New technologies can both destroy and augment jobs. Workers on both ends of the skills spectrum are just as susceptible to being either displaced or fulfilled. How do you get on the right side of progress?
SINGAPORE (Oct 15): As a regular soldier with the Singapore Armed Forces for 12 years, Ye Wenfeng trained to fight not only in the jungle, but also in cyberspace. Among other responsibilities, he was tasked with focusing on processing data when cyber incidents took place.
In May this year, following a stint at the SANS Institute, a US company specialising in digital security training, Ye, armed with more sophisticated skills, joined KPMG Singapore as an assistant manager concentrating on forensics. But, rather than working in the back office as he previously did, Ye now deals with clients directly to help solve their cybersecurity issues. And, he earns 15% more than he used to.
According to a September 2018 paper published by the ASEAN+3 Macroeconomic Research Office, technology has had a positive impact on wages and productivity.
For every additional 1% of IT and communication spent per worker annually, they enjoyed a 0.074% increase in monthly wages and 0.0585% increase in productivity, observes Justin Lim, the paper’s author.
Antonio Fatas, professor of economics at INSEAD, says technology is the driving force of wage increase. “Higher productivity means higher value added and potentially higher income. [Though] it is true that, in some cases, the additional value goes to shareholders or to a small group of wage earners... this is a separate phenomenon,” he tells The Edge Singapore via email. “Overall, technology is a friend of income growth.”
Over the past two decades, wages in Singapore have generally been on an upward trend. However, the wages of higher-skilled workers, such as finance and professionals, have pulled significantly ahead of those deemed to be lower-skilled, such as construction. In 2001, for instance, the median monthly wages of high-skilled workers was $4,500. By contrast, lower-skilled workers earned just below $2,000 a month. By 2017, higher-skilled workers were paid a median wage of nearly $8,000 a month, while the salaries of low-skilled workers languished at $2,500.
Now, the wage disparity is set to widen. “The advent of new digital technologies such as big data analytics, Internet of Things, artificial intelligence (AI) and cloud computing bodes well for productivity and [the] wage growth prospects of high-skilled workers,” states Lim in his report.
But the converse is also true. The uneven effect that technology has on wage growth is best described by Professor Chew Soon Beng of Nanyang Technological University’s School of Social Sciences. “Workers can be grouped in Group 1 and Group 2; Group 1 competes with technology, and technology makes Group 2 more productive. The wages of Group 1 will fall and those of Group 2 will increase. The number of workers in Group 2 gets smaller,” he says.
As Singapore’s national conversation turns towards addressing growing social inequality, there is an increasing need to focus on improving the lot of low- to medium-skilled workers. Chew also notes that while Singapore has put much effort into reskilling, it may not be enough to stave off the advances of technology. The obvious worry is for older workers, who are thought to be more at risk of job displacement because they may face difficulties in adapting to the new realities, and “because they cannot learn technology fast enough”.
“Long-term unemployment is not going down but is on an upward trend,” Chew adds. Indeed, the past five years have seen the resident unemployment rate rise from an annual average of 2.8% in 2013 to 3.1% last year. For citizens, the unemployment rate for the same period is up from 2.9% to 3.3%. The higher jobless rate has been attributed to a slowdown in economic growth and, importantly, business restructuring, including as a result of automation. Employers are lamenting the “talent gap”, or the disparity in the skills they seek and the skills that workers have.
To be sure, the government has recognised the growing disparity in wages. The income of low- to medium-skilled workers has improved over time. That is partly due to government transfers and other support schemes targeting productivity improvements, however, and not market forces. For example, the Workforce Income Scheme was introduced in 2007 to top up the wages of low-income workers. In 2012, the Progressive Wage Model made wage increments mandatory based on skills-upgrading and productivity improvements.
Disruption on both ends
According to a report jointly published by Oxford Economics and US tech company Cisco Systems, Singapore is expected to be worst-hit among Southeast Asian countries in job displacement by technological disruption.
On the bright side, technological advancements and adoption bring an end to boring tasks or tedious jobs. They could also spell the end for some professionals, however, even highly paid ones.
“A lot of the more repetitive, mundane jobs will be gone and be replaced by new jobs — robot coordinator, data analysts and others,” Lim Yew Heng, partner and managing director of the Boston Consulting Group, tells The Edge Singapore. “One can imagine laborious legal and auditing tasks being automated, [thus] reducing the need for lawyers and accountants, for example.”
In survey conducted by EY, an average of 30.4% of banking and finance institutions in Southeast Asia say they lack suitable technology talents and skillsets in-house. Furthermore, many traditional jobs such as bank tellers and relationship managers now require significantly higher levels of familiarity with technology.
To this end, banks, including local ones, have taken steps to retrain staff. Bank tellers, for example, have taken on customer advisory roles as bank customers increasingly use self-service functions. Oversea-Chinese Banking Corp, for example, aims to halve the number of tellers within two years. The existing team is already a 15% reduction from five years ago.
Also, many banks and financial institutions are hiring not only business graduates, but also seeking people with technical expertise. “I know one senior banker who goes to Silicon Valley on a quarterly basis to do massive recruitment,” says Liew Nam Soon, EY managing partner for Asean markets.
There have also been significant efforts by the government to meet the challenges of disruption and job displacements. “Our team of experts acknowledged the exceptional enabling environment in Singapore for innovation and digital transformation, combined with a small geographical area and modern, upgradeable infrastructure, which means businesses there can readily take advantage of new innovations as they become available,” says the Oxford Economics-Cisco report.
For example, Singapore has stepped up efforts in reskilling workers, with schemes such as SkillsFuture, where people are given government grants to take up classes, and the Lifelong Learning Institute to help displaced or soon-to-be-displaced workers gain new skills and jobs. Almost all ministries have introduced so-called Industry Transformation Maps to help chart and plan how the respective sectors might change in the years ahead.
“Singapore has become a landmark destination for its efforts to develop an ecosystem that allows our workforce to continually upgrade themselves and stay relevant in the labour market through initiatives such as SkillsFuture and Lifelong Learning. Incumbents who are facing structural unemployment will find such initiatives tremendously helpful for them to bounce back,” says EY’s Samir Bedi, partner, people advisory services.
Technology fulfils
While much has been said about jobs being taken over by robots, many experts still see human talent working alongside AI to deliver the most productive outcome. In fact, a company’s adoption of technology could help its employees become more fulfilled. “[Technology adoption] opens doors for workers to perform higher-value work and develop soft skills,” says Deloitte Southeast Asia’s Indranil Roy. “It also opens more opportunities to create new jobs that are increasingly contingent in nature (for example, gig and off-balance sheet workers), allowing more flexibility and control of the work that workers want to do.”
Ravin Jesuthasan, managing director at Willis Towers Watson, highlights that technology does not affect jobs, but tasks within a job. And it is up to the company to discern which tasks are better automated.
Jesuthasan cites the example of a call centre. AI capabilities can be used to detect the underlying emotions of a customer within seconds of a call. If the AI senses distress in the voice of a customer, the call will be connected to the most experienced call operator. The AI will also prompt the usage of appropriate phrases and words.
In another case, an oil and gas company decided to retain its workers, even though there was an option to build an autonomous oil rig. The company automated tasks that were repetitive, dirty, dangerous and prone to errors, and reassigned its workers to take on problem-solving, maintenance and monitoring jobs.
The outcome created a win-win situation for both the company and its employees, says Jesuthasan. Given the higher skills required to operate automation technology, employees were compensated higher. At the same time, the rig was more productive and profitable than before, which helped the company offset the higher spend on wages.
Wages weighted by relevance
There should be no surprise that workers better equipped to work with technology will enjoy increases in their salaries, as technological advances permeate the workplace. “Clearly, wages have gone up for skills in demand in the digital-related areas such as digital analytics and robotic process automation,” says Ram Lakshminarayanan, partner, people and change consulting, at KPMG in Singapore. “I expect those who are tech-savvy to be certainly more marketable and command higher wages.”
Still, artificial wage supports, such as government top-ups, should not be counted on to improve the lot of lower-paid workers. How can technology be used as a leveller instead of being a cause of wider disparity?
“Tech adoption should have an impact on wage growth as productivity improves. The adverse impact is on low-value tasks displacement. [But technology] is also spawning newer jobs that should offset the adverse impact in the long run,” says Lakshminarayanan.
Deloitte’s Roy says: “The majority of new job opportunities in Singapore are likely to be created in highly skilled managerial and professional roles, reflecting the growth areas of the economy.” Importantly, this also puts an end to the practice of “learn at school” and “do at work”, he adds. “With the influx of technology replacing different aspects of work, some skills learnt today remain relevant for only as little as three years. Constant reskilling and lifelong learning will be a way of life at work.”
Experts are also urging workers to shake off the old familiarity of doing the same things, even for different companies. BCG’s Lim says workers today may need to make multiple transitions in their career. “There are alternative jobs currently, such as Grab drivers, but those jobs are also threatened with the arrival of autonomous vehicles on the horizon,” he says.
But employers themselves may not be as prepared for the changes, says Deloitte’s Roy. “Based on global research, 35% of employers report being unprepared when it comes to deconstructing jobs and identifying which tasks can best be performed by automation (AI, robotics and so on). Thirty-eight per cent say they are unprepared to identify reskilling pathways for talent whose work is being affected by automation,” he notes.
As such, organisations are also urged to rethink their human resource functions. Jesuthasan says they should no longer view themselves as a “steward of jobs”, but as a “steward of work”. At the same time, if a particular expertise is required, the company’s options are no longer limited to hiring new staff, retraining existing ones or outsourcing to a third party.
The much-criticised gig economy, which essentially opens organisations up to a marketplace of talent, could be a solution. Companies can form alliances to share human resources or recruit volunteers to help promote their products and services.
Ultimately, the workforce of the future will have to constantly upgrade, just as software today is constantly updated. “Humanity is being asked to have that mindset,” says Jesuthasan. “Relevance is tied to our continuous need to reskill. Unless you are doing that, you are going to be irrelevant at some point in time.”
