Friday, December 8, 2023

The IMF warns of an “unprecedented shock” in labor markets due to AI

The introduction of the Artificial intelligence (IA) can suppose an “unprecedented shock” in the labor markets, as the first deputy general director of the International Monetary Fund (IMF), Gita Gopinath, for whom there are no guarantees that the benefits will ultimately outweigh the costs and has called for a “truly global” set of rules.

In a speech in Glasgow to mark the 300th anniversary of Adam Smith’s birth, Kristalina Georgieva’s right-hand woman at the IMF suggested that AI could help reverse the slowdown in the growth of the world productivity by automating certain cognitive tasks while giving rise to new, higher productivity functions for humans to perform.

However, aside from the potential productivity gains, Gopinath highlighted that AI could “shake up the job market in unprecedented ways”, warning that following the recent loss of mid-skill jobs to automation, AI could affect occupations and industries differently than previous waves of automation.

In this regard, he recalled that recent empirical studies suggest that AI can reduce the polarization of the working market by exerting downward pressure on the salaries of the best paid jobs, in addition to flattening the hierarchical structure of the companies, increasing the number of workers in junior positions and decreasing the number in intermediate and high management positions.

“The number of jobs affected could be overwhelming,” said the senior IMF official, for whom it cannot be guaranteed that the gains of the winners will be enough to compensate the losers.

“It is quite possible that AI will simply replace the human jobs without any effort to create new, more productive jobs for humans to move into,” so despite the potential of AI, he urged consideration of the broad negative effect it could have on employment and the social upheaval this could cause. .

In this way, referring to Adam Smith, the economist defended that ‘the invisible hand’ by itself may not be enough to ensure broad benefits for society from the introduction of AI, for which reason she considers it necessary and urgent to establish solid and smart people to ensure that this innovation is harnessed for the benefit of society.

“When it comes to AI, we need more than new rules. We need to recognize that this could be a whole new game, and that it will require a whole new approach to public policy,” he noted, adding that the proposal put forward by the EU is an encouraging start.

In this sense, he considered “encouraging” that the G7 has formed a working group to study AI. “We need a truly global set of rules,” Gopinath defended, stressing that given how fast technology is advancing, time is of the essence.


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