IMF warns AI is a 'slow-moving tsunami' for global jobs, young graduates first in line

Policymakers are moving from debating whether AI will disrupt jobs to deciding how to cushion the fallout, the remarks showed. Georgieva said the people to worry about, first and foremost, are young people coming into the labor market.

"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," she said at a panel on Monday.

Singapore's President Tharman Shanmugaratnam, who co-chairs the World Bank's Jobs Council, said on the same panel that 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." 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."

World Bank President Ajay Banga estimated that 1.2 billion young people will turn 18 over the next 15 years, and that the private sector, which already generates 75% to 85% of jobs in any country, will have to absorb most of them. Governments can help by building infrastructure, setting policy and "de-risking" private capital. "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, Georgieva said, but poorer nations are not better off, "just because AI is further away."

The squeeze is clearest in tech, Tharman said, adding that in the US, demand for graduates has gone down for the first time in a century, 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.

AI has also been the major driver propping up growth this year. AI-related investments and trade have lifted output in a handful of economies, helping keep global expansion near 3% despite an energy supply shock, Georgieva said. "Love it, hate it, or fear it. It [AI] is here, and we are already seeing the first wave of impact," she said, estimating AI adoption could lift growth by 0.5 to 1 percentage point in advanced Asia and 0.2 to 0.8 percentage point in emerging Asia.

Analysis

Why This Matters

The IMF and World Bank are shifting from forecasting AI disruption to proposing concrete policy responses, signaling that labor market upheaval is now central to the global economic agenda.
Young graduates are identified as the most exposed group, and the proposed remedies, such as permanent hiring incentives, would reshape how governments support entry-level employment.
The warnings come as aging populations, particularly in Asia, already threaten to shrink workforces, raising the stakes for managing the transition.

Background

The IMF and the World Bank are the two main international institutions shaping global economic policy, and their meetings set the agenda for finance ministers, central bankers and development officials. AI's effect on employment has moved rapidly up that agenda as adoption spreads. Young workers traditionally entered careers through routine, entry-level jobs and advanced within organizations; the concern now is that AI is eroding that first rung just as a large youth cohort in developing countries enters the workforce. The institutions are also balancing the disruption risk against evidence that AI investment is currently helping to sustain global growth.

Key Perspectives

IMF Managing Director Kristalina Georgieva: AI is hitting labor markets like a slow-moving tsunami, with young people entering the workforce most exposed. The IMF estimates about 40% of jobs worldwide will eventually be augmented, downgraded or eliminated, but AI investment is also propping up global growth this year.

Singapore's President Tharman Shanmugaratnam: Emergency support measures from the pandemic and financial crisis should become permanent structural policy, with incentives for firms to hire fresh graduates, because demand for that first job is falling. In the US, demand for graduates has declined for the first time in a century.

World Bank President Ajay Banga: The private sector, which generates 75% to 85% of jobs, will have to absorb 1.2 billion young people turning 18 over the next 15 years; governments should focus on infrastructure, policy and de-risking private capital.

Critics and skeptics: The IMF itself cautions that lower exposure in low-income countries, about 23% of jobs, is not a comfort, since it reflects AI being further away rather than better protection. An open question is whether measures designed as temporary crisis responses can be sustained indefinitely as permanent policy, and at what cost to government budgets.

What to Watch

US graduate hiring data in coming recruitment cycles, after Tharman cited the first decline in demand for graduates in a century.
Whether the World Bank Jobs Council converts its recommendations into formal proposals, and which governments adopt crisis-era measures as permanent policy.
IMF growth forecasts for Asia, to see whether AI adoption delivers the estimated 0.5 to 1 percentage point lift in advanced economies and 0.2 to 0.8 points in emerging ones.

Analysis

Why This Matters

Background

Key Perspectives

What to Watch

Sources