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20.6% of Singapore’s workforce could be displaced by 2028 due to Artificial Intelligence

Singapore’s workforce will be hardest hit by technological disruptions based on a recent report on the impact of Artificial Intelligence (AI) on workers in ASEAN’s six largest economies. The report by Cisco & Oxford Economics was prepared based on a study by a team of experts that aimed to predict the net impact on jobs in Indonesia, Malaysia, Philippines, Thailand, Vietnam and Singapore, analysing 433 occupations across 21 industries.

Based on their estimation, 28 million fewer workers in those six country, which is more than 10% of their workforce, will be required to produce the same level of output as today. The country with the highest number of workers that will be displaced due to technological disruption is Indonesia with 9.5 million workers. This is followed by Vietnam with 7.5 million workers, Thailand with 4.9 million workers, the Philippines with 4.5 million workers, Malaysia with 1.2 million workers, and Singapore with 500,000 workers.

That may not seem too bad for Singapore but when looking at the percentage of workers that could be displaced, Singapore tops the chart at 20.6%. Since Singapore is the smallest country of the six and has the lowest population, even a displacement of half a million workers amounts to over one fifth (1/5) of the entire nation’s workforce.

In 2016, Prime Minister Lee Hsien Loong touched on the issue of technological disruption during his 2016 National Day Rally speech, saying “it’s not just doom and gloom, because when you disrupt, you also create new jobs”.

However, the report also points out that Singapore faces the biggest skills mismatch of the six countries meaning that the skills of current workers do not align with the new jobs that are being created. The report states that by 2028, around 85,000 jobs will completely disappear from the workforce, leaving employees in those disappearing jobs with little to no transferrable skills that they can use.

The explanation provided by the report on why Singapore is hardest hit by technological disruption is that the fast rate of technological progress in the Lion City creates an environment that enables innovation and digital transformation. The increased investments in technology will lead to a greater displacement of production workers and labourers in Singapore. Changes are occurring at too fast a rate for the workforce to keep up with.

The report added, “Singapore is already close to the frontier of technological progress, so this is not “technology catch-up(...)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.”

The situation is different in the other countries where slower technological change, institutional and political constraints on automation, labour market protection and an abundance of cheap labour keeps the prices of workers competitive, thus dampening the impact of worker displacement in relation to their entire workforce.

The report notes that the new job opportunities being created in Singapore due to these technological disruption are likely in highly-skilled managerial and professional roles which requires a considerable improvement in the overall skills composition of the existing workforce.

In the PM’s 2016 speech, he assured Singaporean’s that the Economic Development Board (EDB), SPRING Singapore, Infocomm Development Authority of Singapore (IDA) and IE Singapore are working with industries to develop programmes to help companies invest in skills. Highlighting the SkillsFuture programme, the PM says it will help workers not only upgrade their present careers but also train retrenched workers to transition into new jobs.

But, how effective is SkillsFuture and will it be enough to mitigate the impact of technological disruption on the workforce, especially at the rate it is happening in Singapore? A displacement of 20.6% of the entire nation’s workforce is alarming to say the least.