Automation likely to impact 18 million PHL jobs

By Denise A. Valdez
Reporter

AT least 18.2 million jobs are expected to be impacted if the Philippines maximizes its potential for automation, according to management consultancy firm McKinsey & Company.

Kaushik Das, McKinsey managing partner for Southeast Asia, said on Wednesday the agriculture and retail & wholesale sectors are likely to take the biggest hit from the next wave of automation.

“We looked at all the major sectors in the Philippines that can actually employ (automation)… We see that on average, between 40-50% of jobs will get impacted in the Philippines because of what technology gives… Roughly about 18 million jobs will be impacted,” Mr. Das said at the Decoded Philippines forum at Shangri-La at the Fort, Taguig City.

Mr. Das said agriculture topped the list of sectors to be affected by automation. Out of the current 12.5 million agricultural workers, the potential for automation stands at 48% or 6 million workers.

For the retail & wholesale sector, he said the automation potential is 48% or 2.4 million jobs out of its employment base of 7.4 million.

The McKinsey official noted that some sectors have a bigger potential for automation, such as manufacturing where 61% of the existing jobs may be automated. This means 1.6 million jobs will be at risk, out of the sector’s 3.9 million jobs.

Another one is transportation, where automation potential is at 55%, or 1.6 million employees at risk out of its 2.9-million employment base.

Other sectors expected to be impacted by automation are administrative & support (41% or 1.1 million of 2.6 employees), construction (41% or 902,000 of 2.2 million employees), accommodation & food services (54% or 864,000 of 1.6 million employees), education (28% or 336,000 of 1.2 million employees), finance (35% or 245,000 of 700,000 employees) and health care (39% or 156,000 of 400,000 employees).

“This does not mean that all these people are going to lose their jobs, but a lot of their work is going to change. Some of these jobs will get impacted, some of these jobs will go away. And a lot of these jobs will stay but the definition of the work will change,” Mr. Das said.

Amid the huge risk on the future of jobs in several sectors in the Philippines, the Southeast Asia managing partner of McKinsey said this must be taken as a reminder of what the government and society must do to prepare for the transformation.

“This has potential to create significant social problems. The good news, of course, is that all these forces will also create new jobs,” Mr. Das said.

“Government and society have to get ahead on re-skilling their workers, on preparing their workers and employees for this future.”

Aside from preparing for the future of work, Mr. Das said companies must figure out how to keep the Philippines relevant in an Asia-for-Asia supply chain.

Mr. Das said 40% of the global trade currently flows within Asia, and a higher percentage of goods and services are produced locally.

He added McKinsey is expecting the Philippines to become a “very significant” part of Southeast Asia’s growing economy in the next 10-20 years, projecting it to become the second-biggest contributor to the region’s growth next to Indonesia.

“If you go back to history, that would have been Singapore, Malaysia. But now it’s probably going to be Philippines. And we think among the large economies, the Philippines will outgrow other ASEAN countries,” he said. “We think conditions are ripe for the Philippines to keep growing and accelerate.”

The Philippine government is currently considering a budget of around P5 billion for the upskilling of workers in the business process outsourcing industry, as stakeholders call for a program to prepare employees for the future of jobs.

The Department of Information and Communications Technology is also advocating for a Digital Philippines, where it envisions improved connectivity with and within the government across all regions. A budget of P32.63 billion for the department next year was already approved by the Senate last week, which it said will be used mainly for digital infrastructure buildout.