Rapid developments in technology typically equates to an increase in convenience and efficiency due to automation, but at the same time, it spells uncertainty for the labour market - displacing certain groups of workers while generating demand for others.
In line with that, the International Labour Organization's (ILO) new survey identifies the disruptive technologies and analyses how it impacts the ﬁve key sectors within the ASEAN region - textiles, clothing and footwear (TCF), business process outsourcing (BPO), automotive and auto parts, electrical and electronics (E&E), and retail.
Textiles, clothing and footwear (TCF)
A highly competitive and labour-intensive industry, TCF collectively provides over 9 million jobs in ASEAN, mostly for young women.
Sadly, among the five sectors analysed, the TCF sector seems to be the most vulnerable to the extensive technological displacement of workers.
- Disruptive technologies in this sector include: 3D printing, body scanning technology, computer-aided design (CAD), wearable technology, nanotechnology, environmentally friendly manufacturing techniques, and lastly, robotic automation.
- In ASEAN robotic automation forms the biggest threat to workers.
- Sewbots can enable production reshoring with the United States seeing immediate savings from them if purchased in 2016 (savings of US$180,000 can be seen over 5 years).
- Significant shares of TCF salaried workers in ASEAN are at high risk of automation, from 64% in Indonesia, 86% in Viet Nam and 88% in Cambodia
- The female share of TCF employment exceeds 70% in Cambodia, Lao PDR, the Philippines, Thailand and Viet Nam
Business process outsourcing (BPO)
An industry born out of technological advancement, the BPO sector is now on the cusp of major changes due to technology. ASEAN’s BPO activities predominantly take place in the Philippines. The sector has seen extraordinary growth over the past decade and now employs approximately 1 million people in the Philippines.
Three technologies that are impacting this sector are: cloud computing, software automation and knowledge process outsourcing
- Call centres (voice work) comprise 60% of BPO employment
- Women make up 59% of the Philippines’ BPO workforce
- Software automation forms the greatest risk to workers in the Philippines working in call centres
- Software automation can reduce costs by 40-75% for BPO clients
- 89% of salaried workers in the Philippines’ BPO sector are at high risk of automation
Automotive and auto parts
One of the most receptive to adpting available technologies, the automotive and auto parts sector employs more than 800,000 workers in ASEAN.
Four major technologies shaping the automotive sector are: the electriﬁcation of vehicles and vehicular components, advancements in lightweight materials, autonomous driving, and robotic automation.
- In 2015, ASEAN was the seventh largest producer of vehicles globally, with a compound annual growth rate of 10% since 2009
- In ASEAN, robotic automation is having the greatest impact and replacing lower-skilled jobs
- 60% of tier one suppliers have seen significant increases in automation
- Over 60% of salaried workers in Indonesia and 73% in Thailand face high risk of automation
Electrical and electronics (E&E)
One of ASEAN’s most prominent sectors and a mainstay of economic growth, the E&E manufacturing sector directly employs an aggregate of more than 2.5 million workers in the region.
In the future, three disruptive technologies are likely to shape the E&E sector: robotic automation, 3D printing (also know as additive manufacturing) and the Internet of Things (IoT).
- ASEAN’s E&E exports almost tripled over the past decade, reaching US$382.1 billion in 2014
- In ASEAN robotic automation is currently replacing simple assembly, lower-skilled tasks
- Over 60% of salaried workers in Indonesia, the Philippines, Thailand and Viet Nam occupy E&E positions at high risk of automation
- China is both an opportunity for ASEAN to scoop up lower-skilled jobs and a reason to invest more in technology to become more competitive
Primed for growth, the retail sector's sales growth in the ASEAN has out performed the rest of the world, with the region’s consumer market numbering at 632 million and a growing middle class with increased disposable income. In terms of employment, retail stands as one of the largest sources of jobs.
While disruptive technologies in the retail - such as mobile and e-Commerce platforms, the IoT, cloud technology, and big data analytics - could have transformative impact on jobs in the region, these technologies are still yet to achieve mainstream usage in the region.
Of all the sectors analysed, ASEAN’s retail industry appears to be the least threatened by up-and-coming technologies.
- Retail in major ASEAN countries reached US$767 billion in 2013
- 44.6 million workers are employed in ASEAN’s retail sector
- Retail represents 16% of total employment and 44% of jobs in the services sector
- 50% of the retail workforce are women
- Local and traditional retail are the biggest barriers for technology’s advancement in ASEAN
- 68% of retail salaried workers in Thailand, 71% in Cambodia, 85% in Indonesia, and 88% in the Philippines are at high risk of automation
Human Resources reached out to Jae-Hee Chang, employers’ specialist at International Labour Organization for an analysis of what this means for employers and employees in Malaysia.
Chang revealed that of the five sectors analysed, the electronics and electrical component (E&E) sector is likely to be the one most affected in Malaysia.
This sector employs about 27% of the manufacturing workforce in Malaysia (nearly 500,000 people) and contributes to about 10% of the country’s GDP.
"Our study shows that increased demand from various industries that require more sophisticated electrical components will drive up the need for advanced technology to be more embedded in Malaysia’s E&E sector," Chang said.
"For example, electrical components are becoming increasingly integrated into the automotive sector, in particular for electrical vehicles (EVs) and higher performing cars."
Unfortunately, Chang pointed out that there is evidence that Malaysia may encounter challenges in producing more high value-added electronics and electrical components, due to lack of skills, which could limit Malaysia’s potential for greater growth.
"In Malaysia, increasing automation and demand for knowledge-based activities since the late 1980s created a capital and knowledge intensive E&E sector, where technical skills are sought by employers."
"However, the E&E sector has experienced a reduction of knowledge-based chip assembly since 2010, due to higher demand for technical personnel, which has not been met."
"Malaysia-based enterprises interviewed emphasised the need for higher skill sets and reported that high-value manufacturing has moved to countries like China as a result of both lack of skilled engineers and the relatively high cost of hiring them."
Most important and difficult skills to find in Malaysia
Most important skills Team work and collaborative skills (46%) Organisation skills and attention to detail (42%) Technical knowledge (42%)
Most difficult skills Specific software skills (37%), Networking skills (34%), Strategic thinking/problem-solving skills (34%)