Inequality Risks: IMF Warns that AI May Worsen Social Tensions and Job Disparity

SINGAPORE – The International Monetary Fund (IMF) has warned that the increasing use of artificial intelligence (AI) is likely to exacerbate inequality worldwide. Managing director Kristalina Georgieva stated that in most scenarios, AI is expected to worsen overall inequality. She emphasized the need for policymakers to address this concerning trend and prevent technology from further contributing to social tensions.

The IMF’s analysis revealed that AI is expected to have a greater impact on jobs in advanced economies, affecting approximately 60% of them. In about half of these instances, workers can anticipate benefiting from the integration of AI, as it enhances productivity. However, in other cases, AI has the potential to replace tasks currently performed by humans, leading to reduced labor demand, lower wages, and job losses.

In low-income countries, the IMF projects that AI will only affect about 26% of jobs. Many of these nations lack the necessary infrastructure and skilled workforce to harness the benefits of AI, which increases the risk of deepening inequality among nations.

The IMF’s findings echo a report from Goldman Sachs in 2023, which estimated that AI could replace the equivalent of 300 million full-time jobs. However, the report also highlighted the possibility of new jobs emerging alongside increased productivity.

While some argue that education reforms will mitigate the negative impact of AI on jobs, the IMF warns that the transition to AI could disproportionately benefit higher-income and younger workers, while leaving lower-income and older workers behind. To address this issue, comprehensive social safety nets and retraining programs are crucial, according to Georgieva.

The analysis from the IMF comes as global business and political leaders gather at the World Economic Forum in Davos, Switzerland, where AI is a topic of discussion. The European Parliament plans to vote on AI Act proposals this year, but any legislation will not take effect until at least 2025. Meanwhile, the US, UK, and China have yet to publish their own AI guidelines.

This warning from the IMF highlights the need for countries to carefully navigate the use of AI to ensure that its benefits are harnessed without exacerbating societal inequalities. The implications of AI on the labor market and the economy will continue to be closely scrutinized by policymakers and researchers.