The International Monetary Fund (IMF) counselled governments to protect their economies against the potential changes wrought by generative artificial intelligence, expressing concerns about massive labour disruptions and rising inequality.
The agency published a report on Monday indicating that countries should engage in initiatives like improving unemployment insurance, indicating that AI could lead to job losses in higher-skilled occupations.
The IMF acknowledged that generative AI has immense potential to boost productivity growth and enhance public service delivery. However, it also warned of profound concerns about massive labor disruptions and increasing inequality. Generative AI, which enables computers to automatically generate text or images using generative models, gained widespread attention with the launch of OpenAI’s ChatGPT in late 2022.
Although many companies have been slow to adopt it so far, generative AI has prompted a rebound in global tech stocks. Regulating AI has become a concern. The EU has agreed on a first-of-its-kind AI Act that targets the risks posed by the fast-moving technology, with a possible outright ban on AI applications that carry unacceptable risks for the safety, livelihoods, and rights of EU citizens.
In its report, the IMF emphasized that policies on education and training need to adapt to new realities to help prepare workers for a rapidly changing job market, with a greater focus on offering life-long learning.
“We want people to be able to benefit more broadly from the potential that this technology holds and we want to ensure that there are opportunities created for people,” said Era Dabla-Norris, deputy director at the IMF’s fiscal affairs department and co-author of the report.
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IMF advises against special taxes on AI
The IMF posed potential solutions, such as apprenticeships, sector-based training and reskilling programmes as potential assistance for helping workers transition to new sectors.
Dabla-Norris also said that the transition could be painful of workers, which may need to face both higher and longer levels of employment because older workers may find their skillsets obsolete in the age of AI, and may require longer periods of time to get new skills.
“You want to be able to cushion this costly transition and maintain social cohesion in societies,” she said.
The IMF advised against special taxes on AI, arguing they could hamper productivity growth. Instead, it proposed increasing taxes on capital gains, profits, and corporate income to help offset rising wealth inequality.
The IMF noted that previous automation waves displaced mostly blue-collar and lower-skilled workers, while AI poses a greater risk to higher-skilled and white-collar workers.
However, AI could also lead to further automation of blue-collar jobs, exacerbating income and wealth inequality. The IMF warned that generative AI could increase the market power and economic rents of dominant firms in increasingly concentrated and winner-take-all markets.
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IMF says AI will impact 40% of jobs
The imminent arrival of the next stage of artificial intelligence raises more questions than it answers.
“As we usher in the era of AI and artificially intelligent systems, we must prepare for the profound effects they will have on our lives, economies, and societies,” according to a think piece from Vancouver-based AI firm, Verses AI (CBOE:VERS) (OTCQB:VRSSF).
“With the rise of machines capable of independent thinking and action, we are confronted with the task of regulating their behaviour as they become more intelligent and autonomous—a development that could diminish both the need and benefit of human involvement and oversight.”
In January, the IMF estimated that AI would impact nearly 40 per cent of jobs worldwide, replacing some and complementing others. This mirrored a 2023 Goldman Sachs report, which projected that AI could replace the equivalent of 300 million full-time jobs while also creating new ones and boosting productivity.
The IMF recommended that governments adopt an agile approach to prepare for highly disruptive scenarios and stressed the importance of international cooperation due to AI’s global reach.
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