IMF: AI could worsen income inequality

Saturday January 20 2024
Artificial Intelligence

Experts try to sculpt frameworks for ensuring AI is used for positive purposes. PHOTO | SHUTTERSTOCK


The International Monetary Fund (IMF) has warned that the growing proliferation of artificial intelligence (AI) could worsen global and national income inequality rates.

In a staff discussion paper exploring the impact that the rapidly growing technology will have on the future of work, the lender finds that AI will impact both workers and countries differently, potentially widening the inequality gap both between and within nations.

For workers whose jobs are not highly augmentable by AI, its growing adoption is likely to reduce labour demand in their fields, prompting a reduction in wages and pushing them into poverty, the study shows.

Read: UN tries to tackle 'mind-blowing' growth of AI

Previous research by the International Labour Organisation (ILO) shows that jobs that involve administrative or clerical activities, database design, data analysis, monitoring of external affairs, trends or events, information sourcing, and documentation of procedures will likely be replaced rather than improved by AI.

As AI adoption grows globally, workers in those sectors are likely to see a drop in their pay as labour demand gradually reduces, but this will not be the case for workers in all sectors.


Tech-savvy and younger workers who will be able to harness the power of AI to augment their daily tasks and boost their productivity may earn increased wages, with those who can’t falling behind, increasing the pay gap between the two factions.

For countries, the gains from AI will largely depend on the general preparedness for the adoption of the technology, which is lagging more in developing economies than in advanced countries.

IMF’s assessment based on four pillars — digital infrastructure, innovation and economic integration, labour market policies, and regulation and ethics — reveals that some countries are more ready to harness AI benefits than others.

Generally, although wealthier economies are more exposed to AI-related disruptions in their labour markets, they are also more prepared to harness thew power of the technology to boost productivity and output and also mitigate the risks associated with it, meaning they stand to gain more than they lose to AI proliferation.

Read: AI poses 'workforce extinction' risk, experts warn

“On the other hand, low-income countries, although relatively less exposed, are underprepared across all dimensions to harness the benefits of AI. Notably, weak digital infrastructure and a less digitally skilled labour force are a concern,” IMF researchers said in the paper.

As such, growing AI use is likely to make rich countries even richer and poor countries poorer, creating an even more inequal world.

According to the researchers, the gains of AI adoption to countries’ economies will only be realised if they perfect well in all four aspects, not just some, of the preparedness index.

Ms Georgieva said despite the disparity, both advanced and developing countries have work to do to boost their preparedness for AI adoption and limit the risks associated with increased uptake.

“Advanced economies should prioritize AI innovation and integration while developing robust regulatory frameworks,” she said.

“For emerging market and developing economies, the priority should be laying a strong foundation through investments in digital infrastructure and a digitally competent workforce.”