April 12, 2019
Published in The Straits Times – Singapore’s leading business newspaper.
The world of jobs and pay is changing fast. Technology and automation are key drivers of change but also improvements in healthcare, with subsequent increase in longevity, changes in habits and generational shifts, are transforming labor markets. Future generations will work in positions that do not exist yet. Because automation will replace and change the nature many of the tasks we humans perform today, the concept of a “job” is going to change fundamentally. As a consequence, the majority of workers will no longer be able to rely on a salaried job for life and will need to redefine the nature and source of their incomes.
We have just published the book “Flex or Fail” to help companies cope with the challenges of addressing this revolution. Let us start with some estimates: by 2030, independent, rather than salaried workers in developed countries may perform 50%, or more of all jobs. This means that the traditional approach to organizing labor markets, based on organizations called firms that distribute tasks and coordinate output, is going to be transformed.
This transition from being an employee to becoming an independent worker will affect millions of people and thousands of companies. Professor Arturo Bris, Director of the IMD World Competitiveness Centre, and his co-authors Dr Tony Felton and Robby Mol have recently zoomed in on Asia and responding to a number of questions from journalists and readers.
How is Asia going to respond to these challenges?
First and foremost, through a rise in independent and task-oriented jobs, as we mentioned earlier.
In China, the labour force shrinks, which pushes up wages. For consumption this is positive because when workers earn more, they spend more. Income levels have reached about $5,000 per person in cities, a level at which discretionary spending has taken off in other countries.
The recent trade war makes Chinese exporters wary and some have responded by accelerating automation in the workplace with the aim to further reduce costs. This means fewer people and more robots. The potential for massive job loss in China is serious, and the potential social unrest is of key concern to government and people. What are people without a salaried job going to do? We could logically expect a rise in personal entrepreneurship; a trait which is already well embedded in the DNA of the Chinese society.
Estimates of the size of China’s middle class is growing which means more people have money to spend. But there is a darker side to China’s rise as a consumer society: increasing inequality. Most countries that undergo rapid growth, experience rising wealth gaps. In China this has been made worse by the government’s control over where people can live.
In Singapore, the ageing population is causing companies to adjust their employment strategies. Making work more flexible for younger people and women with children is one way of securing a large enough talent pool to compete. Younger employees think differently about their careers and seek ‘purpose over presence’ at work.
Almost all companies (96%) have indicated that they are ready to adjust their organisational design and adapt to flex work (meaning part time, adjustable working hours, task-based freelance staff and sharing talent through clusters or pools within industry sectors) in the next two years, according to a study released by Mercer in 2018 (Global Talent Trends Study).
Introducing permanent flexibility in workplaces is challenging for organisations in traditional industries such as manufacturing. In our book we argue that this is not so much because of the actual work that needs to be done, but because of rigid mindsets which prefer to keep things are they are. Working agility into the business model and daring to think in terms of networked structures requires courage in traditional, hierarchy-based societies.
Reskilling existing employees and hiring from the outside challenge the status quo and ‘noise from the system’ can be expected as corporate cultures change. 43% of executives predict one in five roles in their organization will cease to exist in the next five years, so preparing for job displacement is critical for individuals. Who is going to take the responsibility for re-training mature workers? We think the government is not prepared to take on this new task and will increasingly look at companies to come up with solutions. Tax incentives and new public policies on ‘personal training budgets’ might come in vogue.
Well over 50% of Singaporean employees who are currently satisfied in their current job, still plan to leave due to a perceived lack of career opportunity. In addition to purpose, the new value proposition includes health and financial well-being.
In Japan the population is getting older and smaller. The government struggles to balance its own conservative views on immigration with the need for new and younger workers. Public opinion is on the side of change. A 2018 Pew survey revealed that 59% of Japanese believed immigrants could make the country stronger.
In 2019, Japanese lawmakers approved a policy change proposed by Prime Minister Shinzo Abe that will create new visa categories to allow 340,000 foreign workers in. These workers would take on both high-skilled and low-wage jobs.
Japan is already a “super-aged” nation — meaning that more than 20% of its population is over 65 years old. Just 946,060 babies were born in 2017, a record low since official records began in 1899, while an increase in deaths accelerated the population decline. The decline means a shrinking cohort of workers is left supporting an increasingly elderly population in need of healthcare. This is where we would expect to see large scale automation. Who is going to start the first temp agency for care-robots in Japan?
For companies and individuals in Asia, the transformation in work and pay is radical. We claim that only those companies that build a flexible mindset and adapt to the new trends will succeed. Adaptation involves building some key capabilities that we observe today only in very few companies—that is why the main message of our book is not just for individuals, but also for organizations!
As Alibaba’s Jack Ma said: “There is no expert of the future, there is always an expert of yesterday.” Companies will increasingly have to change their mindset when attracting new talent. Previous experience, technical skills, formal degrees and objectives measures of success such as corporate status will be prioritized less in favor of resilience, global mindset, and social skills.
Based on the key themes described in the book, we have developed the ‘Flex Index’™. This tool enables organisations to benchmark where they currently are across seven ‘key domains’ that include strategy, technology readiness, organisational culture and communication. Backed up by some fifty measurable factors, this measurement will allow business leaders to evaluate their organisations in terms of readiness for change, and make informed decisions for key areas of development. The outcome will provide important insights for strategic planning around the concept of ‘responsible change’. The conclusions and can form a basis for organisational leaders to form a narrative and communications strategy that supports engagement with both internal and external stakeholders. Please contact us at email@example.com if you wish to be amongst a core group of innovative companies.
by Tony Felton, Robby Mol, Arturo Bris who welcome your comments!