MS The Future of Work Downunder

Australia Macro+ | Asia Pacific Morgan Stanley Australia Limited+ Foundation

Equity Strategist and Australia Economist

Australia is presenting as a litmus test for how AI is adopted and Isabel Black Equity Strategist its influence on labour force mix, design and outlook. Regulatory

focus is increasing and corporate strategy fast evolving. We take Morgan Stanley & Co. International plc+

key insights from global AlphaWise surveys and identify key Rachel Fletcher, Ph.D. Equity Strategist debates for investors.

M Key Takeaways We draw on recent AlphaWise analysis across two survey waves where multiple sectors are covered and Australian corporates are well represented.

AI is already changing workforce decisions, but through churn, backfill discipline, retraining and redeployment rather than a conventional layoff cycle.

Australia is an AI productivity case study given workforce mix & economic state of play. Whether AI gains are linked to cost or revenue lines is a key focus.

Regulatory settings are coming increasingly into debate for Australian policy makers and will likely influence pace and breadth of adoption from here.

Banks, Insurers, Telcos, Retailers, Healthcare, Real Estate and Professional Services have the repeatable workflows most exposed to AI-enabled work redesign.

Proof of Concept Upon Us: Australia’s Future of Work debate is no longer theoretical: AI adoption is already reshaping hiring, workflows and cost bases across a services-heavy economy, with Australia showing stable net job impact but rising churn beneath the surface. The productivity upside is meaningful but still needs to show up in macro data, while the first labour signal is likely slower hiring and graduate-ladder compression rather than outright unemployment.

Macro Awareness: Policy makers will be increasingly drawn into calibrating the impacts from this disruptive change to the economy. Reaction functions will be tested as labour force signals become more volatile and inflation and growth outcomes less certain. Productivity will be the ultimate prize but how regulatory oversight evolves will influence the cadence of improvement here. Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, Micro Opportunity: For Australian equities, the near-term story is margin self-help, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley with Banks, Insurers, Telcos, Retailers, Healthcare, Real estate and Professional Research. Investors should consider Morgan Stanley Services best placed where AI can lower cost-to-serve, accelerate processing, Research as only a single factor in making their investment decision. improve compliance and retain productivity savings. The upcoming result season For analyst certification and other important disclosures, will see investor focus elevated to opportunity and risks linked to both cost and refer to the Disclosure Section, located at the end of this report. revenue lines as well as continued assessment of the level of competitive rivalry, += Analysts employed by non-U.S. affiliates are not registered the value of incumbency and risk of business model obsolescence. with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.