The International Monetary Fund (IMF) has warned that artificial intelligence (AI) could weaken employment opportunities for young people entering the labour market, raising concerns over the ability of developing economies to create jobs fast enough to absorb their growing workforce. The IMF Managing Director, Kristalina Georgieva, said demand for first jobs after graduation was already declining, particularly in technology exposed sectors, warning that governments must rethink education, skills development and labour market policies to prepare workers for the changing world of work.
Speaking WBG Flagship event on “Small AI: More and Better Jobs” at the 2026 World Bank and IMF meetings, Georgieva said AI was already changing the structure of employment globally, with routine and repetitive jobs facing declining demand even as new opportunities emerged in other sectors. She said the impact of AI on jobs globally could affect about 40 per cent of employment through augmentation, downgrading or elimination, highlighting the need for governments to understand how the technology was reshaping labour markets.
The IMF chief said governments must carefully study developments in the labour market, adapt education systems and promote lifelong learning as workers could no longer depend on a single skill throughout their careers. Also speaking at the event, Singapore President, Tharman Shanmugaratnam, who said the decline in demand for entry level jobs was already becoming evident, particularly in sectors most exposed to AI.
“The first job upon graduation is now seeing less demand. The evidence is already very clear,” he said. Tharman warned that developing countries could face a widening gap between economic growth and employment creation if they failed to respond to technological changes, as he observed that some developing economies were recording strong growth without corresponding improvements in job creation, adding that AI could widen the divergence if governments remained passive.
He called for governments to work with private businesses to create opportunities for fresh graduates, arguing that losing the first rung of the career ladder could deprive young people of more than a year’s employment experience. According to him, prolonged delays in securing first jobs could leave successive cohorts of graduates competing for limited opportunities while weakening their skills and confidence in the future.
“We can’t afford to lose that,” he said, urging governments to introduce policies that would encourage private sector employers to recruit fresh graduates. Tharman also called for changes in higher education, saying universities and other tertiary institutions must place greater emphasis on practical training, internships and workplace attachments. He said the relationship between academic qualifications and career prospects was weakening, making it necessary for education systems to prepare students for changing workplace demands rather than rely overwhelmingly on academic credentials.
The Singapore president added that workers would need to continually update their skills as AI became more widely integrated into economic activities.
