How AEC and the Fourth Industrial Revolution will Impact ASEAN
The establishment of the ASEAN Economic Community (AEC) back in 31st December 2015 marks a major milestone in ASEAN’s overall integration agenda and represents the commitment of the ten Southeast Asian nations to form a single market and production base with free flow of goods, services, investment, skilled labour, and freer flow of capital. With the ASEAN workplace becoming more complex and diverse due to mixed generations and cultures, it is imperative for governments, business leaders and education institutions across the region to be more progressive and collaborate in order to fully tap on the potential of the region’s rapidly evolving environment. The strong growth in the region increases the demand for skilled labours and requires organisations to equip their workforce with a broader range of soft and hard skills to remain competitive. The economic integration of Southeast Asia, combined with the inception of the digital revolution, will progressively transfigure ASEAN’s work environment and inevitably cause the region to undergo rapid structural and strategic advancements over the next decade.
According to a World Economic Forum report published in 2016, we are currently on the cusp of a Fourth Industrial Revolution, in which technological, socio-economic, geopolitical and demographic developments and their interactions will generate new classes of jobs while rendering certain occupations obsolete. The good news is the rate of job displacement caused by automation is predicted to be more gradual than some forecasts suggest. Based on a new study by the McKinsey Global Institute (MGI), it will take decades for technological unemployment to rise to an alarming level, which theoretically gives employers and employees time to adjust and adapt to the radically evolving workforce.
Five Ways Work Life in ASEAN Will Change Forever
The way people work in Southeast Asia today bears little resemblance to the workplace of the past. The impending driving factors discussed have changed the skill sets required in professional occupations and transformed how and where people work. The rise of the Fourth Industrial Revolution will only continue to radically transform the ASEAN employment landscape, presenting unique opportunities and challenges to all stakeholders in the region. These are five key changes to be anticipated by employers and skilled labours working in the ASEAN region.
1. Multi-generational and highly diverse work environment
From the rise in overall life expectancy and increase in minimum retirement age in certain nations to the rapid growth of ASEAN millennial populations, the span of working age groups in this region is predicted to progressively increase in the coming years. This will lead to a multi-generational workforce with employees from several generations, stretching from the Baby Boomers in the senior positions to the Generation Y members who are relatively new in the labour market.
The establishment of AEC 2015 will stimulate an increase in intra-ASEAN talent mobility. In this scenario, countries that face skill and labour shortages will benefit by sourcing for suitable skilled workers and talents from other ASEAN nations with stronger education systems, while higher income nations are often in need of affordable labour, which lower income nations can easily supply due to its surplus of young unemployed workers. This would mean that we can expect our work environments to be enriched with more cultures, languages and expertise.
Due to changing societal norms, ASEAN employers will also start to introduce more flexible working arrangements to accommodate and welcome an increasing number of women into the workforce and leadership positions. TalentCorp from Malaysia is taking this a step further by encouraging companies to hire more female workers with tax and training incentives.
2. Highly collaborative and radically reorganised workforce
Millennials, commonly defined as individuals born between early-1980s to mid-1990s and known to be digital natives, will extensively utilise digital tools to empower their work experience and enable them to flexibly work around the clock from multiple locations. It can be observed that some ASEAN companies are already responding to the needs of the more diverse workforce by offering flexible work arrangements in the form of job sharing or variable work schedules. We can also expect to see organisational shifts in companies from the conventional divisional structure to more project-based teams.
We can anticipate that future workers will no longer be routinely going to the same office to perform the same repetitive tasks with the same co-workers on a daily basis. Instead, employers will start to integrate their workforce across different nations into a single regional workforce by leveraging on technological advances to enable better internal communication and collaboration. This will allow companies to aggregate capabilities of their geographically dispersed workforce to optimise human capital. As a result, employees would likely be required to travel more often to other countries to contribute to short-term projects, long-term initiatives, or even to fill in permanent roles with high-skill requirements.
3. Adoption of virtualisation and automation technology solutions
As an increasing number of companies expand across the region, we will see business teams becoming geographically distributed and will rely on innovative collaboration tools to overcome “silo” mentalities and facilitate communication, file sharing, workflow and content search. In addition, the implementation of mobile internet and cloud technology will enable business data and resources to be easily accessed and shared in a secure and scalable manner.
Today, organisations are able to continually calibrate their strategies to achieve their business outcomes by utilising cutting edge data analytics to gain near real time insights into their operations and target markets. Another impending component of the digital age is the introduction of artificial intelligence and automation technology. According to John Hawksword, PWC chief economist, the automation of manual and repetitive tasks will help to remove monotony from our day jobs and enable workers to focus on higher value and creative work.
4. Implementation of online learning platforms and gamification strategies
Stephen Hawking voiced his concerns about artificial intelligence and increasing automation and the effects they will have on workforce in the coming future. The world-famous physicist explained that while artificial intelligence will radically increase efficiency across industries, the replacement of human jobs by technology will translate into unemployment and uncertainty for low- to medium-skilled workers.
For this exact reason, it is in the best interest of both the employers and employees to make learning and skill development an integral part of the workforce management. Companies will likely leverage on digital training platforms such as massive open online courses (MOOCs), which are easily scalable and have significantly lower unit costs, instead of physical training and workshops. MOOCs can also be tailored to a worker’s individual development plan and offer great flexibility as they are able to decide when and where to complete the required trainings.
Another emerging trend among companies is the incorporation of gamification into their capability development initiatives. According to Accenture Strategy, it has been widely shown that injecting elements of play in work activities can help to cultivate creativity and innovation in the workforce.
5. Increased utilization of contingent workers and outsourcing services
Due to the fluid operating environment in the ASEAN region, organisations will experience a fluctuating demand in the number and type of skills required in their workforce. As described by KPMG, this has resulted in an increasing trend for companies globally to hire third party contract workers, especially for identified peak business periods, instead of recruiting more full time employees throughout the year. This allows businesses to maintain a fluid workforce in order to effectively monitor costs.
Today, companies can easily leverage on technology and talent hubs to source for skilled external talents in the form of temporary contract workers or freelancers to fulfill certain niche tasks or temporary projects that require highly-specialised skills. The integration of permanent employees with talents and capabilities from various resources enables companies to achieve the right mix of workforce utilisation will enable them to optimise their workforce and reap maximum benefits for the business.
Written by: Lucas Khoo
Lucas is the Founding Partner at ProspectsASEAN, a human capital development organisation that is leading the movement to transform the region’s economic and social landscape and aspires to shape the future of Southeast Asia. Prior to ProspectsASEAN, Lucas was a management consultant in Accenture, focusing in the area of Project Management and Talent & Organisation (T&O). He graduated with a Masters in Chemical Engineering from the University of Birmingham.
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