The International Monetary Fund (IMF) released a report recently that says there is an urgent need for governments to adapt fiscal policies to the rise of artificial intelligence (AI).
The IMF claims authorities around the world need to address the problem of job losses and consequential inequality that could result from the widespread adoption of AI in the coming years.
Even though it is crucial to understand and acknowledge the huge potential that AI provides us with in terms of a boost in productivity and improvement of public services for all, the IMF warns the uncontrollably rapid pace and scale of this transformation raises major concerns about huge waves of job losses. This is something that will lead to significant inequalities.
In its recent report, the IMF recommends governments take a swift approach and start preparing for highly disruptive scenarios that right now seem improbable but are still likely to happen in the near future. The report suggests a gradual adaptation of more generous unemployment benefits could limit the negative impact of AI on workers.
Having a safety net in place in case of redundancies will allow people to find jobs that better match their skills and knowledge. Additionally, a series of programs, such as training and life-long education opportunities should be instituted more extensively and be prioritized to prepare workers for the AI-driven job market. It will be a job market that will look quite different than that of today.
The IMF also highlights differences in the ways AI will impact emerging-markets and developing economies. Consequences of AI there will be different from the developed nations of North America and Europe. According to the report, workers in these places of the world are less exposed to AI but also much less protected by formal social protection programs due to larger informal sectors.
What is the situation in Europe? Confronting AI challenges and government policy adaptations
Earlier this year, the European Parliament adopted the world’s first comprehensive regulation, known as the AI Act, on artificial intelligence.
According to EU officials, this landmark and historic legislation aims to ensure that AI systems developed, sold, or used in the EU are safe, transparent, and in accordance with fundamental human rights.
While the AI Act is a very significant step towards responsible AI governance, some people around the world worry its strict requirements could stifle innovation and put Europe at a disadvantage in the global AI race. This could see geopolitical rivals such as China or even the US take a significant lead in the field.
The AI Act of the EU obliges strict transparency obligations on high-risk AI systems with additional requirements for general-purpose AI models. It restricts governments’ use of real-time biometric surveillance in public spaces to cases of certain crimes, prevention of terrorist attacks, and search missions for people suspected of the most serious of crimes.
The new legislation will carry its impact beyond the 27-country bloc, Patrick Van Eecke at the law firm Cooley’s told Reuters.
“The Act will have global reach. Companies outside the EU who use EU customer data in their AI platforms will need to comply. Other countries and regions are likely to use the AI Act as a blueprint, just as they did with the GDPR,” he said, referring to EU privacy rules.
The new legislation will apply in 2026, but bans on the use of AI in social scoring, predictive policing, and untargeted scraping of facial images from the internet or CCTV footage will kick in in six months once the new regulation comes into force.
Related: EU AI Act: Did Europe Just Kill Its AI Development?
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