Time to gird for change to digital era
As digital transformation is bringing about a wealth of changes across industries, our policy-makers and employers are still battling over the minimum wage issue. In fact, all stakeholders need to be more prepared for this new wave of change.
Recently, the cabinet said the hike in the daily minimum wage by 5-22 baht which will take effect from April 1 will not create a significant burden for businesses and consumers, as it will result in operating cost increases that are "only" in the low single digits.
But business operators are not convinced, claiming the wage hike will result in a rise in manufacturing costs and weaken the country's export competitiveness. In fact, the minimum wage rise will result in proportionate wage increases up the ladder. The measure, along with the state welfare scheme for the poor, will boost consumer spending as employees will have more money in their pockets. As a result, small and medium-sized enterprises (SMEs) can expect a rise in sales volumes this year.
Srisamorn Phoosuphanusorn is Business Editor, Bangkok Post.
In spite of its positive macroeconomic effects, the measure will undoubtedly result in higher labour costs to be shouldered by SME operators, who will have to adapt to stay afloat. Eventually, some may opt for the use of information technology, robots and automation to replace workers. This trend will speed up the rate at which digital technology replaces humans in the workforce.
As wages rise, and the cost of human resources remains higher than the cost of technology, a wave of companies spearheaded by the likes of Siam Commercial Bank (SCB) and Total Access Communication Plc (DTAC) is taking initiatives to drastically reduce their payrolls.
SCB has announced its plan to downsize the workforce from 27,000 to 15,000 employees, while planning to cut the number of its branches from 1,152 to 400 by 2020. DTAC, the third-largest mobile operator, also plans to reduce its staff numbers.
Businesses are enlisting analytics to create personalised career path development and compensation packages to retain their millennial talent, and remain competitive in the age of digital transformation. Automation and artificial intelligence (AI) will replace less-skilled labour, compelling blue-collar workers to upskill and do more sophisticated work. Professionals in job fields which rely more on humans than machines, such as engineers, surveyors, salespeople, craftsmen, accountants, architects, dentists, doctors and nurses will survive the transition. But they need to shift away from handling routine tasks to roles that rely on higher-level cognitive skills, and social interaction.
A report by Sasin School of Management highlights that by 2025, millennial workers will account for half the total, compared with 40% of today's 40 million workers aged 15-60. Two-thirds of millennial workers will leave firms within 2-5 years; a fifth will resign within one or two years, and 19% within six months.
On average, human resources account for 70% of a firm's costs. Downsizing the number of employees can certainly reduce costs and improve earnings. But the government has to step in to help the unemployed and new graduates get jobs. The state cannot afford to promote only the 10 S-curve industries, but will have to support other sectors to prevent either labour shortages or widespread unemployment. Employees must do their part by upgrading their skills and, if they are to confront the digital transformation, be willing to take risks and accept failure.
Digital transformation has taken the market by storm, forcing firms across industries to drastically reduce their workforce and change the way they do business to remain relevant in an increasingly competitive market. The advent of digital transformation, however, was not the choice of any one firm, or any one employee, and certainly not the choice of employees whose financial future has been threatened by it.
SCB and DTAC chose to cut their workforces and said they wanted to hire new digital talent instead of retraining their existing workers. Undoubtedly, companies across industries will follow this trend.
As citizens, employees and employers, we should ask ourselves who should take responsibility for the victims of digital transformation. Should displaced workers be left alone to go back to school at their own expense? Should the government use taxpayer money to establish training centres? Should corporations be forced to protect the jobs replaced by technology, or at least train their employees with the skills necessary to be successful in a digital workplace? This is a debate that will carry on in the years ahead.