IMF warns that AI-induced unemployment may lead to anti-globalization, governments should prepare social safety nets accordingly

IMF's First Deputy Managing Director, Gita Gopinath, believes that Generative Artificial Intelligence (AIGC) could significantly disrupt the labor market and urges governments to swiftly establish regulatory rules for the technology.

Generative AI, AIGC, is a specific application of AI that allows AI to create original content, including text, images, music, videos, and more. ChatGPT is one example of this.

The debate over whether AI will take away human jobs is ongoing. Gita Gopinath believes that recognizing the breakthroughs in AI can significantly increase productivity, but also comes with high risks.

She cited several reports, including one from Goldman Sachs, which indicates that generative AI could automate "3 billion jobs" and boost global GDP by 7% within a decade.

Gita Gopinath mentioned that the manufacturing industry in the past few decades serves as a warning. Economists at that time incorrectly predicted that workers would find equivalent or better jobs in other industries, which turned out not to be the case.

"We need governments, institutions, decision-makers to be prepared in all aspects, including regulation and disruptions in the future labor market. We all need to act swiftly."

Gita Gopinath suggested that the issue may not simply be about the "unemployment rate," but more about social problems.

If workers who leave their current jobs can only find lower-paying positions, and if this situation becomes too widespread, it will have a significant impact on society.

The chart below shows the unemployment rate since 1755, and it can be observed that the correlation between technological advancements like the Industrial Revolution or automation and the unemployment rate is not as strong. The more direct correlation is with economic recessions, but this is just one perspective based on the unemployment rate.

Over the past few decades, many jobs have indeed been replaced by machines, resulting in a lower quality of life for those affected. The government has not implemented better support measures, such as retraining programs, temporary increases in public sector jobs, or higher minimum wage guarantees, which have significantly impacted many people's lives.

Gita Gopinath believes that the recent global backlash against globalization is partly due to the government not taking care of these individuals. Just as Trump supporters hope for factories to return to the United States.

Before the emergence of generative AI, experts predicted that over 20 million jobs globally would be replaced by robots, most of which are in developing countries like China, Vietnam, etc., with the majority being blue-collar jobs.

With the advent of generative AI, a significant number of white-collar jobs will be replaced. Gita Gopinath mentioned that breakthroughs like ChatGPT are more attractive and impactful than other automation technologies, so they should be taken more seriously.