Economic and Workforce Transformation and How you can Utilize it!
The Fourth Industrial Revolution is about the combination of cyber-physical systems, the internet of things and the internet of systems. All three look to significantly improve efficiency, and have potential to better allocate resources and increase social value, through collaborative value adding systems, such as through the sharing economy or gig economy. However, they also could significantly reduce the middle band of jobs in the labor market.
Take accounting procedures and bookkeeping, once a purely offline business, is now predominantly done using cloud systems such as Xero. Data inputting and pooling is done by aggregators of data, which can then simplify your accounting records into a manageable format. This information can then be linked to multiple applications, such as Shopify and Megaventory and your company banking accounts, thus dramatically reducing the chances of human error and costs.
This has led to a widening gap between low skill/low paid jobs and high skill/high paid jobs, as the middle sector is trimmed down, as once relatively complex jobs, are being replaced by technologies. As automation substitutes for labor across the entire economy and value chain the net displacement of workers by machines is increasing the gap between the returns to capital and the returns to labor.
Hence, business decision makers are looking to maximize potential revenues and drive down costs, by investing in capital. Thus, the demand for low skilled/low pay jobs is decreasing from suppliers and the demand for high skill/high paid jobs is increasing.
What does this mean to ASEAN?
The typical blue collar jobs have already seen a reduction in employment, but with a highly skilled middle sector workforce, what does this mean to them? Taiwan and South Korea are already experiencing double-digit unemployment for graduates out of university, the situation in Singapore is not dissimilar with a significant amount of foreign talent with graduate education also looking for employment.
However, the key outlook is not to solely focus on the lack of talent in ASEAN for the new jobs that are being created and the reduction of traditional jobs, but to look at how flexible high talent can be. By changing and adapting their skills to the evolving job market the workforce, which is where the sharing and gig economies will be most successful, will receive a larger amount of “jobs”, as jobs will be posted by companies to a wide international audience online, not just to a typical twentieth century employed under a large umbrella workforce.
In a global network of multiple industries and an ethos of assigning jobs via posts by employers and people essentially being freelancers (look at jobs, bid for jobs, receive the job, complete and get paid for job), workers will be able to enter and exit the workforce when they wish and have the flexibility to work as they wish.
The SkillsFuture campaign in Singapore is offering up to 90% scholarships to those who want to retrain and increase their skillsets to be more current and more employable in today’s exponentially changing economy, which is a great initiative. So, human capital of Singapore is being increased, as the skillsets are changing, and the talented employees can work at their current workplace and retrain so they are more employable in the future.
Another example is in Vietnam where they have an unemployment rate out of University of 13%, and this number is growing year on year, this is to a degree due to a reluctance of graduates to enter the blue-collar sector, as they refuse to work in jobs lower than their skill set. This is a fundamental problem, as the workforce is unmotivated to re-educate.
If the jobs, they may be skilled for today, or are over skilled for, may be gone tomorrow or worse, their current skillsets do not match the market, then in future they will be demotivated and unemployable, as the job market is no longer suited for them. Simply waiting for jobs to materialize is a problem, as the market for jobs is evolving, thus the workforce must change too.
Employees should be looking to match their skillsets to markets, not consider themselves as superior to a job. If you cannot get a job because your skillset does not match the market, then you need to find a market that your skillset does apply to, or change your skillset.
This is where the success of the shared and gig economies will come in, as with a system where we bid for work, like on freelancer.sg we will see people leveraging the gig economy, and this is what the workforce of tomorrow is likely to look like, we only have to look at Uber and Airbnb to see that people are preferring to offer their services when they like, not because they have to, which is typical of your normal 9 to 5 job. This is better for productivity, as people are less inclined to be counterproductive, when they’re assigned a task to accomplish.
The Changing Economy model
The Gig Economy and Shared Economies are solutions to this problem, as they provide jobs to people with high skills, that SMEs and local companies can advertise. The traditional views of lifelong jobs, is a future that is disappearing and one we must accept, albeit this is not a bad thing. World economic Forum, considers this change to be the most significant in advanced economies, whereas in the emerging markets the rising middle class absorbs most of this change. We can thus expect the sharing economy to be the key driver of change in the future with regards to employment.
Employee’s need to realize that the skillsets are changing and that major industries, not just low skill/low pay sectors are being disrupted. With globalization and the ability for highly skilled individuals able to move freely, employees need to adapt and look beyond local economies.
There will be a prospective 5 million jobs lost to technology by 2020, in the 15 most economically developed and largest economies, such as China, Brazil, ASEAN and it is a serious problem, yet it misses the vital point, that jobs will also be created. The question is what is the future of work? And if we do not know this, what training and learning systems can we put in place now to make sure that we have a workforce skilled enough to cope for the changing global labor market.
Technology is a key tool to leverage, to empower people to try and make a better world. With the industry landscape changing so quickly, it’s even more important to realize that the freedom to learn and the freedom of thought is what technology is aiding to make more accessible and between them this is our best chance at successfully adapting to changing behaviors with regards to employment.
Leveraging the changing behaviors expected towards the workforce, such as Sharing and Gig economy concepts and acknowledging this gap in understanding between the demands of the firms and the expectations of employees, is the key to unlocking and solving this problem. If potential employees are not prepared for the workforce when they exit education, gig economies, firstly give employees the opportunity to work and retrain at the same time and secondly allow employees to structure their own development according to the market demands. The Gig economy will essentially breed a more versatile workforce.