- 3 minutes ago
Artificial Intelligence (AI) is rapidly transforming the global job market, with effects that differ from earlier expectations. IMF Managing Director Kristalina Georgieva told India Today that while AI is generating jobs overall, the advantages are distributed unevenly.
In an interview with India Today, she noted that the net employment impact in countries assessed so far appears “positive”, but cautioned that the gains are not being shared equally.
In an interview with India Today, she noted that the net employment impact in countries assessed so far appears “positive”, but cautioned that the gains are not being shared equally.
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NewsTranscript
00:00Hello and welcome to India Today. I'm Siddharth Zarabi and joining me today is a very special guest,
00:07the Managing Director of the International Monetary Fund, Kristalina Georgieva.
00:12Welcome to the show. You are here at the AI Impact Summit in New Delhi, a massive gathering.
00:19And given all that you've been seeing and observing, I want your first key takeaways about the AI Summit
00:26and what do you think it has really delivered so far?
00:30Let me start with Namaste.
00:34Thank you very much. I have to respond in kind.
00:37It is great to be in India, especially for an event so dynamic and inspiring.
00:45What the Summit does is to bring not just the world together,
00:51but to bring the developing world in India to meet with those that are ahead on this journey.
01:01What India is doing in AI is phenomenal because the goal of India is to democratize AI.
01:11What is the biggest risk we face?
01:15That AI is going to open the accordion of opportunities too widely.
01:23The haves and the have-nots may have a big distance in between.
01:28What India is saying is it need not be that way.
01:33We can work to make AI a source of benefit for the whole of society.
01:39And we, India, are determined to help the rest of the world, especially the global south, to benefit from AI.
01:50My two big takeaways.
01:53One, AI is already here.
01:56And the speed with which it is affecting the way we work, we live, we interact with each other,
02:02is so high, highest in the history of technological transformation.
02:12We risk falling behind if we don't lean forward with everything we have.
02:17Two, it is a tremendous source of excitement and opportunity.
02:24But it also brings risks.
02:27And we have to embrace the opportunities of higher productivity, higher growth, and manage the risks,
02:35especially the risks of displacement of workers.
02:40And that, for us at the IMF, is a very important objective,
02:46to help our members grab the opportunities, manage the risks.
02:52And here, in India, during the AI summit, I learned a lot about ways we can do it.
03:00On the labor front, and you were an economist all your life, you've studied this issue,
03:06how significant is this risk?
03:08Because for the developing world, labor displacement will be a bigger risk, one would imagine,
03:14than other parts of the world.
03:16So, what we know is the following.
03:20Already, there is evidence that the impact on labor market is very significant.
03:27I mean, AI is like a tsunami hitting the labor market.
03:32We assess 40% of jobs globally, 60% in advanced economies,
03:40to be impacted by AI in the next years, either enhanced, made more productive, or replaced.
03:49And when we study, concretely, what is happening, we find a very interesting story.
03:58Already, in the United States, one in ten jobs require AI-enhanced skills, and it pays more.
04:07People in these jobs, with more money in their pockets, they spend more,
04:11and that creates demand for low-skill workers in restaurants, in hotels, in entertainment.
04:19The total impact on employment, surprisingly, in areas we studied, is positive.
04:27But it is positive because of the increase of low-paying jobs.
04:33So, what is happening is we have one part of the labor force getting better pay because of better skills,
04:42another part of the labor force getting jobs, but with less pay, low-paying jobs.
04:50And who is squeezed?
04:51The middle.
04:52The jobs in the middle that are neither enhanced nor created as low-service jobs,
04:59they get, in relative terms, squeezed.
05:02We also see automation eliminating entry-level jobs.
05:10So, recent graduates, they worry.
05:13Where is the job for me?
05:15And this is where attention of policymakers needs to go.
05:19We are not helpless.
05:22What we can do is, first, redefine education for the era of AI.
05:30Learn to learn and be adaptable in terms of how you adjust to jobs.
05:37Two, put in place good social safety nets.
05:41So, if people, for a while, are displaced, they have something to lean on for themselves and their families.
05:51There is a very good system, flex-security, in Denmark.
05:56I highly recommend that for this world of AI, we create that flexibility in the labor market,
06:04and actually, congratulations to India for the labor market reforms.
06:08But we combine that flexibility with security, with helping people to adjust.
06:16That's a very good prescription that might be needed in the days ahead.
06:21Just one more follow-up on the subject of AI.
06:25And this is to do with the AI arms race.
06:28These are my words.
06:29But you understand this as an economist.
06:32The oil economy had haves and have-nots.
06:35We have seen that in other spheres.
06:38The United States is advocating that the globe should use the American stack.
06:45China has a certain stack.
06:47India is going down a different path.
06:49What is your own assessment of the path that India seems to be choosing,
06:55that is, to use what exists elsewhere,
06:58also a foundational model that has just been announced in India,
07:02and build applications for public gold, healthcare, and education.
07:06Is that the right way for a country like India?
07:09For India, this is the right way.
07:12Why?
07:13India invested over the last years in digital public infrastructure.
07:19It is foundation for AI to be more accessible to more people,
07:25to be applicable in more areas.
07:28India created digital ID for 1.4 billion people,
07:34and that gave a big boost to the digital economy.
07:38Now comes AI.
07:39And to make it beneficial for more people,
07:45it is appropriate to think of models that are specifically designed for a sector
07:51or for a particular activity.
07:54And that democratization of AI is what I started with,
07:59is impressive in India.
08:01Now, where the world is headed,
08:05inevitably there will be different paths.
08:08And the issue is, how about the developing world,
08:12the countries that risk falling behind?
08:16And there, I think the model that India is developing for India
08:21may be more applicable than the high-tech corporate model of the United States.
08:30What matters today is that we think ahead,
08:38independent of which path is chosen,
08:40what should we be most worried about?
08:43And frankly, I think our biggest worry should be guardrails.
08:47We want AI for good, not for evil.
08:51We want AI that protects dignity and the rights of humans.
08:58And that requires more attention to the ethical foundation of AI
09:03and much more attention to what are the guardrails
09:08we have to collectively, as humanity, put in place.
09:13And there, engagements like this summit are very helpful
09:18because they bring the tech world with policymakers,
09:22leaders from different countries,
09:24and they create space to think through
09:27how to go about a transformative technology
09:32that brings enormous opportunities.
09:35We see this potentially lifting global growth by 0.8%.
09:41Just to give the audience a sense, what does it mean?
09:46It means that we will have growth globally above the pre-pandemic level.
09:52Right now, it's anemic 3.3%.
09:56We can break out of this path of low growth, high debt with AI.
10:01But for productivity growth and economic growth to benefit the world,
10:07we have to pay attention to the risks
10:10and we have to work together as a global community
10:14in a world that is more fragmented today
10:17than it was before the AI revolution.
10:20But equally, if guardrails are necessary and one would agree with you,
10:25how do you ensure that innovation doesn't get curbed
10:28due to regulation, over-regulation?
10:30Well, that is the trickiest question.
10:34I think the only answer to the question is to work together
10:40and identify what are the biggest risks
10:44and how we can put guardrails for those
10:48and do that very carefully
10:50because you're right, innovation is what drives prosperity
10:55and we have seen far too many times suffocating innovation
11:00with excessive regulation.
11:02India, over the last years, has worked hard
11:05to reduce the regulatory burden.
11:08I would argue that this is an area where more can be done
11:11to implement the great reforms that India has mustered over the last years.
11:18And I think that culture of creating space for innovation
11:24but managing risks that could come from bad behaviour,
11:30that balance is one that we need to aspire for.
11:34Not an easy one, but it can be done.
11:38It can be done when we all work together.
11:41And to finish on that point,
11:42many thanks to Prime Minister Modi, to India,
11:45for bringing us for this AI summit here in Delhi.
11:50Can and should Europe also deregulate?
11:53So, in Europe, I happen to know Europe very well.
11:58I was EU commissioner,
12:00vice president of the European Commission for a while.
12:03In Europe, the understanding now is that
12:07there is red tape that needs to be taken out.
12:11But Europe thinks about it as efficient regulation,
12:17effective regulation.
12:18The term deregulation, they avoid using
12:23because they don't want to send the signal
12:25that everything goes.
12:28There is no protection for workers
12:32and for the well-being of citizens.
12:35And yes, Europe must implement its single market to the fullest,
12:42something that Mario Draghi and Taleta have been advocating for.
12:46Europe needs a 28 regime for firms.
12:51So, if you go to Europe and you register in Germany,
12:55what you do is applicable in all 27 countries.
12:58Europe needs capital market union.
13:01Europe needs free movement of skills across the union
13:07and a unified energy system.
13:10All of this has to be done with optimal regulatory requirements,
13:17not with the regulatory capacity of Europe that it has today.
13:24So, yes, simplify.
13:26Absolutely.
13:26That's a very good point.
13:27You spoke about AI adding to global growth
13:31and taking it to pre-pandemic levels.
13:34I want to understand from you,
13:36you also spoke about fragmentation,
13:39particularly for me,
13:41the question really that I want you to answer is,
13:43what's your sense about the long-term consequences
13:48of the changes in the tariff order,
13:50particularly from the United States,
13:52which is the largest consuming economy in the world.
13:55In the medium to long term,
13:57Madam,
13:57do you think it's going to have a positive impact for growth
14:01or is it uncertain?
14:03What we have seen is very interesting.
14:06When the U.S. announced tariffs,
14:09it was at a level much higher
14:12than what effectively the tariff level is today.
14:16So, they move in a direction
14:18of moderating the tariffs they proposed.
14:22But most importantly,
14:24how did the rest of the world react?
14:27The rest of the world said,
14:29thank you, but no thank you.
14:31And not only countries continue,
14:35by and large,
14:36to trade under the rules
14:38that have been established over decades,
14:40but there is an uptake of trade agreements,
14:47regional, cross-regional.
14:49India has its trade agreement with the U.K.,
14:53with the E.U.,
14:54a tariff agreement with the U.S.,
14:56working on other trade agreements.
14:58That uptake shows that
15:01if globally we might be in a more difficult place
15:06to have uniform rules,
15:08countries would respond
15:11by regional, sub-regional integration.
15:16Here in South Asia,
15:19there is tremendous potential
15:20to deepen trade integration
15:22within the sub-region
15:24that for sure India can lead
15:27and benefit from.
15:29So, my projection is the following.
15:33We are in a multipolar world.
15:36This is a reality.
15:37And therefore,
15:38it would be more complex
15:40to have trade relations established.
15:43There would be more bilateral,
15:45plurilateral agreements.
15:48But the world would continue to trade.
15:51Supply chains will continue to cross borders.
15:55Why?
15:56Because we are integrated.
15:59We cannot pull apart.
16:03There is no going back to some place
16:07where everybody relies only on its own capacity.
16:11And if you go back in history,
16:14this is what we have been doing
16:15for thousands and thousands and thousands of years,
16:18trading.
16:19Trade is like water.
16:22You put an obstacle,
16:23it goes around it.
16:26As we wind down this conversation,
16:28I want to ask you,
16:29is that your biggest worry
16:30that with the new multipolar arrangements
16:33and the new evolving trade order,
16:36that there will be many countries
16:37that will be left behind?
16:39The global trade order as it existed
16:41lifted many countries out of poverty.
16:44It created jobs.
16:45It created a global supply chain.
16:47Do you worry that that is going to suffer?
16:49So, my biggest worry
16:53is that we are in a more shock-prone world.
16:59We have seen the pandemic,
17:01the war in Ukraine,
17:02inflation spike,
17:04high interest rates,
17:05one after another after another.
17:08Climate shocks are hitting
17:11many countries dramatically.
17:13This will continue.
17:15And what has happened
17:16over the last couple of years
17:18is twofold.
17:20One,
17:21many countries have exhausted
17:23their fiscal capacity
17:25to respond to shocks.
17:27They borrowed
17:28to help their businesses
17:30and their people,
17:31and now level of debt is high,
17:33level of growth
17:34is disappointing.
17:38When the next shock comes,
17:40rich countries are not going to be there
17:43to pour tons of money
17:45with the positive spillover
17:48for the rest of the world.
17:50It's just not possible.
17:52So, this is my first worry.
17:53We exhausted buffers.
17:55We have to rebuild them.
17:56My second worry is then
17:58when a shock hits,
17:59what you said
18:01is going to be a tragedy
18:03in the making,
18:04the smaller, poorer countries,
18:07actually big, poor countries,
18:09they will be most dramatically impacted
18:12and the world has weakened
18:15its collective capacity
18:17of solidarity
18:18in a moment of shock.
18:22I very much welcome
18:25the emerging market economies
18:28like India,
18:29like Brazil,
18:30that are saying
18:31we have to nurture solidarity
18:34because it is the right thing to do
18:37but also because
18:38in an unstable world
18:40there are risks for everyone.
18:43It is a matter of economic security
18:47not to let countries fall behind.
18:51I feel privileged
18:53as the head of the IMF
18:54because our job
18:56is to come to the rescue
18:58to countries in trouble.
19:01Right now we have 50 programs.
19:05One is right next to you
19:07in Sri Lanka.
19:08Yes.
19:09Why so many?
19:10Because so many countries
19:12are experiencing difficulty
19:14and because
19:16official development assistance
19:18has gone down.
19:20Yes, I am proud
19:22we help countries
19:23but I worry
19:24that it should not be
19:26only the IMF
19:28to be there for them.
19:29Finally, a message.
19:31India, a bright spot
19:33globally in terms
19:34of its own domestic growth.
19:367% plus,
19:37give or take a few.
19:39But the weakening climate consensus,
19:43is that a worry
19:44for countries like India?
19:46It is a worry
19:48for everybody.
19:49Everybody who cares
19:50about the future
19:51of our children
19:52and grandchildren
19:53because the risks
19:55of climate change
19:57are real.
19:58They are already materializing
20:00in many places
20:01and India
20:02has many parts
20:04of the country
20:04that are vulnerable
20:05to climate shocks.
20:07But I also would say
20:08this is an opportunity
20:09for India,
20:10opportunity for leadership.
20:12The International Solar Alliance
20:14is one example
20:15how India can step up
20:17and make sure
20:19that for its own people
20:22and for the betterment
20:24of the world
20:24it is taking
20:25that leadership role.
20:27I see a lot
20:29in this growth boost
20:32in India
20:33that is great
20:34for the world.
20:35One, India
20:37contributes significantly
20:38to global growth.
20:40but also
20:42by being
20:43a dynamic
20:44innovation-driven economy
20:46it sheds light
20:48for other countries
20:50to follow
20:51and I see
20:53very often
20:54excitement
20:55that other countries
20:57can follow
20:58in your footsteps.
21:00Absolutely.
21:01Madam Managing Director
21:02you've taken
21:03time to answer
21:04all these questions
21:05and give us a sense
21:06of how we are placed
21:08both at the macro level
21:09and at this moment
21:11in the age of AI.
21:12Thank you very much
21:13for your time.
21:13With that,
21:14it's a wrap
21:14on this conversation.
21:15If you've been,
21:16thank you very much
21:17for watching.
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