Kristalina Georgieva the managing director of International Monetary Fund has issued a warning that artificial intelligence could transform or eliminate up to 60% of jobs in advanced economies and 40% globally. She described AI technology as a ‘tsunami’ hitting the labour market. As reported by Fortune, Speaking on the closing day of the World Economic Forum in Davos, Georgieva acknowledged the disruptive potential of AI but also pointed to a possible silver lining for the low-wage workers. Georgieva argued that productivity gains from AI, which disproportionately benefit high earners, could spill over into the broader economy. As AI-enhanced professionals earn more, their increased spending power boosts demand for local services such as restaurants, retail, and healthcare. “One in 10 jobs is already enhanced by AI, and the people in these jobs are paid better. When they’re paid better, they spend more money in the local economy. Demand for low-skilled jobs goes up,” Georgieva said.Studies back this view: research in San Francisco found that for each new tech job created, 4.4 additional local service jobs emerged, ranging from cooks to teachers.
Risks for the middle class
Despite the potential benefits for low-wage earners, Georgieva cautioned that the middle class faces an increasing pressure. Job not improved by AI risk stagnating wages, while entry-level positions are being eroded by automation, creating barriers for young workers. She described this dynamic as an “accordion of opportunities” — expanding for some, contracting for others.These labor shifts come amid fragile global conditions. The IMF recently upgraded its global growth forecast from 3.1% to 3.3%, but Georgieva warned that growth remains “not strong enough” to manage soaring sovereign debt, now near 100% of GDP, while also funding the massive technological transition AI demands.Georgieva closed with a stark message: “Wake up. AI is for real and it is transforming our world faster than we are getting a handle.” She urged governments and institutions to build inclusive guardrails to ensure the AI revolution does not leave the middle class and developing nations behind.
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