How AI can impact the global economy and employees

With the influence and rise of AI in the industry, there is a need to examine the process of its development on a global scale, especially since it has caused both universal excitement and alarm, and rousing questions about its impact on the global economy.

The International Monetary Fund (IMF) has recently published a new analysis on how AI will affect the labour market on a global level, and how AI can potentially replace jobs or complement human work. The findings, shared by the organisation, showed that across the world, almost 40% of global employment is exposed to AI, and while automation and information technology have affected work with routine tasks, AI is unique in that it affects high-skilled work.

In advanced economies, about 60% of jobs may be impacted by AI as it affects key tasks currently performed by humans, which could lower labour demand, leading to lower wages, reduced hiring, and jobs completely disappearing. In contrast, AI looks to be exposed to 40% and 26% of the jobs in emerging markets and low-income countries. This could also be due to the lack of infrastructure or skilled workforce that could use AI, increasing the income and wealth inequality gap across the different nations.

The IMF, using the research analysis, has worked to develop an AI Preparedness Index that measures readiness in areas such as digital infrastructure, human-capital and labour-market policies, innovation and economic integration, and regulation and ethics so that policymakers can create good policies for their own countries.

Using the index, IMF staff assessed the readiness of 125 countries and found that wealthier economies, including advanced and some emerging market economies, are more likely than not to be better equipped for AI adoption than low-income countries, though there is considerable variation across countries. Singapore, the United States and Denmark posted the highest scores on the index, based on their strong results in all four categories tracked.

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Countries like them should prioritise AI innovation and integration while developing robust regulatory frameworks to create safe and responsible AI environments and help maintain public trust. For emerging markets and developing economies, the priority should be laying a strong foundation through investments in digital infrastructure and a digitally competent workforce.