COVID-19, Job Losses and Automation in Asia: What are Governments Doing?

By Aarthi Raghavan | February 5, 2022, 11.00am SGT

Photo by Possessed Photography on unsplash

While COVID-19 led to an avalanche of crises in many countries, it also led to severe job loses, especially in Asia. Young people who are in low-skilled or unskilled jobs saw massive layoffs, and women were left vulnerable to economic and social insecurity. While highly skilled sectors saw people being recruited even at the peak of the pandemic, poorest communities were left to starve in many cases. This combined with increased automation in several industries increased inequalities between skilled and unskilled workers. Global factors like supply chain disruptions, decline in domestic and international demand, mobility and travel restrictions, and limited possibilities of working remotely, especially in sectors like agriculture, wholesale, and retail sectors only made things worse. Across Asia, manufacturing accounted for a large share of net job losses.[1] The impact was especially hard on the informal sector which employs a large majority of people in South and Southeast Asia.[2]

All this has retriggered the old debate on whether technology creates or destroys jobs. While reports from the western countries clearly indicate its negative impact on low-skilled jobs[3], there is limited evidence from Asia capturing the extent of this impact. Interestingly, Asia is also digitizing fast, with some rich countries in East Asia adopting automation to enhance productivity, and middle-income countries adopting automation due to cost and efficiency reasons. Although automation does not necessarily mean displacement of labor, it means existing labor has to change itself to continue those jobs,[4] and that it is a challenge for governments.

Policymakers recognize this need. Many governments have started to move on this issue, with a number of them having upgraded, introduced or starting to introduce skill development programs at the national level. In the Philippines the Technical Education and Skills Development Authority (TESDA) has embarked significant reforms by institutionalizing a qualification framework and introducing the Technical and Vocational Education and Training for the Philippines 4.0 (TVETPH 4.0) Framework to maximize opportunities created by the Fourth Industrial Revolution (4IR).  With the onset of the pandemic, OPLAN TESDA Abot Lahat was developed as a continuity plan to shift TESDA’s systems, processes, and programs into the new normal, which included online training programs.[5]

Similarly, Cambodia, Indonesia and Vietnam have clear national 4IR roadmaps in priority sectors. In addition to local learning centers, governments are increasingly creating partnerships with employers, educators, and training institutions on skills development.[6] In India, the government recently launched the Digital Ecosystem for Skilling and Livelihood, the DESH-Stack e-portal to skill, reskill or upskill workforce through online training. The government plans to establish a digital university which will built on a networked hub-and-spoke model. The best public universities and institutions will act as hubs, and collaboration with the industry will be reoriented to promote continuous skilling avenues.[7]

It is clear that investments in skill development have become a requirement, especially so as many countries are looking at post-pandemic recovery. However, are these investments worth it? Initial assessments suggest that in the long run, automation will become profitable.[8] It will also become a preferrable mode of replacing labor that is either mundane, dirty, or dangerous. Younger generations can have higher aspirations, they can enter or create new types of jobs that are more creative and offer a better standard of living. But to achieve this, governments in the region should consider leapfrogging existing technologies and move towards advanced ones. While this may not happen overnight, it will have to take shape over some years and in phases.

Experts also suggest that countries in the region must move beyond labor, capital, and land, and capitalize on information flows through trade, capital flows, migration, and knowledge sharing. They should systematically increase investments in broadband and mobile networks, human capital, institutional quality, and business environment. This would encourage entrepreneurship and stimulate the growth of firms based on cutting-edge technologies and will most likely create new employment.[9] Lastly, the industry as a perennial innovator can be an excellent partner in this process. As such there is significant scope for technology firms in Asia to work with governments to accelerate this transition. This will not only help countries in the region to overcome the negative economic impact of the pandemic, but also lead to spillover effects by sparking innovation in the public sector. This will not only make governments efficient but also improve governance and policymaking across countries in Asia.

[1] Youth, Women Among Most Vulnerable to Job Loss in Southeast Asia During COVID-19 – ADB | Asian Development Bank

[2] COVID-19 has worsened the woes of South Asia’s informal sector (worldbank.org)

[3] How to Respond to Job Losses from Technology, Trade, and Policy Choices (tcf.org)

[4] 2022: The year to automate (manmonthly.com.au)

[5] The Future of Skills Development in the Time of COVID-19 | Development Asia

[6] The Future of Skills Development in the Time of COVID-19 | Development Asia

[7] DESH-Stack e-portal to boost skill development; digital varsity to impart world-class education: FM during Budget 2022 – Times of India (indiatimes.com)

[8] The Future of Skills Development in the Time of COVID-19 | Development Asia

[9] Harnessing the benefits of automation in the Asia Pacific (eastasiaforum.org)