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Study: 120 million workers need reskilling as result of automation

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In 2015, 28 per cent of Indonesian manufacturing companies reported that they were automating manual processes, less than Vietnam, Cambodia and Malaysia, which had about 35 per cent of their companies investing in automation within the same year. GERD ALTMANN/PIXABAY

Study: 120 million workers need reskilling as result of automation

As many as 120 million workers from the world’s 12 largest economies, including Indonesia, may need to participate in re-skilling programmes in the next three years as a result of automation enabled by artificial intelligence (AI), according to a recent study.

The study released by technology giant IBM’s Institute for Business Value found that it would take 10 times longer compared to in the last four years to close a skills gap through employee training because of the new skills requirements.

The study, which involved 5,670 businesspeople in 48 countries, said that last year, the top two skills sought were behavioural, namely a willingness to be flexible, agile and adaptable to change and time management skills.

Meanwhile, in 2016, businesspeople ranked technical core capabilities for science, technology, engineering and mathematics, as well as basic computer and software knowledge, as the top two skills, signifying the rapid change in skills requirement.

“Skill set gaps have worried many companies because they would have an impact on the businesses’ future and the world economy,” said IBM Indonesia president director Tan Wijaya.

As more Indonesian companies automated their business processes to reduce costs and boost productivity, IBM sees the country as a potential market for its services and products.

In 2015, 28 per cent of Indonesian manufacturing companies reported that they were automating manual processes, less than Vietnam, Cambodia and Malaysia, which had about 35 per cent of their companies investing in automation within the same year, according to a World Bank study.

Tan last week said Indonesia has huge potential for IBM’s business as many local companies seek to automate their business processes to face the so-called fourth industrial revolution, commonly known as Industry 4.0.

“We aim to solve industries’ problems by helping those who have the potential and the problems because that is our market,” said Tan during a press briefing in Jakarta, adding that the company targets several industries from financial institutions to manufacturing.

According to a road map entitled Making Indonesia 4.0, created by the government to maximise industrial development, the government sets its focus on five industries, namely food and beverages, chemicals, textiles, automotives and electronics.

The technology giant would also focus on the five industries set out by the government, said the president-director.

Tan said that the company would provide business consulting, as well as software and hardware products, to help companies automate their business processes.

Speaking during the same briefing, IBM’s associate partner for global business services, Andrian Purnama, said the company has been working with automotive companies – such as German carmaker BMW – to automate their manufacturing processes.

“We use sensors to detect manufacturing processes so that the machine [learning system] would make their own decisions,” said Andrian, adding that the company has combined the sensors’ data from the manufacturing processes with IBM’s database knowledge for the machine to make its decisions.

Andrian said IBM has booked double-digit revenue growth globally in its lines of business, namely software, hardware, consulting and cloud computing services, adding that the company aimed at double-digit revenue growth in Indonesia. He, however, declined to unveil the value of the company’s revenues in Indonesia.

Indonesia’s automation pace has the potential to contribute five quadrillion rupiah ($352.25 billion) to the nation’s gross domestic product over 11 years, Australia-based advisory firm Alpha Beta and the Australia-Indonesia Partnership for Economic Development (Prospera) projected in a July report. Currently the pace is predicted to be 3.2 quadrillion rupiah between this year and 2030.

“Indonesia’s labour force growth rate is slowing, which means that it will need to rely more heavily on productivity gains like those that automation provides,” the Alpha Beta-Prospera researchers wrote. Statistics Indonesia data show that Indonesia’s workforce growth has stagnated at less than one per cent annually since 2011.

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