A growing wave of job cuts among global technology giants as they pivot aggressively towards artificial intelligence (AI) is raising questions over whether Malaysia’s labour market could face similar disruptions in the years ahead.
Companies such as HP Inc, Microsoft and IBM have announced significant workforce reductions as part of broader restructuring efforts linked to AI adoption, underscoring a shift in how corporations balance productivity gains with manpower needs.
HP recently said it expects to cut between 4,000 and 6,000 jobs globally by fiscal 2028 as it streamlines operations and accelerates AI adoption to improve product development, customer experience and productivity.
Microsoft, meanwhile, has confirmed plans to lay off up to 9,000 workers in its latest round of job cuts this year, with reports indicating that its Xbox gaming division could be among the affected units.
The technology giant is investing heavily in AI, committing about US$80 billion to build data centres to train AI models.
IBM also said in November that it plans to reduce its workforce by thousands as it shifts its focus towards higher-growth AI consulting and software businesses.
While it did not specify numbers, media reports said the layoffs would affect a low single-digit percentage of its global workforce.
FEARS OF SPILLOVER EFFECTS
UNI-Malaysia Labour Centre (UNI-MLLC) president Datuk Mohamed Shafie Bp Mammal said AI and digital transformation are already reshaping workplaces globally, and Malaysia is unlikely to be immune.
“UNI-MLLC is concerned that similar restructuring could occur in Malaysia as companies accelerate their adoption of AI technologies,” he told Business Times.
He said technological progress must not come at the expense of workers’ rights, adding that the organisation is advocating a “just transition” to ensure employees are not displaced without adequate protection, retraining and support.
While Malaysian employers are increasingly inclined to adopt AI to remain competitive, Mohamed Shafie said workforce readiness remains uneven.
“Many Malaysian workers need structured education, training and awareness to adapt to AI-driven changes. The transition is ongoing, but more coordinated efforts are needed at both employer and national levels,” he said.
UNI-MLLC has been engaging employers and authorities to push for responsible automation, reskilling initiatives and digital transformation policies that protect workers, supported by government and international frameworks.
VULNERABLE JOB SEGMENTS
Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman said AI-driven restructuring reflects a broader global trend that Malaysia cannot realistically avoid.
“It would be unrealistic for the Malaysian economy and workforce to be entirely insulated from these pressures,” he said.
Citing recent studies, Syed Hussain noted that up to 620,000 jobs in Malaysia could be at high risk due to AI, digitalisation and the transition to a green economy.
He said roles involving routine and repetitive tasks, such as basic administrative work, customer service, clerical functions and certain manufacturing activities, are most vulnerable to automation.
“With a sizeable portion of workers in semi-skilled and lower-skilled roles, an unmanaged shift to AI could exacerbate job insecurity, under-employment and unemployment among vulnerable groups,” he said.
MEF said it supports proactive mitigation measures, including structured reskilling and upskilling programmes aligned with the needs of a digital and AI-driven economy.
“The shift should not simply be about replacing people with machines, but helping workers transition into higher-value roles.
“Regulatory guidelines are also needed to manage AI-related retrenchments, including notice periods, redeployment and transition assistance,” Syed Hussain said.
UNEVEN READINESS
While there are signs of progress, MEF said Malaysia’s overall readiness for large-scale AI adoption remains uneven.
Surveys show about 70 per cent of employers now assess AI-related skills during hiring, and many workers are open to using AI and willing to retrain. However, only about 14 per cent of companies are considered fully prepared to deploy AI effectively.
Key challenges include inadequate data infrastructure, weak governance frameworks and, critically, a shortage of AI-skilled talent.
Adoption gaps are particularly pronounced among micro, small and medium enterprises (MSMEs), which often lack the financial and technical capacity to invest meaningfully in AI, potentially widening the digital divide within the business ecosystem.
“For Malaysia to prepare effectively for large-scale AI adoption, a piecemeal, firm-by-firm approach will not be enough. Instead, it requires a coordinated national effort,” Syed Hussain said.
“This should include strengthening digital and AI skills, upgrading data governance and IT infrastructure, establishing ethical standards for AI deployment, and providing targeted support to help MSMEs adopt AI in a responsible and sustainable manner.”
EXPLORING AI
SME Association of Malaysia national president Dr Chin Chee Seong said AI adoption among small and medium enterprises (SMEs) remains at an early stage but is increasingly becoming a necessity rather than a choice.
“SMEs are already facing labour constraints, particularly in hiring foreign workers. AI adoption is something we are exploring, but many SME owners lack clarity on which solutions are suitable for their businesses,” he said.
“Most SMEs are still in an exploratory phase, with only about five per cent actively pursuing AI adoption, mainly due to high operating costs, cash-flow constraints and limited understanding of AI technologies.”
Chin said customer service, clerical and accounting functions are among the most vulnerable to automation, especially with the rollout of e-invoicing and digital systems.
However, he said most SMEs are not planning immediate retrenchments but may slow hiring while redeploying existing staff through upskilling and reskilling programmes supported by agencies such as the Human Resource Development Corp.
AI adoption among SMEs is likely to be a longer-term process, Chin said, with initiatives by the National AI Office, including a forthcoming white paper, expected to help businesses better understand and navigate AI solutions.
“In the short term, it is difficult and unrealistic for many SMEs to adopt AI fully. But over time, as costs fall and knowledge improves, adoption will accelerate,” he said.
STRIKING THE RIGHT BALANCE
Across unions, employers and SMEs, there is broad consensus that while AI is essential for long-term competitiveness, its adoption must be managed carefully to avoid social dislocation.
They cautioned that sudden, large-scale retrenchments could undermine workforce morale, consumer demand and economic stability, underscoring the need for policies that balance innovation with worker protection as Malaysia navigates the AI transition.
Source – https://www.nst.com.my/business/corporate/2025/12/1345064/malaysia-may-not-be-immune-ai-led-job-cuts