Key Takeaways:
- Artificial intelligence (AI) will significantly impact the labor market, with 60% of jobs in advanced economies and 40% globally to be affected
- Young people will be disproportionately affected, with entry-level jobs being eliminated or transformed
- The middle class will also be impacted, with potential decreases in pay and benefits
- There is a need for regulation and discussion on how to make AI safe and inclusive
- Employers should work with workers and their representatives to introduce AI tools and share productivity benefits fairly
Introduction to the AI Revolution
The head of the International Monetary Fund (IMF), Kristalina Georgieva, has warned that artificial intelligence (AI) will be a "tsunami hitting the labour market", with young people worst affected. Speaking at the World Economic Forum in Davos, Georgieva stated that the IMF’s research suggests there will be a significant transformation of demand for skills as AI becomes increasingly widespread. As she noted, "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. This is like a tsunami hitting the labour market."
The Impact on Jobs and the Economy
Georgieva highlighted that in advanced economies, one in 10 jobs has already been "enhanced" by AI, resulting in increased pay and benefits for workers. However, she warned that AI will wipe out many roles traditionally taken up by younger workers, making it harder for them to find good job placements. As she said, "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." Furthermore, people whose jobs are not directly changed by AI risk being squeezed, with their pay potentially falling without a productivity boost from AI. Georgieva predicted that "the middle class, inevitably, is going to be affected."
The Need for Regulation and Discussion
Georgieva expressed her greatest fear that AI is insufficiently regulated, stating, "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." Christy Hoffman, general secretary of the UNI global union, echoed this sentiment, saying, "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." Hoffman called for the productivity benefits to be distributed fairly across the economy, stating, "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."
The Global Response to AI
The debate at the World Economic Forum has highlighted the risks and benefits of AI, with many delegates emphasizing the need for cooperation and regulation. The president of the European Central Bank, Christine Lagarde, warned that the AI boom could be hampered by growing mistrust between rival economies, stating, "We are dependent on each other… If countries do not work cooperatively and define the new rules of the game, there will be less capital and less data." Lagarde also sounded the alarm about widening global inequality, highlighting the "disparity that is getting deeper and bigger." Meanwhile, the Microsoft chief executive, Satya Nadella, warned that AI could lose its "social permission" to compete for resources if it fails to generate benefits beyond a few powerful tech firms.
Conclusion and Future Directions
As the world navigates the impact of AI on the labor market, it is clear that there is a need for urgent discussion and regulation. As Georgieva said, "We don’t know how to make it safe. We don’t know how to make it inclusive." The World Economic Forum has provided a platform for leaders to come together and address these issues, but more needs to be done to ensure that the benefits of AI are shared fairly and that the negative consequences are mitigated. As Hoffman noted, "I think it’s time to come to terms with that disruption – and how to manage that disruption." By working together and prioritizing regulation, education, and retraining, we can ensure that the AI revolution benefits all, rather than just a select few.
https://www.theguardian.com/technology/2026/jan/23/ai-tsunami-labour-market-youth-employment-says-head-of-imf-davos
