IMF warns of AI labor tsunami as World Bank urges crisis-era support

International Monetary Fund Managing Director Kristalina Georgieva warned on Monday that artificial intelligence is impacting the global labor market like a "slow-moving tsunami," with young graduates facing the earliest and most severe disruption. Speaking in Bangkok, Georgieva stated that new entrants to the workforce are first in line to be affected, noting that the routine entry-level positions previously used to build careers are vanishing. She argued that no young person should view a barista role as a professional future if those foundational jobs disappear.

Singapore President Tharman Shanmugaratnam, who co-chairs the World Bank's Jobs Council, called for a shift in policy approach on the same panel. He urged governments to adopt "crisis-era" support measures as permanent structural tools rather than temporary fixes. Shanmugaratnam highlighted that the interventions used during the Covid-19 pandemic and the global financial crisis must now become part of the standard policy menu. This includes working with the private sector to incentivize the hiring of fresh graduates, a step he said is necessary because demand for first jobs upon graduation is declining.

World Bank President Ajay Banga provided context on the scale of the challenge, estimating that 1.2 billion young people will turn 18 over the next 15 years. He noted that the private sector, which already generates 75% to 85% of jobs in any country, must absorb most of these workers. Banga stated that governments must facilitate this by building infrastructure and "de-risking" private capital to encourage investment. "It is private capital that creates jobs," Banga said.

The IMF estimates that about 40% of jobs worldwide will eventually be augmented, downgraded, or eliminated. Georgieva said exposure is higher in advanced economies at about 60%, compared to 23% in low-income countries. However, she cautioned that lower exposure in poorer nations does not indicate better prospects, but rather that AI adoption is further away in those regions.

Shanmugaratnam pointed to the United States as an example of this shift, stating that for the first time in a century, demand for graduates has gone down while the wage premium for a college degree shrinks. He warned that without action, graduates will lose more than a year of skills, eroding trust in their future. While AI has helped prop up global growth near 3% despite energy shocks, Georgieva estimated AI adoption could lift growth by 0.5 to 1 percentage point in advanced Asia and 0.2 to 0.8 percentage point in emerging Asia.

Shanmugaratnam cautioned that growth does not automatically translate to job creation, noting that China, India, and developing Southeast Asia are growing well but experiencing weak job creation. He warned that AI will widen this divergence if policymakers remain passive. However, he added that displacement will occur task by task, providing time for adjustment if workers can learn on the job and universities shift toward applied training.