• A new analysis from the International Monetary Fund (IMF) details the risks that generative AI software poses for the global job market.
• Around 60 percent of jobs could be impacted in developed nations, with a potential for AI to decrease employee wages and tank demand for workers.
• Developing nations could become even more unequal compared to the developed world if generative AI software is not regulated in time.

Despite continued reassurance from the world’s largest corporations that AI products, like Google’s Gemini and Salesforce’s EinsteinGPT, will not negatively affect the workforce, a new analysis from the International Monetary Fund (IMF) shows how the relatively new technology could impact a vast swathe of the global job market.

The analysis, detailed in a blog post from the IMF, tells that there is a potential for 40 percent of the worldwide workforce to be impacted by new AI technologies. This percentage is even larger in already developed or “advanced” nations, where AI has both the potential to enhance the productivity of certain positions, and to disrupt the labour market in such a way that wages decrease, demand for skills crater and jobs are cut.

“In advanced economies, about 60 percent of jobs may be impacted by AI. Roughly half the exposed jobs may benefit from AI integration, enhancing productivity,” the IMF explains.

“For the other half, AI applications may execute key tasks currently performed by humans, which could lower labour demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear.”

The start of this “second half” effect could already be taking place. During the month of May 2023, The Challenger issued a report indicating that around 3 900 jobs in the US were cut, with positions replaced by AI software.

That same month, the CEO of IBM – one of the world’s largest corporations with nearly 27 000 employees – said that he believes 30 percent of customer-facing jobs in the company could easily be replaced by AI “over a five year period.”

AI could drive inequality in emerging markets

According to the IMF, jobs sectors in emerging markets, like South Africa, will be less impacted overall by AI software – both positively and negatively. AI exposure to jobs in these countries “is expected to be 40 percent and 26 percent, respectively.”

The analysis suggests that emerging markets and developing economies will face fewer immediate disruptions from AI, however in the long term the struggle to harness the benefits of AI due to lacking infrastructure or skills could leave these developing nations behind when compared to the developed world.

This would raise inequality between the developing world and the developed, the IMF says. Another way AI software could increase inequality is that we may see in the future that workers who can use AI to increase their productivity may begin earning increased wages, while those that cannot may be abandoned.

“Younger workers may find it easier to exploit opportunities, while older workers could struggle to adapt,” the analysis reads, painting an overall grim picture.

“In most scenarios, AI will likely worsen overall inequality,” it reads. “A troubling trend that policymakers must proactively address to prevent the technology from further stoking social tensions.”

“It is crucial for countries to establish comprehensive social safety nets and offer retraining programs for vulnerable workers. In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.”

Regulation and innovation will cushion the generative AI blow on jobs

It is still not too late to do something to cushion the blow AI software will have on the global job market. The IMF suggests that developed nations should prioritise AI innovation and integration, while developing nations should use that time to create regulations around AI products, especially those aimed at helping people work.

“This approach will cultivate a safe and responsible AI environment, helping maintain public trust. For emerging market and developing economies, the priority should be laying a strong foundation through investments in digital infrastructure and a digitally competent workforce,” the IMF adds.

The difficulty comes in with just how fast that innovation arrives compared to ongoing, and lengthy processes around regulating that innovation. The EU is still waiting to adopt its AI Act into European law, but meanwhile Tesla has devised AI-powered humanoid robots that can move like people, and more importantly, work like people.

While these bots are slated to take over “repetative,” “boring” and “dangerous” tasks from human workers, it could simply be a stepping stone for a future where factories full of machines can work longer hours and do so without needing breaks.

The immediate danger for jobs is more on the white collar, software side, however, as enormously powerful computer programmes like ChatGPT makes large teams redundent. Why hire five programmers to create websites for you when the same work can be done by one programmer, and a R300 subscription to ChatGPT Plus.