World Bank jobs council urges 'crisis-era' employment support measures as IMF warns of AI ‘tsunami’

BANGKOK — Policymakers are moving from debating whether artificial intelligence will hit jobs to issuing stark warnings about AI-led disruption and recommending measures on cushioning the fallout.

International Monetary Fund Managing Director Kristalina Georgieva warned on Monday that artificial intelligence was hitting the global labor market like a "slow-moving tsunami," with young graduates first in line to be knocked down.

"People to worry about, first and foremost, [are] young people that are coming into the labor market," Georgieva said at a panels on Monday. "Normally, they would get into these routine, repetitive jobs and then grow up the ranks. But if they're gone, I don't think any young person wants to be a barista in a coffee shop as ... professional future."

Speaking on the same panel, Singapore President Tharman Shanmugaratnam, who co-chairs the World Bank's Jobs Council, called for governments to make "crisis-era" support measures a permanent tool for getting young people into work.

What governments did during the Covid-19 pandemic and, in some cases, the global financial crisis "now has to be thought of not as a crisis measure, but as part of the structural, the menu of structural policies," he said.

That means working with the private sector, and incentivizing firms to hire fresh graduates, because "the first rung in employment, your first job upon graduation, is now seeing less demand," Shanmugaratnam said.

The remarks show that policymakers are moving from debating whether AI will disrupt jobs to deciding how to cushion the fallout, at a time when rapidly aging populations, particularly in Asia, already threaten to shrink workforces.

World Bank President Ajay Banga, estimates 1.2 billion young people will turn 18 over the next 15 years, and the private sector, which already generates 75% to 85% of jobs in any country, will have to absorb most of them.

Governments' role is to make that possible, he said, by building infrastructure, setting policy and "de-risking" private capital, or lowering the risks that deter investors from putting in money at scale. "It is private capital that creates jobs," he said.

The IMF estimates that about 40% of jobs worldwide will eventually be "augmented, downgraded or eliminated." Exposure is about 60% in advanced economies and 23% in low-income countries, she said, but poorer nations are not better off: that is "just because AI is further away."

The squeeze is clearest in tech, Shanmugaratnam said, adding that in the U.S. "for the first time in a century, demand for graduates has gone down," with the wage premium for a college degree also shrinking. Without action, a cohort of graduates loses more than a year of skills: "you lose trust in the future," he said.