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The IMF expressed its “deep concern” about massive job disruptions and rising inequality as society shifts to generative AI and called on governments to do more to guard their economies.
In a report published on Monday, the fund urged countries to take measures resembling improving unemployment insurance, but warned that unlike disruptive technologies of the past, AI may lead to job losses in higher-skilled occupations.
While the IMF said generative AI has enormous potential to spice up productivity growth and improve public service delivery, it warned that it also “raises deep concerns about massive job disruptions and rising inequality.”
Generative AI, the flexibility of computers to mechanically generate text or images using generative models, gained widespread attention with the launch of OpenAI's ChatGPT in late 2022. Although many firms have been slow to adopt the technology, it has led to a recovery in global technology stocks.
The regulation of AI has turn into an issue. The EU has agreed A primary-of-its-kind AI law that addresses the risks posed by this rapidly evolving technology. It envisages a possible complete ban on AI applications that pose unacceptable risks to the security, livelihoods and rights of EU residents.
In its report, the IMF said education and training policies have to be adapted to the brand new realities to organize staff for a rapidly changing labour market in the longer term, with a greater deal with lifelong learning. Sector-specific training, apprenticeships and retraining programmes could play a greater role in helping staff transition to recent roles and sectors, it said.
“We want people to find a way to learn more widely from the potential of this technology and we wish to be sure that opportunities are opened up for people,” said Era Dabla-Norris, deputy director of the IMF's Finance Department and co-author of the report.
She added that the “transition may very well be painful for staff” as they face higher and longer periods of unemployment because “older staff may not have the abilities needed within the age of artificial intelligence and acquiring these recent skills may take longer than up to now.”
“We need to find a way to cushion this costly transition and preserve social cohesion in society,” she said.
The IMF advises against special taxes on AI. These have been proposed as a income to cover up the negative impacts of AI, as they might hinder productivity growth.
Instead, the IMF proposed increasing taxes on capital gains and profits – levies that had declined in recent a long time – in addition to corporate taxes to counter growing wealth inequality.
Previous waves of automation, resembling the introduction of robots, primarily displaced blue-collar and low-skilled staff, while higher-skilled and white-collar staff are considered most affected by AI.
However, AI could also power more intelligent robots and result in further automation of blue-collar jobs, the IMF warned. This could exacerbate income and wealth inequality.
Generative AI could also result in an extra increase available in the market power and economic rents of dominant firms “in increasingly concentrated, all-or-nothing markets” as capital becomes concentrated within the hands of a number of firms.
In January estimated that AI will affect nearly 40 percent of jobs worldwide, replacing some and complementing others. This echoes a 2023 report by Goldman Sachs, which estimated that AI could replace the equivalent of 300 million full-time jobs while creating others and increasing productivity.
The IMF said that given the uncertainty concerning the way forward for AI, governments should adopt an “agile” approach that prepares them for “highly disruptive scenarios.”
Because of AI’s global reach, Dabla-Norris said, “it can be more necessary than ever for countries to work together.”
