Industry 4.0: What’s happening to employment in Southeast Asia?
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Industry 4.0: What’s happening to employment in Southeast Asia?

WITH the shift to digital putting the world economy on the precipice of Industry 4.0, Southeast Asia is expecting to see an employment storm that will turn the country’s jobs landscape completely on its head.

This is not a battle confined to emerging economies, with Singapore standing alongside its neighbours in squaring up to face an evolving labour market.

The challenge, it appears, is that a lot of the problems the region expects to face over the next 15 to 20 years aren’t yet problems today. This is reflected in the jobs landscape as well; a recent report by Dell Technologies pointed out that 85 percent of jobs of the future don’t even exist yet.

“It is very difficult, even for us, to predict what types of jobs will exist 10 years from now, similarly what types of jobs will no longer exist.

“Ten years ago, we had not heard of a cybersecurity analyst but it is probably one of the hottest jobs around at this point in time,” said Ian Lee, CEO Asia-Pacific of The Adecco Group, during a roundtable discussion at the World Economic Forum on Asean in Hanoi from Sept 11 to 13.

“One thing that is consistent is that change is inevitable.”

A new reality

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AI and automation will see many jobs displaced in the near future. Source: AP Photo/Gemunu Amarasinghe

And no matter which way you look at it, these changes will affect employment and the consensus is that the new reality – virtual or not – is going to be very different.

A 2017 study by McKinsey Global Institute on the impact of artificial intelligence (AI) and automation on global economies, such as the US, China and India, highlighted almost universal employment concerns.

Most jobs affected will not even be within sniffing distance of glamorous offerings the global tech companies would have you believe: sectors that rely on automation or predictable environments, like the fast food industry, and areas where data capture and processing can be handled by machine or, well, intelligence.

Not only will the spread of AI and automation replace many jobs that exist today, it will also require workers to quickly adapt to different roles within their current sector or risk facing unemployment.

This is a digital-first economic system, built for and powered by a young workforce.

SEE ALSO: Women, ethnic minorities most likely to lose jobs to robots

Speaking about AI’s impact on Southeast Asia at the WEF, Cisco Systems Southeast Asia President Naveen Menon pointed out that 50 percent of the region’s citizens are under 30 years of age, 90 percent of whom have access to the internet.

“This young, educated, digitally connected base has helped to turn the region into an economic powerhouse, one with a combined GDP of US$2.4 trillion,” he continued, adding that Asean’s GDP would bulge by another US$1 trillion come 2025.

But as the young hunker down to work on new technologies designed to improve lives, the resultant impact is a drop in birth and fertility rates and an increased population of elderly people. This, of course, only gives way to a whole new set of challenges.

The demographic timebomb

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Many developed and developing countries in Asia are facing an ageing population problem. Source: Shutterstock

The ageing population is a global phenomenon observed in both developed and developing nations across Asia; there are likely to be 300 million more people over the age of 65 on the planet in 2030 than there are now.

This will, as a result, lead to a significant increase in a country’s dependency ratio (percentage of dependents vs the percentage of working age people), which is a concern as it adds to the burden of a shrinking working population.

This also puts a strain on government finances, with more pension payouts and healthcare spending considerations.

According to Francesca Chia, co-founder of Malaysian based start-up GoGet, however, the digital economy has also created a different breed of elderly, one that is capable, switched on and not ready to retire just yet.

“We have 60-year olds getting involved in their career, all doing flexible work,” she said at WEF. She added that people were also signing up to do “microjobs” of periodic or irregular hours that did not constitute full-time or even part-time work in the traditional sense.

The key, Chia said, was to teach senior citizens to be engaged, ie. training them to use a smartphone.

SEE ALSO: Asian universities are not ready for the 4th Industrial Revolution

On the flip side, this new reality is also witnessing the emergence of the FIRE (financial independence, retire early) movement among the young, which promotes increasing savings, leaving a minimalist lifestyle and investing aggressively.

“But not everyone can become entrepreneurs,” Xu Haoliang, assistant secretary-general and regional director for Asia and the Pacific at the UN Development Programme, pointed out.

He added that governments needed to provide a social safety net – eg, traditional protection schemes, needs-based transfer, pension schemes and even universal income – so people could build up resilience.

Can workers keep up?

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Very soon, jobs in call centres and secretarial roles will be come obsolete. Source: Shutterstock

However, regardless what the challenge, the labour market would still change shape.

Naveen estimated that to produce the same economic output as 2018, up to 28 million workers could be displaced over the following 10 years through automation and AI, with upwards of 9 million jobs in Indonesia facing extinction.

However, proportionally Singapore would be the hardest hit, with 21 percent of the labour force displaced.

Meanwhile, the McKinsey report concluded 17 million people in Indonesia alone could be displaced by the introduction of midpoint automation by 2030. While there is some variance with Naveen’s estimates, both sets of figures are sobering.

“The lowest skilled workers will be most at risk and the sectors that are most vulnerable are in the services and agricultural industries,” Naveen said.

SEE ALSO: To be young, highly-qualified and poor in Malaysia

Vietnam Deputy Prime Minister Vu Duc Dam said that this was a problem his country was already facing.

“Many of these jobs will be replaced, especially those that are very popular in Vietnam, such as textile and footwear construction, electronics manufacturing, factories or even secretaries,” noting that these jobs often employed women.

“We are having to retrain them to give them new skills or move them to other professions. Thirty-eight percent of the Vietnamese workforce is in the agriculture sector, so we have the challenge of moving people from this to other sectors.

“In agriculture, they also need to use new skills and technologies, so they can sell their goods and services to other countries around the world.”

Vu said his government was having to seriously consider overhauling its education system, with a more flexible, digital approach. At the same time, students would be taught to question their teachers and rely less on simple obedience.

Upskilling and reskilling

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To remain relevant, workers in factory jobs, among others, will need to upskill and reskill. Source: Shutterstock

Meanwhile, Naveen said that roughly 6.6 million of these 28 million soon-to-be defunct jobs would need complete reskilling in terms of problem-solving, design thinking, leadership and collaboration, conflict resolution, and empathy.

“These skills will enable workers to be flexible. This is what we are urging all countries to do: develop a flexible labour force,” he said, adding that it would require education, on-the-job training, policy changes by governments.

“Businesses will need to retrain their staff to pre-empt them for what’s coming and educational institutions will need to change the way they deliver curriculums.”

Yet, historically and economically, Naveen said, employment trends shift, moving with the times. When one industry sector shuts down, others open. The key, he added was how adaptable the workforce was to change.

SEE ALSO: Is flexible working all it’s cracked up to be?

Xu said that new drivers had opened up burgeoning markets in areas such as environmental protection, renewable energy, urbanisation and even plastics recycling.

The UNDP invests 0.5 percent of GDP in research and development (R&D) into Asian middle-income countries, according to Xu. Japan invests 3 percent, while China increased R&D spending from 1.4 percent five years ago to more than 2 percent.

“This is where you see countries turning innovations into marketable products and tens of thousands of jobs.

“When we look at employment in small-medium enterprises (SMEs), it’s a critical part of future jobs: self-employment.

“We need to look at future growth areas and – country by country – their competitive advantage.”

This article was written by a contributor.