Drivers of Change Owais Parray ILO, Jakarta National Dialogue: - - PowerPoint PPT Presentation

Jobs Drivers of Change

Owais Parray ILO, Jakarta National Dialogue: Future of Work April 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)

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 2016

No 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

BALI KEPULAUAN BANGKA BELITUNG DI YOGYAKARTA SULAWESI TENGGARA GORONTALO NUSA TENGGARA TIMUR SULAWESI TENGAH BENGKULU SULAWESI BARAT PAPUA NUSA TENGGARA BARAT JAMBI MALUKU UTARA JAWA TIMUR KALIMANTAN BARAT SUMATERA SELATAN LAMPUNG JAWA TENGAH SULAWESI SELATAN KALIMANTAN TENGAH SUMATERA BARAT KALIMANTAN UTARA KALIMANTAN SELATAN Average National SUMATERA UTARA DKI JAKARTA SULAWESI UTARA MALUKU RIAU PAPUA BARAT ACEH KEPULAUAN RIAU KALIMANTAN TIMUR JAWA BARAT BANTEN

Employment in manufacturing by provinces (2016)

Sumber: Sakernas, Aug 2016

0.0 5.0 10.0 15.0 20.0 25.0

BANTEN JAWA BARAT JAWA TENGAH KEPULAUAN RIAU BALI JAWA TIMUR DI YOGYAKARTA KALIMANTAN UTARA DKI JAKARTA NUSA TENGGARA BARAT MALUKU UTARA SUMATERA BARAT LAMPUNG MALUKU KEPULAUAN BANGKA BELITUNG SULAWESI BARAT SULAWESI SELATAN SUMATERA UTARA RIAU GORONTALO SULAWESI TENGGARA NUSA TENGGARA TIMUR KALIMANTAN SELATAN KALIMANTAN TIMUR SULAWESI TENGAH ACEH SULAWESI UTARA KALIMANTAN BARAT SUMATERA SELATAN BENGKULU KALIMANTAN TENGAH JAMBI PAPUA BARAT PAPUA

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
• ccupations

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 kasih

Owais Parray

JAKARTA@ilo.org