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Artificial Intelligence disrupts the labor market

India's Narendra Modi and the US President Joe Biden hold up a T-Shirt with the text: "The future is AI. America + India"

Bridging development: Artificial intelligence disrupts professions, branches and countries. What measures does it take to be prepared.


Already, the digital age is developing rapidly, but with the advent of Artificial Intelligence (AI), a fundamental force is emerging that is capable of reshaping the structure of labor markets and entire economies worldwide. Around the current trends, both dystopias and utopias are sprouting. The International Monetary Fund (IMF) recently published a report titled “Gen-AI: Artificial Intelligence and the Future of Work,” which follows a more substantiated approach. It addresses the profound impacts of this technological revolution and highlights the differences between economies on one hand, and their preparation for the future on the other.

In this, IMF researchers apply a methodology that distinguishes between three scenarios for various jobs. In the first, the jobs of certain professions and industries are exposed to AI to a very minor extent, meaning that the jobs performed therein are less likely to be subject to the associated upheavals. This mainly concerns physical manual labor, such as masonry or carpentry. For other jobs and industries, however, the IMF sees a very high exposure to AI. Yet many of them should be able to integrate it into their daily tasks and possibly even increase their productivity – they have a high complementarity, meaning they complement each other. But a third group will also be heavily exposed to AI, unable to integrate it into their daily routines. AI will gradually undertake their tasks until it completely replaces them. How individuals will succeed and how society as a whole will respond to the rapid introduction of AI depends entirely on the preparation of individual countries.

A Map of AI Transformation

The IMF estimates that globally, about 40 percent of the workforce will be exposed to the effects of AI development, which can automate routine tasks and thus replace human labor or supplement employees in their cognitive roles. However, this exposure varies dramatically between economic sectors, professions, and nations – and even regions. These variations reflect their differences in economic structures and labor market dynamics. Developments in Artificial Intelligence, however, mainly affect those who perform more sophisticated cognitive tasks.

For example, one might think that the activities of butchers and surgeons overlap in many ways: both work with the physical manipulation of human or animal tissue, both professions require manual dexterity and finger agility, as well as arm-hand stability. However, most evidence suggests that surgeons will be exposed to much more Artificial Intelligence due to the number of cognitive skills their work entails, such as problem-solving, problem awareness, deductive and inductive reasoning, and information ordering.

Therefore, it is not surprising that advanced economies such as the United States or the United Kingdom, with 60 percent of their workforce affected, are at the forefront of this impact. With their skilled workforces in numerous thought-intensive and technical professions, these nations face a significant break from their previous world of work, where AI either automates or supplements their roles. About half of those exposed to this technology will be able to integrate it into their daily work. However, the other half is quite threatened in their professional existence.

Different countries are affected differently by artificial intelligence. Around 30% of professions worldwide are affected. In developed countries around 60%, but the majority of these can incorporate AI into their daily routines. Emerging countries with up to 40%, but large variance between individual countries. In developing countries, around 26% are affected

Different countries are affected differently by artificial intelligence. Around 30% of professions worldwide are affected. In developed countries around 60%, but the majority of these can incorporate AI into their daily routines. Emerging countries with up to 40%, but large variance between individual countries. In developing countries, around 26% are affected.


Due to their different structures, emerging countries like India, Brazil, or South Africa, on the other hand, exhibit a comparatively lower, yet still significant, exposure. With up to 40 percent of their workforce, they too are vulnerable to disruption by AI. However, their exposure varies significantly due to substantial differences in the economic sectors they rely on for their income. Brazil’s workforce is highly exposed, with over 40 percent of the workforce. In contrast, in India, it’s only 26 percent, as the workforce on the subcontinent mainly consists of small-scale artisans, skilled agricultural workers, and low-skilled but fundamental laborers. Ultimately, the exposure of jobs to AI reflects the composition of the workforce and the economic structure of their respective countries.

On the other hand, low-wage countries find themselves at the lower end of the spectrum of regions affected by AI. With 8 percent of jobs highly exposed and highly complementary, and 18 percent of jobs highly exposed but less complementary, it is not yet clear what impact this transformative technology will have on them and whether they will be able to reap its benefits.

AI threathens to deepen existing inequalities

Therefore, it could also turn out that AI might potentially exacerbate inequalities within countries as well as between countries and regions. It also appears that across all income groups, women will be more affected than men. However, their jobs also tend to have high complementarity with AI technologies. Higher-paid, better-educated workers are also better prepared to integrate these into their workday, as their skills and roles are more likely to be complemented by AI rather than replaced. Conversely, working-class professions face only minor changes.

Conversely, historical data suggest that certain demographic groups, including less well-educated or older workers, might struggle to adjust to the shifts in the labor market driven by AI. Younger individuals with university degrees are more positive about the changes and are more willing to continuously acquire skills.

Even if upheavals through AI may still be some distance away in some cases, preparing digital competencies is already the fundamental task today, even in emerging and developing countries, as seen here in a classroom in India, 2020. (Source: Manoej Paateel/Shutterstock, 2020)

Even if upheavals through AI may still be some distance away in some cases, preparing digital competencies is already the fundamental task today, even in emerging and developing countries, as seen here in a classroom in India, 2020. (Source: Manoej Paateel/Shutterstock, 2020)


Yet, while the theoretical possibilities of AI are consistently convincing, the true catalyst for the rapid spread of AI technologies lies in the preparedness of the country itself. Despite their greater exposure, more advanced economies are generally well-equipped to harness the potential of AI for productivity gains. These nations possess robust digital infrastructure, adaptable regulatory frameworks, and a skilled human capital pool ready to take on AI-compatible roles.

In contrast, many emerging economies and low-wage countries are often very poorly prepared in reality. They need to invest in crucial dimensions to integrate AI into their economy without significant frictional losses: this includes digital infrastructure and widespread availability of broadband internet, measures to develop the education level of their population, and innovation systems that offer incentives to quickly adopt and further develop new technologies. All these are essential components for effectively utilizing the potential of AI and for enhancing the productivity of their own society.

Furthermore, the IMF highlights the transformative role of digitalization for the public sector (so-called GOVTech) itself. AI can help modernize public finances by improving revenue collection and expenditure efficiency – governments in Namibia, Peru, Zambia, and Uganda have already successfully used their digital infrastructure to accelerate the disbursement of financial aid during the Corona pandemic – AI could enhance these processes by identifying service gaps in these areas, supporting decision-making, detecting fraud and corruption, and tailoring interventions to local conditions. Parallel to this, AI could increase yields in agriculture, optimize irrigation, and identify potential pests. Similar effects could be achieved through optimizations of resource allocation in hospitals or preventive analytics.

The next challenges for the world

To avoid a further diverging AI divide, the IMF recommends that developing countries fundamentally prepare for the ultimate disruption of their economies and prioritize accordingly. Low-income countries should focus their investments on building a robust digital infrastructure, such as widespread internet access and access to cloud computing, all of which serve as the foundation for the introduction of new technology. Additionally, the training and further education of workers with AI-complementary skills must be prioritized to ensure that the workforce is equipped to navigate a rapidly changing work environment.

A more interconnected world enables the full potential of AI to be realized. However, every country must make prepa-rations to not fall behind in the production chains eventually. (Source: Travel Mania/shutterstock, 2024)

A more interconnected world enables the full potential of AI to be realized. However, every country must make prepa-rations to not fall behind in the production chains eventually. (Source: Travel Mania/shutterstock, 2024)


For emerging countries that have already made progress in building these fundamental elements, the focus should be on nurturing vital digital innovation systems and establishing robust regulatory frameworks. These frameworks are intended to regulate the implementation of AI in an ethical manner and across different use cases, promote trust, and ensure a responsible introduction of this transformative technology.

The Indian government has taken up the challenge and is ambitiously integrating AI into its development plans under “Making AI work for India.” While the country, once referred to as the world’s back office, starts the AI era with the advantage of massive amounts of data due to its sheer population size, its IT infrastructure is still patchy. In particular, the country lacks GPU (Graphics Processing Unit) farms for training and operating AI systems like Chat GTP. A model of public-private partnership is intended to close these gaps and make India a hub for AI research and innovation.

Mitigating risks today to look forward to the future

The AI revolution is no longer just on the horizon; it is already in full swing, initiating a wave of change and creative destruction that will spread across industries, societies, and entire economic spaces at various stages of development. The IMF clearly warns of the serious risks that arise if countries are not prepared. Inequalities within nations and on a global level could worsen if concerted preparations are not made.

The actual impacts on income inequality will ultimately depend on the extent to which productivity gains through AI can offset potential income losses due to displaced jobs and the increase in capital income, most of which will ultimately flow to wealthier individuals and more affluent countries.

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