IMF chief warns of AI ‘tsunami’ coming for jobs

One of these was Kristalina Georgieva, managing director of the International Monetary Fund. In a panel conversation on Friday, Georgieva said that AI is already disrupting labor markets worldwide by shifting demand for skills employers seek, and might even boost earnings for some workers by improving productivity. But for others, especially younger people, the upshot is fewer entry-level tasks and a shrinking pool for jobs. For people new to the workforce, Georgieva said, AI is “like a tsunami hitting the labor market.”

“Tasks that are eliminated are usually what entry-level jobs present, so young people searching for jobs find it harder to get to a good placement,” Georgieva said. “Where are the guardrails? 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.”

Georgieva cited IMF research that has found AI is likely to impact around 60% of jobs in advanced economies, and 40% globally. Of these, roughly half of exposed workers could stand to benefit from AI, but for the rest, key tasks that once required human input are likely to be automated. This could lead to lower wages and slower hiring. For entry-level roles, especially those requiring clerical tasks, AI could be a death knell.

AI-related job losses may have already begun. AI was cited as a factor in nearly 55,000 job cuts in the U.S. last year, according to a report by the consulting firm Challenger, Gray & Christmas. Entry-level positions are often cited as being higher risk. One analysis from the Brookings Institution, for example, found that automation was at least two or three times more likely to affect starting roles such as marketing analysts, sales representatives or graphic designers compared to their managerial counterparts.

Georgieva framed the rapid-paced AI development in advanced economies as a risky strategy, as the technology’s evolution threatens to outpace policymakers’ ability to contain potential harms. She described an unregulated, market-driven deployment of AI her “biggest worry.”

“Wake up. AI is for real, and it is transforming our world faster than we are getting a handle on,” she said at the Davos panel.

Entry-level roles are not the only jobs at risk, she added. Between the jobs set to benefit from AI and those that risk disappearing, lies a vast gulf of positions that will only be partially affected or not at all. As pay grows at the top of the income chart, workers whose role does not receive an AI-driven productivity boost could find themselves “squeezed,” according to Georgieva.

“The middle class, inevitably, is going to be affected,” she said.

Not every boss speaking in Davos was convinced that AI is destined to wreak havoc on labor markets just yet. Earlier in the week, Microsoft CEO Satya Nadella discussed an emerging type of knowledge work, with new competencies based on how AI was reshaping hierarchies and the way information flows through society. 

More tangibly, Nvidia CEO Jensen Huang talked about “largest infrastructure build-out in human history,” referring to the cityscapes of new computational hardware needed to satisfy AI’s processing power demand, which is generating swathes of blue collar work contracts. Huang noted during the summit that there is a “great shortage” of workers considering the new demand, leading to rocketing salaries for roles like electricians, plumbers and steelworkers.