AI-exposed firms cut 4% of jobs; car sector hardest hit: Morgan Stanley report

[SINGAPORE] Companies in sectors most vulnerable to job cuts driven by the use of artificial intelligence shed 4 per cent of jobs on average as a result of the technology over a one-year period, said Morgan Stanley Research on Monday (Apr 27).  

Its Global Insight Report, titled AI Adoption and the Future of Work, assessed the impact of AI on employment in firms in five AI-exposed sectors in the UK, US, Germany, Japan and Australia; the firms in the study, which were of varying sizes and revenue levels, had been using AI solutions for at least 12 months.

The sectors covered were consumer staples, real estate, transport, healthcare equipment and services, and automobiles and components. 

Over the year in the lead-up to November 2025, AI was found to have contributed to the elimination of 11 per cent of jobs, meaning that these roles ceased to exist.

Another 12 per cent of roles were not backfilled, in that they still existed in the company, but no one was hired to fill them.

When offset against the new hires in these companies, there was a net job loss of 4 per cent, said the report. 

Morgan Stanley Research said that notably, the average net job loss of 4 per cent was not consistent across countries and sectors. 

The automobiles and components sector was most badly hit by AI. It racked up the highest net loss of jobs across sectors, at 10 per cent – even as the real estate sector had a net 1 per cent gain in its employee pool. 

Among the five countries surveyed, UK firms reported the highest average net loss of jobs, at 8 per cent. It was followed by Japan at 7 per cent; Germany and Australia were tied at 4 per cent each. 

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Bucking the trend, the US recorded a 2 per cent net job gain. The country also recorded the highest rate of retraining staff, at 32 per cent.  

More early-career roles slashed   

More positions for inexperienced workers – those with two to five years of work experience – were eliminated or not backfilled, the report said. 

This group of workers recorded the most instances of job eliminations or positions not being backfilled in companies with more than 10,000 staff. Such workers were, however, the most likely to be hired by firms with under 50 staff. 

These workers accounted for the majority of new hires in the transportation, automobiles and components as well as consumer sectors; these sectors also retrained or redeployed a high number of staff, the report said.

Employees with two to 10 years of work experience were the most likely to be newly hired, retrained and redeployed. 

In the healthcare and real estate sectors, workers with six to 10 years of experience were targeted for hiring, retraining and redeployment. 

Productivity wins by country, sector, firm size 

Across the board, firms experienced net productivity gains of 11.5 per cent on average as a result of AI implementation in the last 12 months. 

Australian companies led the pack, with net productivity increases of 13.6 per cent, followed by Japanese firms (11.9 per cent), UK firms (11 per cent) and US firms (10.8 per cent). German firms lagged with the lowest net productivity gains of 10.1 per cent. 

Sector-wise, healthcare recorded the steepest rise in net productivity, at 12.3 per cent. This was followed by consumer staples (12 per cent), automobiles and components (11.5 per cent), transportation (11 per cent) and lastly, real estate (10.6 per cent). 

Across firm sizes, companies with more than 10,000 of staff clocked highest net productivity gains of 12.4 per cent.