Transforming economies in ASEAN: Southeast Asia needs to keep pace with a changing job market

Electronics factory worker, Cikarang, Indonesia. Photo: ILO Asia-Pacific

The UN says job creation in productive industries will be essential for keeping pace on its Sustainable Development Goals. To stay competitive, Southeast Asia will need to double down on inclusive and forward-looking economic policies.

By Zachary Frye

From September 11-13, 2019, the UN hosted a series of events in Bangkok as part of its “Transforming Economies for Better Jobs” series. At the conference, scholars, researchers and practitioners provided insight into the changing nature of the global economy and debated the ways governments and the private sector will need to adjust to meet modern challenges.

In the coming decades, technological innovations are set to slash the number of labour-intensive jobs and drastically alter the skillsets required of the workforce.

A key message of the conference was the importance of keeping the lives and livelihoods of human beings at the centre of the technological conversation. Working towards the full implementation of SDG 8, or the promotion of decent work for all will be paramount in achieving the most equitable and just economic reality.

A worker operates a forklift truck in this Indonesian garment factory.
Photo: ILO Asian-Pacific

In Southeast Asia, many economies are still developing. The middle classes are expanding due to strong growth, but too many are still getting left behind. For these families, the spoils of development have yet to materialise. The future can be kind to these demographics, but only if governments prioritise policies that put human lives at the centre of economic policy and planning.  

The poor and middle classes rely on labour-intensive work

Southeast Asia is a hub for global manufacturing. Many international companies, including Samsung, Mitsubishi, and Nike, have factories in the region.  

Low-skill workers rely on these jobs for steady wages but technological progress in the sector are their streamlining potential are set to significantly reduce the volume of workers required in the production process.

In a report on the future of work in the region, the International Labor Organization warns that “about 56% of all salaried employment in Cambodia, Indonesia, the Philippines, Thailand and Vietnam is at risk of displacement due to technology in the next couple of decades.”

Digital inclusion will be paramount

One of the most important ways governments can help prepare its citizens for the future of work is through connectivity. Southeast Asia has seen rapid growth in its Internet penetration rates, but some marginalised populations remain unconnected. 

A dock worker carries the markes of his labour on his hands.
Photo: Adam Cohn

Speaking with ASEAN Today, Armida Salsiah Alisjahbana, the United Nations Under-Secretary-General and Executive Secretary of ESCAP, outlined the progress that still needs to be made.

“Currently, more than 70% of the population in countries such as Cambodia, Indonesia, Laos and Myanmar remain offline and cannot fully participate in the digital economy. Expanding broadband infrastructure is essential to close this gap.”  

The 4th industrial revolution doesn’t just stand to benefit the upper classes. These technologies have the potential to transform the lives of the poor and near-poor, as well. There are already exciting developments taking place in the region, but it’s vital that policymakers lay the groundwork for the most equitable application. 

“In the broader Asia-Pacific region, e-commerce combined with ICT-enabled financial services is empowering online entrepreneurs, revitalizing and repopulating villages, and allowing farmers to sell their produce more profitably. This is a success on which we should build, but to do so broadband infrastructure is a prerequisite,” she added.

ASEAN nations have blueprints for long-term economic success, but proper implementation will be paramount  

There are arguments that the threat of widespread unemployment is overblown in emerging Asia. Even as the nature of work changes, the expanding middle classes will provide an accelerated demand for goods and services. Production is often a complicated, multi-step process. Unskilled labour survived previous technological revolutions and it could survive this one as well.

That doesn’t mean governments should uphold the status quo and hope for the best. The rates of technological change are moving fast and will become increasingly consequential as time goes by.

“We must take a balanced view of new technologies, which may lead to the disappearance of some jobs but will also support innovation, growth and job creation. To support the transition to a digital economy, traditional education must be complemented by the delivery of life-long learning and social safety nets,” says Ms Alisjahbana.    

Workers loading a crane with cement stacks. Photo: Adam Cohn

ASEAN nations have plans to mitigate the worst effects of economic transformation, but it’s going to take persistence and well-managed follow-through to see that they are properly implemented.

Thailand 4.0, Myanmar’s Digital Economy and Singapore’s Smart Nation programme are the fruits of regional governments’ efforts to plan ahead. These plans focus on information and communications technology infrastructure, skills development, education, and e-government regulations.

This is a step in the right direction. In the case of widespread job displacement, retraining and education efforts will be crucial. As our lives become more enmeshed with the digital world, there will be tremendous opportunities to rethink and reimagine the ways we do business.

Singapore’s robust education efforts are a model for the region. It’s Smart Nation program looks at the issue from multiple angles. One programme offers low-income households subsidised high-speed Internet, while another offers mentorships, resources and equipment to tech-oriented innovators. There is even a programme dedicated to supporting senior citizens’ lifelong learning and digital literacy.

Even with robust education schemes, the most vulnerable will still need insurance against the worst effects of a transforming economy. Although government protection will play a big role in facilitating a smooth transition, it will be the private sector that drives innovation. The potential of social entrepreneurship is especially strong. If governments can lay the groundwork for successful small business, tech-focused social entrepreneurs will have the means to introduce new systems to communities that were previously left behind.  

The 4th industrial revolution brings with it a host of potential pitfalls, but also a chance for renewal. ASEAN nations have made great economic strides in the past several decades. Technology can be the catalyst for more broad-based prosperity, but only if governments take advantage of the opportunity.