The global policy debate around artificial intelligence and employment has decisively shifted, moving away from whether disruption will happen toward how governments should respond.
International Monetary Fund Managing Director Kristalina Georgieva issued a stark warning Monday, describing AI’s impact on labor markets as a “slow-moving tsunami” that is already making landfall.
Young graduates entering the workforce face the most immediate threat, according to Georgieva, who said they traditionally relied on routine entry-level jobs to climb the professional ladder.
“People to worry about, first and foremost, [are] young people that are coming into the labor market,” Georgieva said at a panel Monday, noting that those pathways are rapidly disappearing.
“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 added.
Singapore President Tharman Shanmugaratnam, who co-chairs the World Bank’s Jobs Council, argued that emergency-style government interventions used during past crises must now become standard policy tools.
What governments deployed during the Covid-19 pandemic and 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,” Shanmugaratnam said.
He stressed the need to work alongside the private sector and incentivize firms to hire fresh graduates, because “the first rung in employment, your first job upon graduation, is now seeing less demand.”
In the United States specifically, Shanmugaratnam warned that “for the first time in a century, demand for graduates has gone down,” with the wage premium for a college degree also shrinking significantly.
He cautioned that without intervention, affected graduates lose far more than time, saying “you lose trust in the future” when an entire cohort misses out on early career development.
World Bank President Ajay Banga estimated that 1.2 billion young people will turn 18 over the next 15 years, placing enormous pressure on job markets worldwide to absorb a massive new workforce.
Banga noted that the private sector already generates 75% to 85% of jobs in any country, meaning governments must focus on enabling conditions rather than direct employment creation.
Governments should build infrastructure, set supportive policy, and “de-risk” private capital by lowering barriers that deter large-scale investment, Banga argued, adding bluntly that “it is private capital that creates jobs.”
The IMF estimates roughly 40% of jobs worldwide will eventually be “augmented, downgraded or eliminated,” with exposure reaching approximately 60% in advanced economies and 23% in low-income countries.
Georgieva noted that lower exposure in poorer nations offers little comfort, explaining that the gap exists “just because AI is further away” rather than because those economies are protected.
Despite the risks, AI has also been a significant driver of global economic growth this year, with AI-related investments and trade helping keep global expansion near 3% despite an energy supply shock.
“Love it, hate it, or fear it. It [AI] is here, and we are already seeing the first wave of impact,” Georgieva said, outlining potential growth gains across both advanced and emerging Asian economies.
At the high end of projections, Georgieva said AI adoption gains “would more than offset the loss that comes from aging population,” offering a potential economic counterweight to demographic decline.
Shanmugaratnam cautioned, however, that growth alone does not guarantee jobs, pointing out that China, India, and developing Southeast Asia are “growing quite well, but job creation is weak.”
He offered a cautiously optimistic note, saying AI-induced displacement will come “task by task, and that gives us time” — but only if workers can retrain and universities pivot toward applied, practical education.
