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Forty percent of workers worldwide will be negatively impacted by AI…the IMF has some solutions to help!
Boosting Social Safety Nets and Education
The rapid advancement of generative-AI technologies presents both opportunities and challenges, such as productivity boosts and public service improvements, but also job losses and increased inequality. According to a new International Monetary Fund (IMF) paper, fiscal policy must play a crucial role in ensuring equitable distribution of AI’s benefits. Strengthening social safety nets and investing in education are pivotal. Lessons from past automation indicate that more generous unemployment insurance and improved training programs can help workers transition to new roles and mitigate the negative impacts of AI.
Adapting Policies for Diverse Economies
AI’s impact will vary across different economies. In emerging markets and developing countries, workers are less exposed to AI but also less protected by formal social safety nets. Innovative approaches leveraging digital technologies can help expand social assistance in these regions. A robot tax, suggested by some to mitigate labor-market disruptions, is deemed impractical and potentially harmful to innovation. Instead, corporate tax systems should be reevaluated to avoid favoring automation excessively and to support human employment.
Designing Fair Tax Policies
To counteract rising inequality from AI, tax policies must be adjusted. Strengthening taxes on capital income is essential to maintain a balanced tax base and support public revenue needed for education and social spending. The global minimum tax of 15% on multinational companies is a positive step, but further measures, such as taxes on excess profits and capital gains, are necessary. Policymakers’ decisions now will shape AI’s future impact, emphasising the need for global cooperation to ensure AI benefits are widely shared.
(Visit IMF for the full story)
*An AI tool was used to add an extra layer to the editing process for this story.
