Beijing: Technology is driving significant changes in jobs and wages across East Asia and the Pacific, presenting new opportunities while also posing challenges in terms of equitable benefit distribution.
According to World Bank, the impact of technological adoption is heavily influenced by the nature of tasks that can be automated profitably. Workers whose skills complement emerging technologies are more likely to benefit than those whose skills are replaceable by technology.
Industrial robots have become more viable economically and are widely used in factories for routine tasks like welding. The costs and effectiveness of these robots vary, especially between advanced sectors like electronics and vehicles and less sophisticated ones like rubber and plastics. East Asia and Pacific countries have increased their use of robots, narrowing the gap with high-income economies. In 2022, high-income countries had an average of 17 robots per 1,000 manufacturing workers, while China had 12, and Malaysia, Thailand, and Viet Nam each had 8.
An analysis of labor markets in Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam shows that robot adoption has boosted employment and labor earnings. In Viet Nam, areas with higher robot usage experienced employment and income increases of about 10 percent and 5 percent, respectively. However, the distribution of benefits is uneven. Between 2018 and 2022, around 2 million jobs were created for skilled workers across these five countries, while 1.4 million low-skilled workers faced displacement. Younger, skilled workers have largely benefitted, while older assembly-line workers have been pushed to lower-paying jobs.
Artificial intelligence is increasingly used for tasks like financial analysis and translation and supports strategic, creative, and social tasks. Such jobs are less prevalent in developing EAP countries, where only 10 percent of people are employed in these roles, compared to 30 percent in high-income countries. Consequently, EAP countries are less vulnerable to AI-driven job displacement but also less equipped to capitalize on AI.
Digital platforms such as Alibaba, GoTo, and Grab have improved market intermediation. They offer flexible job hours and broaden job access for previously excluded individuals but have negatively impacted workers in traditional sectors. In Viet Nam, motorbike drivers in the informal sector saw a 20 percent income increase post-ride-hailing apps, while traditional taxi drivers faced decreased job security and earnings.
Policymakers are urged to ensure technological advances are advantageous. As technology becomes more affordable, its adoption is expected to further transform labor markets. Policymakers need to invest in skills development, facilitate capital and labor mobility, address factor price distortions, and ensure social safety nets for workers in the digital informal economy.
The World Bank has launched a series of reports exploring the interplay between new technologies, jobs, productivity, and green and service sector-oriented growth in EAP.
