Labour risks going under amid AI wave

Labour risks going under amid AI wave

Is Thailand ready for the 4.0 transformation, or will the country fail to weather the storm of its own ambitious digital policy?

Although technology has helped usher in a new level of communication and industrial development, it is inevitable that robotics and automation controlled by artificial intelligence (AI) will eventually start performing human jobs, affecting the unskilled workforce who cannot adapt to new technological changes.

Job losses resulting from the digital transformation are at our doorstep. For instance, Fukoku Mutual Life Insurance laid off employees earlier this year, replacing them with an AI system that can calculate insurance payouts. The firm ultimately believes it will increase productivity by 30% and expects to save ¥140 million a year on salaries.

As for Thailand, there have not been any significant changes in the job industry attributed to AI, but that future is imminent because the country has started implementing the Thailand 4.0 policy to move towards digitisation.

A robot greets attendees at Thailand Tech Show 2017 at Bitec Bang Na. All it wants is your job. (Photo by Somchai Poomlard)

Thailand is estimated to have a 38.3-million-strong workforce, 37.5 million of whom were employed in this year's first quarter, according to the National Labour Development Advisory Council. There are 5.74 million new workers entering the labour market every year.

Unskilled labourers are estimated at 16.9 million, accounting for 45% of the total workforce. Of that total, 11.2 million are in the farm sector and the rest are in labour-intensive industries.

As pondered by the renowned physicist Stephen Hawking, questions also linger in the minds of many about whether massive job cuts will transpire, worsening social inequality and igniting political upheavals. More importantly, is Thailand really ready for such a transformation, or will the country fall victim to its own digital policy?

Feeling the Digital Pinch

Bankers, brokers, human resources, accountants, call centre agents, software programmers and factory workers are the first to be hit by digital disruption in Thailand and the rise of automation technology and AI.

In the digital era, workers need to shift to becoming a "digital workforce" armed with analytics skills, creative design, entertainment and innovative capabilities.

PricewaterhouseCoopers Consulting Thailand estimates that 45% of work activities can be automated, and this automation will be able to save US$2 trillion in global workforce costs.

"Emerging technologies that enable automation will help business to increase productivity and efficiency with no need to increase workforce size, even when business growth results in higher volume transactions," said Vilaiporn Taweelappontong, PwC consulting leader.

The automation process and technology will not displace, but rather work alongside, humans. It may decrease the number of working people while creating new job positions.

The changes are intended to give employees greater work-life balance and shift their valuable skills to business development and customer engagement.

There are three levels of automation, starting from Robotic Process Automation (RPA), a bot software that automates simpler routine human tasks such as basic accounting and reporting, including finding job candidates. This will essentially affect office workers who are in back-end support, such as human resources and accounting.

The major adoption of RPA has already emerged across various industries, Ms Vilaiporn said.

In fact, many companies have started with RPA proof of concept, while some are at the stage of deploying robots.

Intelligent Process Automation (IPA) is another type of digital workforce, in which a set of technologies assists human workers by performing repetitive and manual tasks, but with the capability to learn from human activities and improve over time.

These robots can perform simple analysis and correlate data to reach relevant conclusions.

But human capabilities are still required to make the final decisions or handle certain types of exceptions, such as credit approval.

AI is the highest level of automation. Bots are able to learn, improve and make the best decisions within a given set of parameters.

The bots drive processes and decisions, while humans augment the decisions and set the overall parameters.

One example is a chatbot or digital assistant that can communicate with customers and handle service requests.

Digital assistants are still constrained by the use of local language, with the technology potentially maturing over the next 12 months.

This technology is expected to reach its full potential over the next 3-5 years, with call centre staff, booking services, insurance agents and front desk staff at hotels and hospitals needing to prepare for this rapid digital change.

"Bank and financial service providers also, in the first wave, will be impacted by branch closings, and their tasks for identity verification and checking credit or handling records can be done via automation," Ms Vilaiporn said.

Users can also employ online and mobile applications, conducting banking transactions by themselves.

Financial brokers are also being challenged by AI, as there are robo-advisers that can suggest more personalised investment strategies. This includes financial advisers and wealth managers.

Those banking and finance staff need to increase their skills to deliver more sales and services, business development, deeper customer relationships and greater customer engagement.

"In developed countries, wealth managers have taken on the role of caring for a family of richer investors," Ms Vilaiporn said.

A robot chef demonstrates cooking skills at an engineering fair. (Photo by Patipat Janthong)

IT technical staff like network administrators and software programmers are also being struck by the rise of cloud computing, as it requires less customisation with the automated system.

Back-end support officers such as accounting, human resource, procurement and data entry workers also need to shift their skills.

Ms Vilaiporn said that over the next five years, as the global adoption of blockchain technology penetrates the financial sector, the impact will not only be felt by banks and regulators, but also auditors and tax-filing officers whose roles will be decreased as all information will be verified among stakeholders.

The bottom line is that businesses need to build a culture that dares to risk and accept failure to create an open, innovative culture for success in the digital transformation vortex.

Job Losses on the Horizon

Thailand's industrial sector has felt the pinch of the ongoing digital transformation, with some labour-intensive industries starting to switch to the use of automation systems and robots instead of human workers, including the food processing and garment industries, said Chen Namchaisiri, chairman of the Federation of Thai Industries (FTI).

He said most garment industry players have moved their production hubs to border areas or neighbouring countries to help solve the problem of rising wages, while the food and food processing industry is gradually switching to robots.

But a big impact on the Thai labour market or a sharp rise in unemployment is unlikely, because most of those who are to be affected by the shift from human workers to robots are unskilled foreigners.

"It is because labourers working in the food industry who are cutting, slicing or slaughtering are likely to be migrants," Mr Chen said. "That has forced investors to switch to robots, since those migrant workers are moving back to their hometowns in neighbouring countries, where the economies are growing. That's why I don't think that the use of robots and automation is likely to push the unemployment rate higher for the time being."

Mr Chen said switching to robots and automation is an inevitable trend because of lower operating costs, shortened times and increased accuracy and efficiency.

Boonpeng Santiwattatam, president of the FTI's food processing industry club, said employment trends are changing globally as everyone starts to use robots and automation, implying that human workers will ultimately be replaced by robots worldwide.

But he said he doubts the trend will have an immediate adverse impact on the Thai labour market, as not everyone in the food industry is ready to switch to robots.

For the food industry, Mr Boonpeng said 70% of investors are small and medium-sized enterprises, while the rest are large businesses that are ready to use robots for work processes.

"Those 70% still have to rely on the human workforce, and that means we still have time to adjust," he said.

Anon Vangvasu, secretary-general of Thai General Insurance Association, estimates that 20% of the workforce in the insurance industry will be slashed in the next 5-10 years as insurers shift towards digital technology.

"Competition in the insurance market is very high, pressuring players to cut operation costs by adopting new technologies to replace human jobs," he said.

The insurance industry has been adopting digital technology in its back-office operations for some time, and that has eliminated the need for some jobs dealing with paperwork.

"In the next 5-10 years, the effects of innovation and new technology on employment in the [insurance] sector will be seen largely in customer service," Mr Anon said.

He said insurance firms have been using electronic policy issuance or e-policy to issue and deliver insurance policies to customers.

Mr Anon said that while the technology has yet to be widely accepted among customers, its use will gradually rise and the number of employees tasked with policy delivery to customers will fall accordingly.

Insurance claims through electronic channels such as mobile applications are also rising rapidly, reducing the need for employees who work to issue claims for customers.

On the other hand, more jobs that require analytical skills will be needed in the future because they cannot be fully replaced by computers or robots, Mr Anon said.

Yuenyong Songsiridej, TMB Bank's head of branch operations excellence, said his bank has no plans to shutter its existing 430 branches and lay off employees, even as digital technology is being adopted at more branches.

"We have focused on customer demand and we use technology to serve their needs," he said. "It's in an early stage of adoption, and staff remain necessary to help demonstrate to customers how to use the new technology."

Investment advisory positions are expected to be in high demand, as customers still want to contact staff for information, he said.

Somboon Chitphentom, assistant governor of the financial institutions policy group at the Bank of Thailand, said the impact of the new technology and innovation on commercial bank jobs is hard to estimate.

"Technology definitely changes banks' business, such as how to make transactions, banking operations and also employment," he said. "But with new technology adoption, employment might either decrease or increase for developing the system, so it is very hard to predict."

Mr Somboon said that as the number of bank branches has declined, banks have relocated and retrained branch employees to retain them.

Preparing for the Future

Porametee Vimolsiri, secretary-general of the National Economic and Social Development Board (NESDB), said disruptive technology has already affected many sectors such as media, banking, tourism, transport, energy and retail.

Although some jobs will disappear, new jobs will be created or demand for other job categories will increase, Mr Porametee said. For example, e-commerce will reduce customer service jobs in brick-and-mortar stores, but it will increase jobs in online services and logistics in order to deliver products to customers.

In the past, when companies had to adjust to new technology, they would retrain workers for new skills or new work processes.

So if the economy can improve its competitiveness, the market can take care of this transformation. In cases where workers are unemployed during the transition process, they can get unemployment support from the social security system.

Mr Porametee said the process of technology and digital transformation remains slow in Thailand. The government has, however, been preparing platforms such as broadband internet, a mobile payment system and a regulatory sandbox so that access and adoption of technology is more inclusive and faster.

The NESDB suggested that agencies tasked with human resource development should prepare both qualitative and quantitative aspects of human resources to conform with the expansion of the manufacturing sector for skilled and semi-unskilled labour, especially among new graduates, to be ready for new types of jobs.

Prime Minister's Office Minister Suvit Maesincee said that at the first meeting of the committee to drive national reform to usher in Thailand 4.0, chaired by Prime Minister Prayut Chan-o-cha, related agencies were ordered to prepare short-term and long-term measures for human resource development.

In the short term, training courses are necessary for workers employed at companies that are involved with emerging technologies.

For the long term, Mr Suvit said education reform is required for 77 schools nationwide as part of a pilot project in 2018, while the private sector will help the government support such reforms by contributing to the government budget and conducting training courses on technology.

The project will later be expanded to 30,000 schools nationwide, while Gen Prayut has authorised that the reform be implemented in vocational schools, Mr Suvit said.

Deputy Prime Minister Somkid Jatusripitak said development of the service industry in local communities is significant, as those workers will be heavily affected when staff are laid off from factories to make way for robotics and automation applied to the production process.

The tourism sector and community businesses will absorb those labourers, thus the government needs to complete the internet broadband roll-out by next year, while the Commerce Ministry will implement a training programme for community businesses.

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