits, in comparison with emerging markets and developing economies.

In advanced economies, about 60% 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.

Meanwhile, with emerging markets and low-income countries, AI exposure is expected to be 40% and 26%, respectively.

(Photo: IMF).

These findings suggest 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.

AI could also affect income and wealth inequality within countries. Within income brackets, workers who can harness AI can expect an increase in their productivity and wages while those who cannot fall behind. With work experience, research shows that AI can help less experienced workers enhance their productivity more quickly. Older workers could struggle to adapt to AI.

AI will probably worsen inequality. If significantly complementing higher-income workers, AI may lead to a disproportionate increase in their labor income. Firms that gain productivity by adopting AI will likely boost capital returns, which may also favor high earners.

This troubling trend must be addressed by policymakers across the globe, according to the IMF. Countries must establish comprehensive social safety nets and offer retraining programs for vulnerable workers.

Establishing an inclusive AI-driven world

To help countries craft the right policies, the AI Preparedness Index by the IMF measures readiness in areas such as digital infrastructure, human capital and labor-market policies, innovation and economic integration, and regulation and ethics.

Using the index, IMF staff assessed the readiness of 125 countries. The findings reveal that wealthier economies, including advanced and some emerging market economies, tend to be better equipped for AI adoption than low-income countries, with considerable variation across countries.

In particular, Singapore, the United States, and Denmark posted the highest scores on the index, based on their strong results in all four categories tracked. These advanced economies should prioritize AI innovation and integration while developing robust regulatory frameworks. This approach will cultivate a safe and responsible AI environment, helping maintain public trust.

For emerging markets and developing economies, the priority should be laying a strong foundation through investments in digital infrastructure and a digitally competent workforce.

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