IMF chief warns AI tsunami will eliminate entry-level jobs and squeeze 60% of workforce

Young will suffer most when AI 'tsunami' hits jobs, says head of IMF

Kristalina Georgieva says research suggests 60% of jobs in advanced economies will be affected, with many entry-level roles wiped out Artificial intelligence will be a "tsunami hitting the labour market", with young people worst affected, the head of the International Monetary Fund warned the World Economic Forum on Friday. Kristalina Georgieva told delegates in Davos that the IMF's own research suggests there will be a big transformation of demand for skills, as the technology becomes increasingly widespread. "We expect over the next years, in advanced economies, 60% of jobs to be affected by AI: either enhanced or eliminated or transformed - 40% globally," she said. "This is like a tsunami hitting the labour market." She suggested that in advanced economies, one in 10 jobs have already been "enhanced" by AI, tending to boost these workers' pay, with knock on benefits for the local economy. By contrast, Georgieva warned that AI will wipe out many roles traditionally taken up by younger workers. "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." Meanwhile people whose jobs are not directly changed by artificial intelligence risk being squeezed, she said, with their pay potentially falling without a productivity boost from AI. "So the middle class, inevitably, is going to be affected," Georgieva predicted. She said her greatest fear was 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 said. Much of the debate at the annual meeting of the business and political elite in the Swiss ski resort this week has been hijacked by Donald Trump's on-off tariff threats over the future of Greenland. But many delegates were also keen to highlight the risks and benefits of AI. Christy Hoffman, general secretary of the UNI global union, told the Guardian: "It's just a basic premise that the point of AI, on the business side, is to increase productivity, therefore lower costs - which will be cutting jobs." "I think it's time to come to terms with that disruption - and how to manage that disruption," she said, calling for the productivity benefits to be distributed fairly across the economy. "We want to share in the gains. We're not going to stop AI, nor do we want to even try: but we don't want it to just roll over us." She called on employers to discuss the role of AI tools with workers and their representatives, before introducing them. Earlier in the week at Davos, the Microsoft chief executive, Satya Nadella, warned that AI could lose its "social permission" to compete for resources such as energy, for example, if it failed to generate benefits beyond a few powerful tech firms - such as the rapid development of effective new drugs. Georgieva was speaking on a panel alongside the president of the European Central Bank, Christine Lagarde, who warned that the AI boom could be hampered by growing mistrust between rival economies, as the US throws up tariff barriers. "We are dependent on each other," she said, pointing out that AI was capital intensive, energy intensive and data intensive. If we do not work cooperatively and "define the new rules of the game," she said, there would be less capital and less data. "We are in a bind, lets face it," she said. Lagarde also sounded the alarm about widening global inequality, highlighting the "disparity that is getting deeper and bigger". Earlier in the week at Davos, the Canadian prime minister, Mark Carney, urged delegates to face up to a permanent "rupture" in the global economic order, and band together in the face of erratic US trade policy. But Lagarde said she was less gloomy. "I'm not exactly on the same page as Mark," she said. "I'm not sure that we should be talking about rupture. I think we should be talking about alternatives."

An AI 'tsunami' is coming for young workers, IMF chief warns | Fortune

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.

IMF Chief Warns AI 'Tsunami' Could Eliminate Millions Of Jobs, But Says Richer Workers' Spending Could Lift Low-Wage Labor

Enter your email to get Benzinga's ultimate morning update: The PreMarket Activity Newsletter The International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, warned that artificial intelligence could wipe out millions of jobs worldwide, but said higher wages for AI-enhanced workers could generate demand that benefits low-wage service employees. AI Job Losses Threaten Millions On Friday, speaking on the final day of the World Economic Forum in Davos, Switzerland, Georgieva described AI as a "tsunami" reshaping the labor market, with the potential to transform or eliminate roughly 60% of jobs in advanced economies and 40% globally. She said the most immediate effects are already visible in high-skilled roles, where AI is boosting productivity and pay. High-Wage AI Workers Could Boost Service Jobs "One in 10 jobs is already enhanced [by AI]," Georgieva said. "And the people in these jobs are paid better. When they're paid better, they spend more money in the local economy." She argued that increased spending by higher-paid workers could create more jobs in local services such as restaurants, retail, and healthcare. "Demand for low-skilled jobs goes up," she said. She added, "And actually total employment seems to slightly increase because of it." However, Georgieva also cautioned that the benefits of AI are unevenly distributed. She said the "accordion of opportunities" is widening, with the middle class at risk as wages stagnate and entry-level jobs disappear. "AI is for real and it is transforming our world faster than we are getting a handle," she said. AI Disrupts Jobs And Career Paths Earlier, Bill Gates warned that AI was already disrupting jobs and accelerating changes in the labor market, even as he remained optimistic about its long-term benefits. He said AI was boosting productivity, particularly in software development, and could eventually shorten workweeks, while urging governments to prepare policies to manage disruption and risks beyond employment. Randstad CEO Sander van't Noordende said AI was eroding entry-level office roles and weakening the traditional college-to-office career path. He encouraged young workers to retrain and consider skilled trades, service jobs and STEM fields, where demand and wages were growing. Author Yuval Noah Harari warned that AI would create deeper social challenges, arguing that machines outperforming humans in cognitive tasks could trigger an identity crisis over how people define human value and intelligence. He also said governments would be forced to decide how far AI systems should be integrated into society, including whether they should be granted legal status to operate, organize or interact in ways similar to humans. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs