MORE than half of jobs in Malaysia face a high risk of being lost to automation over the next two decades, with more Malaysians affected than foreign workers, says a report by the Khazanah Research Institute (KRI).

Four of five of these jobs are semi-skilled workers such as factory workers, clerks, and telemarketeers. Also, 90% of these semi-skilled jobs are held by Malaysians.

The discussion paper, which was authored by KRI deputy director of research Allen Ng, was released on April 28. 

The KRI report on technology, employment and the Malaysian economy says the country risks deindustrialiaation if it does not adopt labour-saving technologies. 

It said that technological change is an important determinant of modern economic growth with a distinction given to a class known as general purpose technologies (GPTs).

GPTs are technologies that lead to big productivity gains in an economy over a long period of time.

“The classical GPTs are steam, electricity and information and communication technology (ICT). These GPTs brought great economic transformations – the first two industrial revolutions and the information age,” said Ng.

The current phase, artificial intelligence (AI), is increasingly recognised as the new GPT. 

“AI has the ability to spread wide and far in applicability of AI, advanced data analytics, cloud computing. They have the potential to disrupt different industries, from manufacturing, healthcare, transport, retail to finance.

“And while the first industrial revolution saw steam replace manual labour and horse power, we are now witnessing technologies substituting and surpassing our cognitive abilities,” said Ng.

The speed that AI can affect industries will be even faster due to the exponential growth in computing power of machines, the creation of digital information, network of connected devices and big investments coming into it, he added. 

Ng said an International Labour Organisation (ILO) report in 2016 approximates that 54% of all jobs in Malaysia is at high risk of being displaced by technology in the next 20 years.

By skill level, more than 70% or all semi-skilled and 80% of all low-skilled jobs are at risk. About 40% of skilled jobs are at medium risk while the lowest risk jobs are the skilled ones.

“These jobs cut across all major economic sectors.”

Ng said that the consequences on the Malaysian labour market “is quite dire” if the technological displacement happens. 

“While adoption of automation technologies could reduce our reliance on low-skilled workers, it is the semi-skilled jobs that are most at risk as 90% of these jobs are held by Malaysians.

“If a large scale technological displacement happens, a large number of Malaysians will be under-employed or without jobs

He said that staying put and relying on cheap foreign labour is not a good option for Malaysia either.

“What would happen to Malaysia if the other major economies adopt greater automation? If they do, these countries could erode the labour-cost advantage of Malaysian manufacturing or leave us behind and accelerate Malaysia’s de-industrialisation.

“It is important to note that we had already reached our peak industrialisation, in terms of value-added, in 2000. Since then, the economy has steadily de-industrialised without significant expansion in modern services to replace the reduced share of high- and medium-tech manufacturing.”

Ng said that Malaysia can turn this around by recommitting to policies. He said the first is to have industrial policies that are based on enhancing technological readiness of Malaysian industries.

“The second is to have education policies that equip Malaysians with relevant skills for the future with an emphasis on lifelong learning. Additionally we need to focus on quality job creation by small and medium-sized enterprises.”

The report author said Malaysia’s past experience offers hope.

“In the mid-1980s, while the world was recovering from recessions, Malaysia took bold policy initiatives to change the economy by launching a comprehensive industrial policy agenda in 1986 to transform the structure of the economy and to integrate the domestic economy with the world.

“It was also at this period, for the first time, more Malaysians had secondary education than primary education. By the time the ICT-driven global transformation arrived in the early 1990s, the foundations had already been laid.

“This was when Malaysia was known as an East Asian miracle.” – May 3, 2017.