The Effect of Artificial Intelligence on the Future of Labour Demand

In recent years, artificial intelligence (AI) has developed rapidly worldwide and been deeply integrated into daily economic life, reshaping the way humans work. For developing countries like Malaysia, this technological wave represents not only an opportunity for industrial upgrading but also poses challenges. On one hand, AI can enhance productivity and accelerate the modernization process; on the other hand, it poses severe tests to job security and workers' ability to cope with complex tasks. Currently, in sectors such as manufacturing, finance, and logistics in Malaysia, AI has begun to replace routine work, and nearly 40% of existing jobs may be automated in the near future. However, there is a shortage of talent for positions that require advanced analytical thinking and technical capabilities, such as data science and AI maintenance. Meanwhile, the changes brought about by AI are unevenly distributed. People in rural areas and low-income groups are at a disadvantage in the AI-driven economy due to difficulties in accessing digital tools and training opportunities, which may exacerbate inequality. Against this background, this study explores how AI is reshaping labor demand in Malaysia, analyzes the replacement and creation of jobs, changes in skill requirements, and the polarization of the labor market. By integrating relevant economic theories, such as those related to technological unemployment, it aims to propose practical policy solutions to facilitate a fair and sustainable transition for the labor force.