2018 Sep 17
September 17, 2018

Automation and the future of work in Asean

0 Comment
People attending a SkillsFuture Earn and Learn Carnival in Singapore. More than 120,000 people have taken courses, at the end of the initiative's first year. But more needs to be done across Southeast Asia. PHOTO: SPH FILE
People attending a SkillsFuture Earn and Learn Carnival in Singapore. More than 120,000 people have taken courses, at the end of the initiative’s first year. But more needs to be done across Southeast Asia. PHOTO: SPH FILE
Technological revolutions are rolling rapidly across economies one after the other — digitisation, followed by automation, and now, increasingly, the use of artificial intelligence (AI).

These waves of change will disrupt virtually every sector, and utterly change the way many of us work.

The scale of what is happening should not be underestimated.

Globally, about half the activities people are paid to do have the potential to be automated using current demonstrated technology, according to an analysis by McKinsey Global Institute (MGI), of more than 2,000 work activities across 800 occupations.

Less than 5 per cent of all occupations have the potential to be automated entirely, but about 60 per cent of all occupations involve at least 30 per cent of tasks that have the potential to be automated by computers and robots.

Workforce transitions in Southeast Asia

The proportion of work actually displaced by 2030 will likely be lower.

Our scenarios for 46 countries suggest that between almost zero and one-third of work activities could be displaced by 2030, with a midpoint of 15 per cent.

The proportion varies widely across countries.

Advanced economies are likely to be more affected by automation than developing ones, reflecting the fact that higher wages strengthen the incentive to automate.

Southeast Asian countries could experience displacement of between 16 and 25 per cent of time spent on work tasks in a midpoint automation scenario.

Looking at individual countries, the midpoint is 25 per cent in each of Malaysia and Singapore, 21 per cent in Thailand, and 16 per cent in Indonesia.

Even with automation, the demand for work and workers could increase as economies grow, partly fueled by productivity growth enabled by technological progress.

Rising incomes and consumption especially in developing countries, increasing healthcare for aging societies, investment in infrastructure and energy, and other trends will create demand for work that could help offset the displacement of workers.

Additional investments such as in infrastructure and construction, beneficial in their own right, could be needed to reduce the risk of job shortages in some advanced economies.

Although 4.5 million and 23 million full-time-equivalent jobs could be displaced in Malaysia and Indonesia, respectively, an estimated 3.3 million to 6.6 million, and 27 million to 46 million jobs could be added in these two countries, respectively.

Overall, therefore, broadly enough jobs could be created to replace those lost.

However, to ensure that job creation on this scale happens, governments, businesses, educators, and social leaders need to act together with significant investment and enabling policies.

The implication is that many people will not only change jobs but occupations. Around the world, up to 375 million people may need to transition into new occupations because of automation by 2030.

In Malaysia, the numbers are 2.2 million to 6.8 million people or 38 per cent at the upper end of that range. In Indonesia, between 6.0 million and 29 million (as much as 20 per cent) of people may need to change occupations.