The World Bank and the International Monetary Fund (IMF) have warned that artificial intelligence (AI) could transform or eliminate about 40 per cent of jobs globally, urging governments to invest in skills development, infrastructure and new employment opportunities to protect workers.
The institutions warned that young people entering the labour market could face particular challenges as AI reshapes employment patterns, making it imperative for governments to adapt education systems and prepare workers for changing workplace demands.
World Bank Group President, Ajay Banga, spoke during a panel discussion involving IMF Managing Director Kristalina Georgieva and Singapore President Tharman Shanmugaratnam.
Banga said about 1.2 billion young people would reach the age of 18 over the next 15 years, presenting developing countries with a major opportunity if they could provide the education, healthcare, skills and economic opportunities needed to make them productive.
He said job creation had become central to the World Bank’s development strategy, stressing that employment should encompass not only formal jobs in large and small companies but also entrepreneurship and other income-generating activities.
According to him, governments must invest in essential infrastructure, including roads, electricity, water, schools and healthcare facilities, while implementing policies that encourage private-sector investment.
He noted that the private sector generated between 75 and 85 per cent of jobs in most countries, making it essential for governments to create an enabling environment for businesses to invest, grow and employ more people.
On AI adoption, Banga urged developing countries to prioritise practical and affordable applications capable of improving productivity in agriculture, healthcare, education and other sectors rather than concentrating exclusively on large-scale AI systems.
He explained that simple AI tools could help farmers identify crop diseases, access improved seeds and fertilisers, obtain credit and insurance, and secure better prices for their produce.
Similarly, healthcare workers could use digital tools to consult doctors remotely, identify possible illnesses and arrange specialist appointments for patients with limited access to medical services.
Banga identified infrastructure, agriculture, primary healthcare, tourism and manufacturing as sectors with significant potential to create jobs in developing economies.
He also urged African countries to strengthen their creative industries and develop local businesses rather than rely mainly on jobs outsourced from advanced economies.
However, Singapore President Shanmugaratnam cautioned that economic growth alone would not guarantee sufficient employment, citing examples of Asian economies where strong growth had not translated into a corresponding increase in jobs.
He warned that AI could widen the gap between economic growth and job creation, while putting pressure on middle-income workers whose skills and occupations were vulnerable to automation.
Shanmugaratnam urged developing countries not to abandon manufacturing, arguing that they could still attract investment by offering competitive production costs, improving access to land and addressing labour regulations that discourage business expansion.
He also identified renewable energy as a potential source of employment, saying it could generate about three times as many jobs as fossil fuel energy for the same level of investment.
The Singaporean leader called for increased investment in healthcare, particularly in developing countries facing shortages of nurses and other health professionals.
He added that AI could help small businesses access technology, professional services and wider markets at lower costs.
On education, he urged stronger partnerships between governments and businesses to help young graduates secure their first jobs and acquire practical workplace experience.
He warned that declining demand for entry-level workers, particularly in technology-related industries, should prompt universities to combine academic learning with internships, practical training and workplace experience.
IMF Managing Director Georgieva said the impact of AI could be more pronounced in advanced economies, where an estimated 60 per cent of jobs could be affected, compared with 40 per cent globally and approximately 26 per cent in low-income countries.
She cautioned that the lower exposure in poorer countries did not necessarily mean they were better protected, but could instead reflect their limited access to AI technology.
Georgieva said the IMF’s analysis of the United States labour market showed that jobs requiring AI skills were already attracting higher pay, while demand for routine and repetitive work was declining.
However, she expressed concern about the quality of some emerging jobs, including those associated with data centre construction and services, which could offer relatively low wages.
She identified young people as particularly vulnerable because routine jobs had traditionally provided entry points into the labour market, allowing workers to gain experience before progressing to better-paid positions.
The IMF chief called on governments to monitor labour market trends, reform education systems and promote lifelong learning to help workers continually update their skills.
She also urged policymakers to consider the implications of changing employment patterns for public revenue, particularly as economies increasingly rely on capital and technology rather than human labour.
Despite the challenges, Georgieva said AI adoption could boost economic growth in Asia.
She estimated that advanced Asian economies could record additional growth of between 0.5 and one percentage point, while emerging Asian economies could gain between 0.2 and 0.8 percentage points.
She stressed, however, that countries needed reliable electricity, digital infrastructure, relevant skills and safeguards against the misuse of AI to maximise its benefits.
The three leaders agreed that governments should harness AI to improve productivity, expand employment opportunities and protect human dignity, while ensuring that technological advancement does not deepen inequality between advanced and developing economies.
