The International Monetary Fund (IMF) has urged governments worldwide to reconsider their tax policies as the growing use of artificial intelligence (AI) threatens to disrupt employment.
Speaking on Monday at the 2026 IMF-World Bank Group Annual Meetings, during the WBG flagship session titled “Small AI, Real Jobs,” IMF managing director Kristalina Georgieva said AI could disrupt around 40% of jobs worldwide, though its impact may unfold as a “slow-moving tsunami” that reshapes labour markets across the world.
“Given this scenario, policymakers should prioritise three core areas in preparing the workforce for the period ahead. First, governments should develop a clearer understanding of labour market changes by collecting and analysing reliable data. Second, education systems should be reformed to support lifelong learning. Third, policymakers should reconsider fiscal and tax policies,” she said.
“Governments have traditionally relied heavily on taxes on labour, but the growing use of AI and capital could reduce the role of human labour in production and weaken revenue. Authorities will need to determine how to raise sufficient revenue to support societies through the transition.”
Nonetheless, the IMF anticipates that emerging economies in the Asia region, on average, would gain from AI integration by 0.2-0.8 percentage points annually. Meanwhile, growth in advanced Asia is expected to increase by around 0.5-1 percentage points as a result of AI adoption.
Separately, the World Bank Group (WBG) has identified five key industries with strong potential to create domestic jobs in developing economies through AI adoption: infrastructure, agriculture, primary healthcare, tourism and value-added manufacturing.
WBG president Ajay Banga said that for Thailand, the tourism sector offers a model for generating employment and supporting broader economic growth through AI adoption, particularly by leveraging Small AI solutions.
Small AI is a strategy that focuses on creating jobs within local economies rather than relying primarily on offshore outsourcing, while using technology and AI to improve productivity and expand employment opportunities.
The WBG is putting job creation at the centre of its development strategy, seeking to turn a growing youth population into an economic opportunity while mobilising private investment and technology to boost productivity, he said.
According to the WBG, about 1.2 billion young people will reach the age of 18 over the next 15 years, presenting countries with a potential demographic dividend if they receive adequate healthcare, education, clean water and air and skills training.
“Jobs are not merely formal employment or entrepreneurship, but productive roles that provide income, dignity and optimism,” he said.
Meanwhile, the private sector generates between 75% and 85% of jobs in an economy, making its participation essential, while governments play an enabling role in creating conditions for businesses to expand.
Tharman Shanmugaratnam, Singapore’s president, said economic growth alone is no longer enough to ensure the creation of quality jobs in developing economies and that AI could widen the gap between economic expansion and employment unless governments take proactive measures.
Despite continued growth in China, India and Southeast Asia, job creation remains weak, highlighting the need for policies that translate economic gains into broader employment opportunities.
The latest wave of technological change also risks creating a K-shaped workforce, threatening middle-income workers whose skills and career prospects could deteriorate as AI reshapes labour markets.
Policymakers must ensure workers can adapt to changing demands and progress towards better-paid jobs.
“AI is also lowering barriers to entrepreneurship, enabling one-person businesses to access advanced tools and global markets with fewer resources,” he said, adding that the challenge for governments is to ensure technological progress delivers inclusive growth and sustainable employment.