IMF warns AI tsunami could hit young workers hardest
International Monetary Fund chief Kristalina Georgieva says AI is reshaping the labor market and young people entering work may face the sharpest disruption…
At a meeting in Bangkok, International Monetary Fund Managing Director Kristalina Georgieva warned that an AI tsunami is beginning to reshape the job market, with young people entering the workforce among those most exposed. The IMF estimates around 40% of jobs worldwide will be augmented, downgraded or eliminated as artificial intelligence advances.
The warning puts pressure on governments to prepare workers for changing job requirements and protect routes into employment. Georgieva said the disruption was only beginning, while Singapore President Tharman Shanmugaratnam cautioned that fewer first jobs could leave graduates competing for openings in later years.
“The people to worry about first and foremost are young people that are coming into the labor market,” Georgieva said at an event held alongside the IMF and World Bank annual meetings. She described the change as a “slow-moving tsunami.”
First jobs face a shift
Young workers often begin in routine, repetitive roles and move up as they gain experience. Georgieva said that path could narrow if AI reduces demand for those jobs. She questioned whether young people would regard service work, such as becoming a barista, as a professional future.
The labor market is already shifting, she said. Workers with AI-related skills are earning more, but that has not produced broad-based job growth. Lower-paying roles, including restaurant work and data center construction, are expanding, while middle-skilled workers in jobs highly exposed to automation risk being left behind.
Advanced economies face a particularly significant impact, according to Georgieva. The estimate of around 40% covers jobs that could be changed in different ways: some may be augmented, others downgraded or eliminated. The figure does not mean all affected workers will lose their jobs.
“Burst the myth that AI is shrinking demand for people,” Georgieva said. “What it is doing is shifting demand for people now. That may not be the case in the future.”
Governments urged to act early
Georgieva said education systems need to change as workers can no longer expect to learn one set of skills and rely on it throughout their careers. She also linked disruption in employment to public finances: less spending could mean less tax revenue, leaving governments with a tougher financial position.
Tharman, who joined Georgieva onstage, said demand for the first job after graduation is already falling. In Singapore, 74.4% of university graduates secured full-time positions in 2025, down from 79.4% in 2024, according to data reported by The Straits Times.
He argued governments should treat the challenge as a long-term structural problem rather than wait for it to become a crisis. Responses used after the 2008 financial crisis and the COVID-19 pandemic could offer models for helping workers adjust, he said.
The consequences can extend beyond an individual graduate’s delayed start. If one group waits for work, it may compete with the next group entering the job market, while losing time to build skills and confidence in the future.
“We can’t afford to lose that because if you lose that, you not only have that cohort of young people waiting a year and then competing with the next cohort the next year, you lose more than one year of skills,” Shanmugaratnam said. “You lose a whole set of intangible attributes, and you lose trust in the future.”
Other leaders have taken a more optimistic view of AI’s effects on employment. OpenAI CEO Sam Altman said he had expected a faster impact on entry-level white-collar jobs than has occurred so far. Georgieva’s warning, however, centers on whether workers and governments can adapt before the first rung of the employment ladder becomes harder to reach.
Source: fortune.com
