5 trends that will affect job loss
Confluence of seemingly unrelated factors are impacting employment
One thing seems clear in the global economy: We are looking down at a deep freeze in employment.
This pessimism was not prevalent a decade ago. Today, we are in the midst of a curious confluence of seemingly unrelated factors, all driving towards one conclusion - the demise of jobs. Five trends have accelerated this.
Firstly, global growth is still anaemic, and there are still no strong green shoots in the big economies such as the US, Europe, Japan and Brazil.
The impact of India, China and Indonesia growing faster is not sufficiently felt in the overall pot as they need to mop up their own surges of employable pools.
Secondly, jobs tend to lag economic pick-up - that means we are some time away from real job spurts.
The US is supposed to have added about 10 million jobs in the two Obama terms, but one suspects that much of that is the restoration of jobs lost or correction of stagnation during the Bush years.
Thirdly, high-wage countries continue to drive out jobs. As wages rise in first-world economies, including Singapore, private businesses realign their costs and will move operations.
When this happens, it does not impact only the blue-collar or mid-level jobs - when companies move, C-suite jobs move too.
Japan has faced it for a long time. Now, the US East Coast and some western European economies are facing it too . And Brexit is bound to add a further element of surprise in this as the immigrant jobs of European Union nationals are reduced.
The fourth trend is that, for a long time now, industry shifts are causing disruptions in employment. Traditional industries such as textiles gave way to information technology and services a few decades ago.
There is a new churn now. The new wealth creators, "technology" companies, do not employ the same number of people for a given turnover.
Apple, Facebook, Google and Microsoft employ far less people for their combined revenue of over US$500 billion (S$718 billion). Also, Amazon is defining new business models, which even Walmart - the world's largest employer at 2.2 million - is forced to adopt. E-commerce will further shave jobs.
Overall, there will be more dynamism — and unpredictability — about jobs, skill sets and compensations. Underemployment or gap years will be new norms.
The real economic activity is more vibrant in small and medium enterprises in the technology and service industries.
Fintech, medtech, app-services, SMAC (social media analytics companies) are mushrooming not just in Silicon Valley but all over the world.
These are new jobs in new industries that require new skills. Campus recruitment in top colleges has already shifted to these enterprises in a significant way.
The last factor is "skill obsolescence", which affects workers aged 45 and above more than others.
Unless they dramatically re-skill themselves, a good proportion of them would be displaced, in some cases by machines, and in others, by people with machine knowledge. Mid-level accountants, for instance, can be replaced by software.
Then there is outsourcing, which continues unabated, despite nationalistic cries. The manufacturing and services industries continue to move to lower-wage countries with some changes in the basket of such countries.
The trends in artificial intelligence and robotics are equally alarming, even though they have not yet created major job churns.
If we do not need as many drivers, factory workers, checkout clerks, paralegals, retail bank staff or telemarketers as before, it could be another telling blow of massive portent.
How is this pain going to be manifested or alleviated?
Re-skilling is an important part of the solution. Some countries have gingerly started this - SkillsFuture of Singapore is one such voluntary public-funded model - but this could hurtle towards compulsory enrolments soon. There will be a further trend towards protectionism in both subtle and overt ways.
New private investors will be required to guarantee a certain level of employment. Closures will become difficult or will come at a prohibitive exit cost.
Incentives for start-ups will increase. It is now possible to crowdfund even millions of dollars to start a venture.
We will see crowdfunding 2.0 and other peer-to-peer financing ideas. Fintechs are rapidly causing these shifts. New ancillary industries, such as last-mile deliverers, are becoming large employers.
The app industry is estimated to reach US$100 billion in a couple of years. While the employment intensity is not high, it should still produce a large number of jobs.
Overall, there will be more dynamism - and unpredictability - about jobs, skill sets and compensations. Under-employment or gap years will be new norms.
The other big takeaway is in education. Education by schools have to change quickly and profoundly to cater to these trends. Learning will become lifelong instead of being front-ended in the teens and the 20s.
The importance of self-teaching will grow as that is the most effective impetus for re-skilling without a pause.
The writer is a Singapore-based consultant. This article appeared in The Business Times yesterday.