Phillia Wibowo, the president director of McKinsey Indonesia, said Indonesia is poised to create two times more new jobs from automation than it loses. (Photo courtesy of McKinsey Indonesia)
Automation to Create More Jobs for Indonesia Than It Destroys by 2030: McKinsey
SEPTEMBER 26, 2019
Jakarta. Indonesian workforce could end up seeing more jobs available to them – mainly in the service sector – should the government and corporate sectors manage the adoption of automation and artificial intelligence well over the next decade, a new report by global consulting company McKinsey said.
Automation in the largest economy in Southeast Asia is projected to destroy up to 23 million jobs and create between 27 to 46 million new jobs by 2030, according to a McKinsey report titled "Automation and the Future of Work in Indonesia: Jobs Lost, Jobs gained, Jobs Changed," released on Wednesday.
The numbers are equal to between four and 23 million net job gain, thanks to increases in technology spending, income, infrastructure development, economic growth and consumption thanks to the automation. Reflecting from past trends, McKinsey said 10 million of these jobs would be in fields do not even exist today.
"The public debate about automation in Indonesia, as elsewhere, often focuses on the risks for the future of work, but our research suggests that Indonesia is poised for growth. There could be as much as two times more new jobs created than lost, primarily driven by infrastructure and consumer spending," Phillia Wibowo, the president director of McKinsey Indonesia and an author of the report, said in a statement.
"The country will nonetheless need to prepare carefully for the transitions because all jobs will change, and new skills will be required to accompany technology adoption. In particular, Indonesia will need to focus on upgrading its education and vocational training to skill, reskill and upskill its workforce for the new era of work," Phillia said.
McKinsey projected that 60 percent of all jobs globally contained up to 30 percent of tasks that can be automated. That means partially automated jobs would be more commonplace than full automated ones, the consultancy firm said.
In Indonesia, the overall employment mix would move away from jobs with a high potential for automation, such as data processing and predictable physical tasks, toward service.
"Construction, manufacturing, healthcare, accommodation, food service, education and retail are likely to see a growing demand for labor over this period. Occupations like mining, gardening, forestry, machinery installation and firefighting will also be more challenging to automate," McKinsey said.
The consultancy firm noticed new technology has already made impacts in Indonesia's labor market, with digital-based service companies like Go-Jek Indonesia and Grab creating job opportunities for Indonesia's underemployed and unemployed population.
McKinsey also projected that online commerce could directly or indirectly support up to 26 million full-time-equivalent jobs in Indonesia by 2022.
The consultancy firm, however, warned that the nature of new jobs would demand more knowledge and skill for workers. For example, the cashiers in retail shops would need to have more product knowledge to help customers, as transactions would be taken care of by self-service checkout technology.
"Technological skills will be in higher demand and there will also be an increased need for social and emotional skills, as well as higher cognitive skills such as creativity and advanced problem-solving. This creates an important priority for the country’s education system to address," McKinsey said.
The government and companies need to anticipate that automation would force millions of workers to change occupations. Manufacturing jobs or data processing can disappear but those with difficult-to-automate jobs like managers, teachers, nurses, gardeners and plumbers would thrive.