IMF Report Warns of AI-Driven Youth Unemployment Ahead of Davos Summit

Ahead of the 2026 World Economic Forum in Davos, the International Monetary Fund has issued a stark warning about artificial intelligence's disproportionate impact on young workers. In a comprehensive analysis, the IMF presents evidence showing AI adoption is accelerating workforce displacement among workers under 30 at nearly twice the rate of older demographics.

What the Data Shows

The IMF's research examined labor markets across 25 advanced economies between 2023-2025, finding:

• Entry-level positions in customer service, content creation, and administrative support experienced 14-22% wage depression
• Hiring rates for junior marketing and paralegal roles declined by 18% in markets with rapid AI adoption
• Countries with weak retraining programs saw youth unemployment spikes exceeding 5 percentage points

"We're observing a troubling pattern where automation isn't just changing job functions but eliminating traditional entry points into the workforce," the report states. The analysis specifically cites generative AI tools that can now handle tasks like drafting legal documents, creating marketing copy, and managing customer inquiries - roles that traditionally served as career launching pads.

Practical Recommendations

Rather than advocating for broad restrictions on AI adoption, the IMF proposes concrete interventions:

1. AI-Apprenticeship Partnerships: Tax incentives for companies that pair junior staff with AI tools under senior supervision
2. Portable Skill Wallets: Government-funded digital credentials that track verified skills acquired through micro-certifications
3. Adaptive Unemployment Systems: Benefits programs that adjust support based on local AI adoption rates and retraining availability
4. Public AI Utilities: Low-cost access to foundation models through public libraries and community colleges

The most striking recommendation encourages workers to "harness AI rather than compete with it." This translates to programs teaching prompt engineering for creative roles, AI-assisted coding for developers, and computational thinking integration in vocational training. Denmark's "AI-Assisted Worker" certification program, which increased youth placement rates by 17%, serves as a model.

Implementation Challenges

The report acknowledges significant hurdles:

• Current AI upskilling programs reach only 12% of displaced workers in surveyed countries
• Many vocational schools still teach curricula designed for pre-AI workflows
• Small businesses lack resources to implement the recommended AI-human collaboration models

Critically, the IMF notes its proposals require unprecedented coordination between education ministries, labor departments, and technology regulators - a challenge given only 6 of 25 surveyed countries have such interagency task forces.

Broader Implications

This analysis arrives as the WEF's 2026 agenda prioritizes "AI and the Future of Work." With global youth unemployment already at 13.2% according to ILO data, the IMF warns that without intervention, AI could widen generational inequality through what it terms "automation cascades" - where displaced junior workers never gain skills to advance to more AI-resistant senior roles.

The full report concludes that while AI productivity gains could boost global GDP by 7% this decade, these benefits won't automatically translate to younger workers without deliberate policy architecture. As governments prepare for Davos, this research provides a sobering counterpoint to the tech industry's automation optimism.