Is Philippines ready for IR4?

Much has been written and said about the coming of the Fourth Industrial Revolution (IR4), also known as Industry 4.0. While it still seems a far-fetched concept that is as remote as history books’ annotations of previous industrial revolutions, economic analysts are warning that IR4 is without doubt approaching, and at an accelerated speed.

In the ASEAN region’s automotive sector, for example, vehicle manufacturers are racing to automate their processes at plant sites, and are consequently paring down human intervention to the barest minimum. Even in the Philippines, which is a small player compared to Thailand or Indonesia, such initiatives can be expected in the coming years.

All this will apparently translate to job losses, and while the advent of artificial intelligence (AI), the internet of things, digitization, and robotics in the fourth industrial revolution can be expected to open new jobs, governments and its citizens are being urged to be aware and respond early.

In a series of studies prepared by technology company Cisco and economic forecasting agency Oxford Economics to quantify the impact of technology disruptions with the advent of IR4 on six countries in ASEAN, 28 million jobs are projected to be displaced by 2028.

In its latest released findings, the Cisco-Oxford study said that about 4.5 million jobs representing 10.1 percent of the labor force in the Philippines would be affected particularly in agriculture (1.2 million), wholesale/retail (880,000), and manufacturing (380,000).

Varied responses

In Singapore, where 20.6 percent of its work population (equivalent to 500,000 full-time positions) will likely be displaced because of faster digitization, the government has already adopted reskilling programs like SkillsFuture to help workers shift to other jobs or upgrade their current skills.

Other countries like Indonesia and Vietnam, on the other hand, which will likely have more workers affected by automation (9.5 million and 7.5 million, respectively), the response has been inadequate, even bordering on indifference.

The Philippine government has not also been as quick to respond. This has been mainly attributed to the slower pace of locally operating companies in adopting technology, which in turn is influenced by a relatively lower cost of labor and the still high cost of automation.

Neither is there a strong impetus for the government to encourage industries to adopt automation, even in business process outsourcing (BPO), which is one of the sectors flagged to be more vulnerable, or in agriculture, where most of job displacements are expected to occur.

Indifference and skepticism

Initiatives to adapt to change have been largely left to the private sector, and while some companies deeply value human resources that they have invested time and money on, many others – especially those in agriculture – will most likely be indifferent.

Perhaps the more compelling reason for not doing anything is the timeframe: with automation and digitization still farther in most companies’ medium- and long-term plans, and with the abundance of skilled labor and professional services locally, the urgency is just not there.

Still, while the actual numbers of employed that may be affected in the Philippines would run into millions, there’s a high degree of skepticism on how this would actually happen, especially in the agriculture sector, or if this would really happen even after 2028.

The same indifference and skepticism is also reflected with government, and this is likely to be an offshoot of more pressing demands for basic governance – like finding more jobs, fighting crime and rebellion, and generally ensuring the food and other basic needs of a growing population.

AI in your face

Two sectors in the country, however, bear more intense watching in the short term. Here, the effect of IR4 will be more pressing and in-your-face, and will compel urgent action and reaction by the affected stakeholders.

The BPO sector, currently employing about 1.3 million people to date, is a major driver of the Philippine economy. About half of BPO jobs are endangered by automation, where a growing number of customers surveyed had admitted to having trouble recognizing if they had communicated with an answering machine or an actual person.

The impact of automation is already real for BPO employees, what with chat bots and AI now being increasingly used and relied on by many companies, and not necessarily to augment the services provided by person-to-person customer interfaces.

It’s a good thing that the local BPO sector, dominated by multinational companies, had been preparing for AI for some years now. However, while new jobs have been created and up-skilling initiatives have been initiated, there are already lost jobs.

In fact, recruitment for new jobs in the BPO sector has significantly been decreasing in the last few months, while entry requirements have become more demanding, requiring critical thinking skills and complex decision making from recruits.

The other area is in agriculture, which may force the use of AI earlier than many of us can imagine. Google, for example, is at the forefront of developing apps that will utilize AI to help farmers improve yields and optimize production. Think Google Map for commuters.

A new kind of agriculture is surprisingly taking shape, as the cost of custom-fit AI becomes more affordable to many farmers, likewise the use of equally less expensive tools like smartphones and drones, all of which can now be had at a lower cost and operated in more areas, thanks to improved internet connectivity in previously remote locations.

This deserves more space in future columns, a topic that should excite those that give agriculture more value nation building.

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