In its 32nd Malaysia Economic Monitor report, the bank drew on a 2025 study conducted with the Institute for Strategic and International Studies (ISIS) Malaysia.

The study found that about 45% of Malaysian workers are in jobs with medium to high exposure to generative AI, with clerical, urban and younger workers among the most affected groups.

However, the World Bank said exposure to generative AI is not the same as displacement.

It said that whether AI substitutes or complements workers will depend on how quickly firms adopt the technology, whether workers are retained and how workplaces are redesigned.

“When accompanied by job redesign, skills upgrading, and effective workforce adaptation, AI adoption has the potential to support productivity gains by enabling workers to shift toward higher-value tasks,” it said.

“However, in the absence of these, AI diffusion could also deepen labour market polarisation by reducing demand for routine cognitive work while increasing premiums for advanced skills and capabilities that AI cannot easily replicate.”

As such, the World Bank called for stronger foundational, digital, and socio-emotional skills, faster reskilling linked to industry demand, and support for small and medium enterprises to adopt AI effectively.

It also said that policy responses will determine whether AI becomes a productivity boost or a source of labour market inequality.