AI risks ‘substantial disruptions’ in jobs markets, warns IMF official

Large-language models such as ChatGPT could boost economic output, but risks were ‘very large’, warned IMF official Gita Gopinath. Photo / 123RF

A top official at the IMF has warned of the risk of “substantial disruptions in labour markets” stemming from generative artificial intelligence, as she called on policymakers to quickly craft rules to govern the new technology.

In an interview with the Financial Times, the fund’s second-in-command Gita Gopinath said AI breakthroughs, especially those based on large-language models such as ChatGPT, could boost productivity and economic output but warned the risks were “very large”.

“There is tremendous uncertainty, but that... doesn’t mean that we have the luxury of time to wait and think of the policies that we will put in place in the future,” said Gopinath, first deputy managing director of the IMF.

She added: “We need governments, we need institutions and we need policymakers to move quickly on all fronts, in terms of regulation, but also in terms of preparing for probably substantial disruptions in labour markets.”

Gopinath’s comments on AI, her most extensive so far, follow warnings over the potential of the new technology to result in societal upheaval if workers lose their jobs en masse.

Gopinath said automation in manufacturing over past decades served as a cautionary tale, after economists incorrectly predicted large numbers of workers laid off from car production lines would find better opportunities in other industries.

“The lesson we have learned is that it was a very bad assumption to make,” she said. “It was important for countries to actually ensure that the people...left behind were actually being matched with productive work.”

The failure to do so had contributed to the “backlash against globalisation” following the great financial crisis, Gopinath added.

To avoid history repeating itself, governments need to bolster “social safety nets” for workers who are affected while fostering tax policies that do not reward companies replacing employees with machines.

Meanwhile, she warned policymakers to be vigilant in case some corporations emerge with an unassailable position in the new technology. “You don’t want to have supersized companies with huge amounts of data and computing power that have an unfair advantage,” said Gopinath, also citing privacy concerns and AI-fuelled discrimination.

The EU has proposed new legislation to regulate AI, which she said was an “encouraging start”, while the Biden administration is in the process of formulating regulatory plans.

The push for co-ordinated global action comes amid fresh evidence that generative AI, once more widely adopted, could be hugely transformative.

In a speech delivered later on Monday, Gopinath cited numerous studies that have tried to quantify the economic impact, including a Goldman Sachs report that estimated 300 million jobs could be automated, leading to higher productivity and a 7 per cent increase in global output over a decade.

“AI could be as disruptive as the Industrial Revolution was in Adam Smith’s time,” she told an audience in Scotland at an event commemorating the economist.

Gopinath said new technologies such as ChatGPT had “widescale appeal” and needed to be taken more seriously than other advances like self-driving cars that had been billed as game changers.

“Usually when you see a technology behaving like a general purpose technology...that is when we think this could have a wide-ranging impact on the economy,” she said.

Written by: Colby Smith

© Financial Times