Monday 31 March 2014

The future of jobs - The case of the vanishing mid-level skilled worker

As automation advances, jobs for middle-skilled workers are disappearing. Insight looks at the issue of job polarisation and what might lie ahead for Singapore's labour force.
By Toh Yong Chuan And Tham Yuen-c, The Straits Times, 29 Mar 2014

FOR five years, Mr Norizal Mohamed Hassan's take-home pay as a marine mechanic for a multinational company stagnated at just below $2,000 a month.

"I was frustrated because I was working hard and have a young child," says Mr Norizal, who has a vocational training certificate from the former Vocational and Industrial Training Board.

In January, the full-time employee decided he had had enough and quit - to become a taxi driver. Yes, to be self-employed, with no medical leave and no Central Provident Fund contributions. But the 37-year-old hopes that if he puts in the long hours, he will earn more monthly than in his old job.

The dad of one's switch from a middle-level skilled job to a service sector one that does not require technical training is part of a phenomenon dubbed job polarisation, say economists.

In it, middle-skilled jobs are disappearing while demand for high- and low-skilled workers grows. This has emerged only over the last few years in Singapore, but is a trend that has become established in many industrialised countries as automation replaces workers.

Deputy Prime Minister Tharman Shanmugaratnam warned about job polarisation when rounding up this year's Budget debate. Referring to the need to "transform" jobs and develop "obsolescence-proof skills", he declared: "We have to prepare for that new world."

Recent advances in technology are making some workers obsolete, yet boosting the efficiency of others. A gulf is forming in both demand for and the wages of those with the right fit and those whose skills have passed their use-by date.

Of course, ever since the Industrial Revolution, technology has displaced workers. But the same technology has often also created new jobs for which the workers can retrain.

This time around, experts are not sure if this wave of progress will be as creative as it will be disruptive.

With technology cycles getting shorter, it has become harder to predict where the future jobs will be. And it also means preparing for jobs that may not exist now.

Insight looks at what this new world might mean for workers, firms and the Government.

Mid-level workers squeezed

MR NORIZAL'S former job as a marine mechanic falls within a classification known as production craftsmen, and those jobs are shrinking. They fell from 101,500 in 2001 to 90,600 in 2012, even as the labour force grew. It was a similar story with semi-skilled factory workers.

And while the number of clerical workers grew from 231,500 in 2001 to 262,200 in 2012, their proportion of the labour force shrank from 14.6 per cent to 12.8 per cent in the same period.

Workers at the wrong end of this polarisation gap face a double whammy - there are fewer jobs for them, and the declining demand for their skills has contributed to slower wage growth.

The median monthly gross salary of "production craftsmen" and related workers - such as electricians, mechanics and carpenters - grew by 17 per cent from $2,051 in 2001 to $2,400 in 2012, before adjusting for inflation.

This is much slower than the 46 per cent increase for all workers - from $2,387 to $3,480 over the same period.

In contrast, professionals, executives and managers are doing nicely. The median gross monthly pay of managers grew from $5,807 in 2001 to $7,000 in 2012.

And high-level jobs are growing. There are more professionals and managers in the resident labour force, up from about one in four in 2001 to about one in three last year.

So what would you do if you were at the wrong end of this polarisation gap? "People may have to prepare for having two different careers," says National University of Singapore labour economist Shandre Thangavelu. "The ability to acquire a new skill becomes very important, because you have to think about moving people across industries."

One worker displaying such nimbleness is Mr Jonathan Wong. Until last December, he was a production technician for hard disk maker HGST Singapore. That month, he was retrenched when the firm decided to move production to Thailand.

It was the fourth time he had been retrenched in 10 years - so the 35-year-old decided it was time to get out of the manufacturing industry. "I better do it when I am still young," says the diploma holder, who now works as a maintenance technician at a hotel.

Such was the attitude of Mr Low Weng Hoe four years ago when, spurred by the fear of being made irrelevant, he quit his job as a technical support staff member at a bank to get a diploma in physiotherapy. "My industry has a lot of outsourcing and I was worried that if I lose my job in my 40s, I may not be able to get another one," says the 38-year-old.

Member of Parliament Zainudin Nordin says such career or sector switches help minimise the impact of retrenchments when jobs disappear. "But it is easier said than done," adds the chairman of the Parliamentary Committee for Manpower.

The key, he stresses, is to ensure jobs are created in growth areas and that Singaporeans, including those in mid-career, are trained to do them.

To achieve this would require a redefinition of education. Mr Tharman said in his round-up that it involves seeing education as a "continuum", where people learn new skills over the course of their lives, instead of just during the school years.

When technology races ahead, jobs are lost. Education is the way for people to catch up, says Associate Professor Thangavelu, who is also a consultant to the Ministry of Manpower (MOM).

An idea gaining credence in Singapore is for schools to prepare students for life, instead of just for jobs.

Education Minister Heng Swee Keat outlined last year, and during his Budget speech, how schools would do this through building character and values. The aim is to help students develop qualities such as grit and resilience, which will see them through the increasingly complex world.

Take Mr Low, who gave up IT for physiotherapy. Going back to school for retraining was tough. "I didn't have a very strong science and biology background, so I had to start from scratch. Academic-wise, it was quite tough," he says.

While experts may not be able to predict with as much accuracy as they can now where future jobs lie, they agree it is those jobs which require the personal touch - like Mr Low's venture into physiotherapy - which will be in demand.

Bosses turn to automation

BOSSES, too, benefit, from workers being open to acquiring new skills. President of the Association of Small and Medium Enterprises Kurt Wee says: "For SMEs to survive, it is quite critical for workers to be multi-disciplinary.

"You still need traditional values like hard work, honesty and reliability, but we need to mix them with skilfulness, creativity and awareness of the current market."

Indeed, for companies, this rapid innovation could not have come at a better time. As globalisation heightens competition, businesses welcome productivity gains from automation.

Ms Angie Tay, vice-chairman of the Contact Centre Association of Singapore, estimates that technology has helped to cut back some telemarketing teams by 10 to 20 per cent.

In an industry where wages are "rather high" - pay starts at $2,200 for newbies - and competition from call centres in India, the Philippines and China is fierce, this has helped companies stay afloat, she says.

Last year, Oxford professors Carl Benedikt Frey and Michael A.Osborne published a landmark study on the likelihood of jobs being computerised, predicting that about 50 per cent of jobs in the United States are at high risk of being replaced by automation over the next two decades.

In Singapore, such findings highlight the need for the economy to remain competitive so that more jobs can be created.

For several years, the Government has been trying to coax firms to boost productivity through automation. The banking and real estate sectors were cited by Mr Tharman as examples where labour can be cut by allowing people to serve themselves through technology. Singapore's challenge, though, is in lifting productivity without shedding jobs, said Mr Tharman.

Singapore Management University economics don Hoon Hian Teck thinks it is possible. He notes that while industries in the future may depend more on machines, workers will still be needed. In fact, they will likely be more highly skilled and paid better. He says: "If there are factories, there will be jobs. Somebody still has to oversee the robots."

The Government acts

SO JUST how bad is the situation in Singapore? After all, the country has managed to keep unemployment low - at below 4 per cent for the past 10 years.

Judging by the tight labour market and low unemployment, it appears that those displaced so far have managed to find jobs.

"Our economy is still creating more jobs than Singaporeans can fill," says the MOM's divisional director of manpower planning and policy, Mr Adrian Chua. "(And) within the next decade, more Singaporeans will retire and leave the labour force than there are young Singaporeans joining it."

But there is the nagging fear that this wave of progress will bring with it greater inequality. While structural unemployment has not set in here, the income gap between the top and bottom has widened.

At 0.412 (after government transfers), Singapore's Gini coefficient - a measure of income inequality that ranges from zero to one, with higher values indicating more inequality - is among the highest in the world for a country.

But so far, the effects of job polarisation have been much less pronounced here compared with the US and Britain.

Economists, such as Massachusetts Institute of Technology professor David Autor, put this down to the country's good education system, political stability and geographic centrality in Asia.

Prof Autor, a pioneer in the research of job polarisation, said during a talk at the Civil Service College in 2012 that Singapore is in an "enviable" position to deal with the problems of polarisation of jobs and wages.

One way the Government is achieving this is ensuring Singapore attracts industries and companies that can provide jobs.

Advanced manufacturing is one such industry the Economic Development Board (EDB) has identified. Chairman Leo Yip tells Insight: "We aim to have Singapore ready to seize future growth opportunities and anchor our position as the advanced manufacturing hub in Asia."

The EDB is working with research institutes to develop new technologies in the field, and with Singapore-based companies to build a competitive supplier base, he adds.

The Government is also stepping up re-training efforts. MOM's Mr Chua says that the national continuing education and training system is under review to make it more responsive in meeting future training needs.

Experts agree training is the way to go.

UniSIM labour economist Randolph Tan suggests a "formalised structure of apprenticeship training" to channel middle-skilled aspirants to jobs that are in demand.

But Singapore Workforce Development Agency chief executive Ng Cher Pong warns that training takes time: "(We) do need time to build up the emerging skills."

Unionists say workers must also help themselves. "(They) must constantly enhance their skills to enhance their competitive advantage and stay employable," says National Trades Union Congress assistant secretary-general Cham Hui Fong.

While the numbers show that Singapore has not suffered much from job polarisation, experts say the situation has to be continually managed.

MOM's Mr Chua acknowledges: "Globalisation and technology will continue to change Singapore's economic and employment landscape. We will not be immune from these driving forces."

It is still too early to say what the impact of job polarisation will be on Singapore. But there are no less than three government agencies and unions attuned to its issues and risks, which augurs well in mapping out a future in the labour force's "new world".

How safe is your job?
By Toh Yong Chuan, The Straits Times, 29 Mar 2014

FOR clues about what jobs are a safe haven amid automation, consider this: Sure, data-crunching is simple for a computer. But would you get a machine to file your nails and paint them?

The task may not require complicated training, yet it is not something machines can do. The personal touch is needed, plus a flair for design and fashion.

Massachusetts Institute of Technology economist David Autor, during a talk at the Civil Service College, explained the marketplace of the new world by dividing jobs into three categories - those with manual, routine and abstract content.

Jobs that involve routine, repetitive tasks, which machines can be programmed to do, are the most vulnerable. Think factory workers being phased out in favour of robots.With the rise in processing power, even tasks such as accounting and visual analysis of health scans and security footage are being computerised.

The proliferation of general-purpose technology also makes self-service an option. Ticketing agents and cashiers, for example, are replaced by websites and supermarket self-checkout counters.

But it is not all gloom. Occupations requiring more manual and abstract input are set to grow. These require personal interaction, perception and creativity, and social skills. They range from dog-walkers and gardeners to teachers and CEOs.

An Oxford University study on jobs in the United States worked out the probability of computerisation for 702 occupations, indicating how likely these jobs would be lost to automation within the next 20 years. The authors ranked the jobs based on how easy it would be for a computer programmer to break them down and specify them, with a probability of 1 meaning certain computerisation.

Longer hours now, but higher pay
By Toh Yong Chuan, The Straits Times, 29 Mar 2014

MR NORIZAL Mohamed Hassan may be part of a trend of mid-level workers with skill sets moving to the service sector, but he is unfazed.

He used to repair ship engines for a living, but now he plies the roads as a cab driver.

But Mr Norizal does not see his career switch as a downgrade, moving from a skilled job to taxi driving where all that is needed is to attend a two-week course and pass a test.

"It is a respectable job," he says, adding: "And I am working to provide for my family."

He drives about 14 hours a day, earning more than $100 each day after covering the daily rental for the taxi and fuel.

The income is more than in his old job and allows him to save up for his three-year-old daughter's education and support his wife who works as a secretary.

He used to take home less than $2,000 each month, after five years in the marine sector.

Now, "I work longer hours, but my income is higher", says the 37-year-old.

He admits that his career options are limited because he only has a vocational certificate from the former Vocational and Industrial Training Board.

But who can argue with this rationale for being a cabby: "I won't be out of a job as long as people take taxis and I continue to work hard."

In search of long-term security
By Tham Yuen-c, The Straits Times, 29 Mar 2014

FROM being a technical support engineer to being a physiotherapist, Mr Low Weng Hoe, 38, made a big career move.

Though both jobs involve fixing things - troubleshooting computer bugs before, and helping to address his patients' physical problems now - they couldn't be more different in nature. While the first paid him well enough - his last drawn pay was about $3,000 a month - it lacked the fulfilment he sought. It also did not provide certainty, he says.

After 10 years in the industry, he was all too aware of how easily jobs like his could be outsourced to a cheaper country. The prospect of losing his job in mid-life, combined with his soft spot for old folk, pushed him to seek out a career in the health-care sector. So in 2010, he got an award from the Singapore Workforce Development Agency to go back to school and took a 20 per cent pay cut to become a physiotherapist.

His current job at Alexandra Hospital is precisely the type that experts think will be in demand with the health-care industry booming. It requires human interaction and a good degree of interpersonal skills, and is automation-proof for now. Says Mr Low: "I'm not just looking at helping people walk if they cannot walk. I also need to coax them to do the exercises and chat with them to cheer them up," he says. "With computers, it's either the thing works or it doesn't work - with human beings, I need care about their well-being."


From 2001 to 2012, the proportion of managers and professionals in Singapore’s labour force rose, reflecting an increase in high-end jobs.

Over the same period, the proportion of workers in middle-level jobs such as clerks and production craftsmen fell. The sharpest dive was in the proportion of machine operators working in factories – tumbling from 11.2 per cent in 2001 to 7.2 per cent in 2012. This corresponds with the shrinking of the manufacturing sector in Singapore. The proportion of workers in the services sector fluctuated within a band of 11.2 to 14.5 per cent.


WHILE median monthly gross salaries of all workers rose between 2001 and 2012, the rate of growth varied.

Managers and professionals saw sharp increases.

But the salary increases for workers holding middle-level jobs such as clerks, factory workers and craftsmen were more moderate.

Cleaners and low-wage workers saw their salaries dive. Their median monthly gross pay was $1,282 in 2001. It plummeted to $1,000 in 2012.

In contrast, over that period, the median monthly gross salary of all workers rose from $2,387 to $3,480, including employers’ Central Provident Fund contributions.

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