The International Monetary Fund (IMF) has expressed concerns that artificial intelligence (AI) could negatively impact employment opportunities for young people entering the labour market in developing economies. According to IMF Managing Director, Kristalina Georgieva, demand for first jobs after graduation is declining, particularly in technology-exposed sectors. This trend raises concerns about the ability of developing economies to create jobs quickly enough to absorb their growing workforce. Georgieva made these remarks at a World Bank and IMF meeting event.
Georgieva emphasized that AI is changing the structure of employment globally, with routine and repetitive jobs facing declining demand, while new opportunities emerge in other sectors. She warned that the impact of AI on jobs globally could affect about 40 per cent of employment through augmentation, downgrading, or elimination. This highlights the need for governments to understand how the technology is reshaping labour markets and adapt their policies accordingly. The IMF chief also stressed the importance of lifelong learning, as workers can no longer depend on a single skill throughout their careers.
Singapore President, Tharman Shanmugaratnam, also spoke at the event, noting that the decline in demand for entry-level jobs is already becoming evident, particularly in sectors most exposed to AI. He stated that the first job upon graduation is now seeing less demand, citing clear evidence of this trend. Tharman warned that developing countries could face a widening gap between economic growth and employment creation if they fail to respond to technological changes. Some developing economies are recording strong growth without corresponding improvements in job creation.
Tharman Shanmugaratnam emphasized that AI could widen the divergence between economic growth and employment creation if governments remain passive. He called for governments to work with private businesses to create opportunities for fresh graduates, arguing that losing the first rung of the career ladder could deprive young people of more than a year’s employment experience. Prolonged delays in securing first jobs could leave successive cohorts of graduates competing for limited opportunities while weakening their skills and confidence in the future.
Tharman Shanmugaratnam urged governments to introduce policies that would encourage private sector employers to recruit fresh graduates. He also called for changes in higher education, saying universities and other tertiary institutions must place greater emphasis on practical training, internships, and workplace attachments. The relationship between academic qualifications and career prospects is weakening, making it necessary for education systems to prepare students for changing workplace demands rather than rely overwhelmingly on academic credentials.
According to Tharman Shanmugaratnam, workers will need to continually update their skills as AI becomes more widely integrated into economic activities. This requires a shift in how education systems are designed and implemented. The Singapore president’s remarks highlight the need for a more agile and responsive education system that can prepare students for the changing demands of the labour market. This is particularly important for developing economies, where the ability to adapt to technological changes will be crucial in creating jobs and driving economic growth.
The IMF and Singapore president’s warnings highlight the need for governments to take proactive steps to address the impact of AI on employment. By rethinking education, skills development, and labour market policies, governments can help prepare workers for the changing world of work. This will require a collaborative effort between governments, private businesses, and education institutions to create opportunities for young people and ensure that they are equipped with the skills needed to succeed in a rapidly changing labour market.
Key points
- AI could affect about 40 per cent of employment through augmentation, downgrading, or elimination globally.
- The decline in demand for entry-level jobs is already becoming evident, particularly in sectors most exposed to AI.
- Governments must rethink education, skills development, and labour market policies to prepare workers for the changing world of work.
