The World Bank and the International Monetary Fund (IMF) have warned that artificial intelligence (AI) could transform or eliminate about 40 per cent of jobs worldwide, urging governments to invest in skills, infrastructure and new employment opportunities to protect workers, especially young people.
World Bank Group President Ajay Banga said the growing number of young people entering the labour market presented a major opportunity for developing countries, but only if governments provided the education, healthcare, skills and economic opportunities needed to make them productive.
Speaking at a panel discussion involving IMF Managing Director Kristalina Georgieva and Singapore President Tharman Shanmugaratnam, Banga said the World Bank had made job creation central to its development strategy.
He said about 1.2 billion young people would reach the age of 18 over the next 15 years, making it critical for developing countries to create enough opportunities to absorb them into productive employment.
According to Banga, jobs should not be limited to formal employment in large or small companies but should also include entrepreneurship and other activities that enable people to earn a living and contribute meaningfully to society.
He said governments must provide essential infrastructure, including roads, electricity, water, schools and healthcare facilities, while establishing sound policies to encourage private investment.
He noted that the private sector generated between 75 and 85 per cent of jobs in most countries, stressing that governments must create the right conditions for businesses to invest and expand.
On the role of AI, Banga said developing countries should focus on practical, affordable applications that could improve productivity in agriculture, healthcare, education and other sectors, rather than concentrating solely on large AI systems.
He explained that simple AI tools could help small farmers identify crop diseases, access better seeds and fertilisers, obtain credit and insurance, and secure better prices for their produce.
Similarly, healthcare workers could use basic digital tools to consult doctors remotely, identify possible illnesses and arrange specialist appointments for patients who might otherwise struggle to access such services.
Banga added that these applications could improve productivity and create employment opportunities, particularly in countries where access to advanced technology and specialised services remained limited.
He identified infrastructure, agriculture, primary healthcare, tourism and manufacturing as five sectors with significant potential to generate jobs in developing economies.
He also highlighted opportunities in Africa’s creative industries, urging countries to develop local businesses and industries rather than rely mainly on jobs outsourced from advanced economies.
Singapore President Shanmugaratnam, however, warned that economic growth alone would not guarantee sufficient job creation, pointing to Asian countries that had recorded strong growth without a corresponding increase in employment.
He said AI could widen the gap between economic growth and job creation if governments failed to take deliberate action.
Shanmugaratnam cautioned that the technology could put pressure on middle-income workers whose skills and jobs might be affected by automation, making it necessary for governments to prepare workers for changing labour market demands.
He urged developing countries not to abandon manufacturing, noting that they could still attract investment by offering competitive production costs, improving access to land and addressing labour regulations that discouraged businesses from expanding.
He also identified renewable energy as an important source of employment, saying it could create about three times as many jobs as fossil fuel energy for the same level of investment.
The Singaporean leader further called for greater investment in healthcare, particularly in developing countries where the number of nurses and other health workers remained far below levels in advanced economies.
He said AI could also support the growth of small businesses by helping entrepreneurs access technology, professional services and wider markets at lower costs.
On education, Shanmugaratnam called for stronger partnerships between governments and businesses to help young graduates secure their first jobs and gain the experience needed to build careers.
He said declining demand for entry-level workers, particularly in technology-related industries, was an early warning that education systems needed to adapt to changing workplace requirements.
He urged universities to combine academic learning with practical training, internships and workplace experience, arguing that academic qualifications alone might no longer guarantee strong career prospects.
According to him, governments should also encourage businesses to recruit fresh graduates and provide opportunities for them to develop workplace skills.
IMF Managing Director Kristalina Georgieva said AI could affect about 40 per cent of jobs globally, changing existing roles in ways that could improve productivity, reduce opportunities or eliminate positions.
She said the impact could be more pronounced in advanced economies, where an estimated 60 per cent of jobs could be affected, compared with 40 per cent globally and about 26 per cent in low-income countries.
Georgieva warned that lower exposure in poorer countries did not necessarily mean they were better protected but could reflect their limited access to AI technology.
She said the IMF’s analysis of the United States labour market showed that jobs requiring AI skills were already attracting higher pay, while demand for routine and repetitive work was declining.
However, she noted that some new jobs emerging in areas such as data centre construction and services were relatively low-paying, raising concerns about the quality of employment being created.
Georgieva identified young people entering the labour market as particularly vulnerable because routine jobs had traditionally provided an entry point into employment, allowing workers to gain experience before progressing to better positions.
She called on governments to monitor labour market trends, reform education systems and promote lifelong learning so workers could continually update their skills.
She also urged policymakers to consider how changes in employment could affect government revenue, particularly if economies increasingly relied on capital and technology rather than human labour.
Georgieva said AI adoption could boost economic growth in Asia, estimating that advanced Asian economies could gain an additional 0.5 to one percentage point in growth, while emerging Asian economies could record gains of between 0.2 and 0.8 percentage points.
However, she stressed that countries needed reliable electricity, digital infrastructure, relevant skills and safeguards against the misuse of AI to benefit from the technology.
The three leaders agreed that the priority should be to use AI to improve productivity, create opportunities and protect human dignity rather than allow technological progress to deepen inequality between advanced and developing economies.
