Jobs Drivers of Change - ilo.org · Source: ILO, 2015. ASEAN in transformation Survey 0% 10% 20%...

Jobs Drivers of Change

Owais Parray

ILO, Jakarta

National Dialogue: Future of WorkApril 17, 2017

Outline

1. Drivers of economic growth & employment

2. New wave of creative destruction/ fourth industrial revolution

3. Impact in developed and developing countries

4. Looking at Indonesia

5. Way forward

Why are we talking about Future of Work?

Technology is engine of sustained economic growth

Output = Capital + Labour

Economic diversification from subsistence agriculture to industry was key

Sector Breakdown GDP (2000 & 2015)

0

10

20

30

40

50

60

70

80

Agriculture 2000 Manufacture 2000 Services 2000 Manufacture 2015 Services 2015 Agriculture 2015

Source: World Bank Dbase accessed 6 April 2017

Employment share by sectors (2005 & 2015)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2005 (Nov) 2015 (Aug)

Sumber: Sakernas, Aug Series 2005-2015

A large service sector in the economy and concurrent deindustrialization

Gig economy

In Indonesia proportion of workers having second job has increased

0.0

5.0

10.0

15.0

20.0

25.0

2016 2006 1996

15-24 25-34 35-44 45-54 55-64 65-98 15-98

More and more routine jobs are being replaced by automation

Product fragmentation

Share of national income for labour is declining

Impact of technology varies from developed to developing countries

Developing Countries

Some distance from technology frontier so adopting technology can complement labour, but it could possibly lead to diminishing income

Developed Countries

Already more technologically advanced so any further improvement can potentially lead to job losses

Absorption of technology in Indonesia

• Recently there is more rapid technology uptake in trade & services (banking, logistics, transport etc.)

• Less so in manufacturing and agriculture

Polarization of the labour market

-14% -12% -10% -8% -6% -4% -2% 0%

Developed Countries

Developing Countries

Decline of “routine/ mid-level” jobs

Source: WDR 2016

Broad classification of occupations

Managers

Professionals

Technicians and associate professionals

Clerical support workers

Service and sales workers

Skilled agricultural, forestry and fishery

Craft and related trades workers

Plant and machine operators, and assemblers

Elementary occupations

Unemployment by education (%)

Sumber: Sakernas 1986-2016

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1986 1996 2006 2016No schooling ≤ Elementary School Junior High

Senior High Senior High (Vocational) Diploma

University Average Unemp Rate

Trend in share of employment in Indonesia

Are “routine/ mid-level” jobs growing slowly?

Source: Sakernas, 2006 & 2016

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

High skill cccupations Mid-level skill occupations Low skill occupations Agriculture work

Chart Title

2006 2016

Impact of technology in Indonesia

Technology will reduce jobs

Source: ILO, 2015. ASEAN in transformation Survey

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Women employed

Total workers employed

Exports

Labour cost per worker

High-skill workers emp.

Profits

Domestic sales

Labour productivity

Increase No impact Reduce Don’t know

Unemployment rate has continued its downward trend, but that along does not capture the state of the labour market

Source: Sakernas, Augustus Series 2005-2016

-

2.00

4.00

6.00

8.00

10.00

12.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Unemployment Provinces (%)

Sumber: Sakernas, Aug 2016

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

BA

LI

KEP

ULA

UA

N B

AN

GK

A B

ELIT

UN

G

DI Y

OG

YA

KA

RTA

SULA

WES

I TEN

GG

AR

A

GO

RO

NTA

LO

NU

SA T

ENG

GA

RA

TIM

UR

SULA

WES

I TEN

GA

H

BEN

GK

ULU

SULA

WES

I BA

RA

T

PA

PU

A

NU

SA T

ENG

GA

RA

BA

RA

T

JAM

BI

MA

LUK

U U

TAR

A

JAW

A T

IMU

R

KA

LIM

AN

TAN

BA

RA

T

SUM

ATE

RA

SEL

ATA

N

LAM

PU

NG

JAW

A T

ENG

AH

SULA

WES

I SEL

ATA

N

KA

LIM

AN

TAN

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GA

H

SUM

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RA

BA

RA

T

KA

LIM

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TAN

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KA

LIM

AN

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N

Ave

rage

Nat

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al

SUM

ATE

RA

UTA

RA

DK

I JA

KA

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WES

I UTA

RA

MA

LUK

U

RIA

U

PA

PU

A B

AR

AT

AC

EH

KEP

ULA

UA

N R

IAU

KA

LIM

AN

TAN

TIM

UR

JAW

A B

AR

AT

BA

NTE

N

Employment in manufacturing by provinces (2016)

Sumber: Sakernas, Aug 2016

0.0

5.0

10.0

15.0

20.0

25.0B

AN

TEN

JAW

A B

AR

AT

JAW

A T

ENG

AH

KEP

ULA

UA

N R

IAU

BA

LI

JAW

A T

IMU

R

DI Y

OG

YA

KA

RTA

KA

LIM

AN

TAN

UTA

RA

DK

I JA

KA

RTA

NU

SA T

ENG

GA

RA

BA

RA

T

MA

LUK

U U

TAR

A

SUM

ATE

RA

BA

RA

T

LAM

PU

NG

MA

LUK

U

KEP

ULA

UA

N B

AN

GK

A B

ELIT

UN

G

SULA

WES

I BA

RA

T

SULA

WES

I SEL

ATA

N

SUM

ATE

RA

UTA

RA

RIA

U

GO

RO

NTA

LO

SULA

WES

I TEN

GG

AR

A

NU

SA T

ENG

GA

RA

TIM

UR

KA

LIM

AN

TAN

SEL

ATA

N

KA

LIM

AN

TAN

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SULA

WES

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AC

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SULA

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RA

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RA

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RA

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N

BEN

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KA

LIM

AN

TAN

TEN

GA

H

JAM

BI

PA

PU

A B

AR

AT

PA

PU

A

Labour force by education attainment is showing positive trend

Sumber: Sakernas, Aug Series 1996, 2006 & 2016

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

Primary School or less

Junior High school

Senior High school

Vocational High school

Diploma I/II

Diploma III

University/Diploma IV

1996 2006 2016

Rethink work and structural transformation

• Traditionally manufacturing was the stepping stone for economic development

• Deindustrialization is a worrying trend, especially developing countries without a mature manufacturing

• Redefine work. Wasn’t technology supposed to give us more leisure time

• Surplus from automization use to create more jobs; care, entertainment.

Technology is creating opportunities

• New technologies can be transformative

• Creating new opportunities and reducing costs even in low-income countries

• Made individuals more autonomous and access to learning

Technological advances can be disruptive

• Impact in developing and developing countries different

• Jobs loses- squeezing the mid-skills level occupations

Steering the economy

• An evidence-based approach should guide how policy-makers guide the economy

• Regular collection and analysis of labour & economic data

• Job matching platforms- there should be good feedback loop

Public investment in education & training

• Positive externalities… and greater spillover effect

• Lifelong learning to keep up with the changes in the labour market

• Soft skills becoming very import

Expanding social safety net

• Disruptions will invariably mean there are losers

• Revisit social protection to ensure that vulnerable are not left behind

• Universal basic income??

Terima kasihOwais Parray

JAKARTA@ilo.org