Fourth industrial revolution impacts on Vietnam labor and employment

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Abstract: The 4th Industrial Revolution will have a major impact on labor and employment. Employment is forecasted to increase sharply for professions such as architects, engineers, computer, mathematics; to reduce slightly in the field of manufacturing, assembly and to reduce significantly in the manual work, low-skilled occupations, administrative and office jobs; other fields such as business, finance, sales and construction will be less volatile. At the same time, this revolution also requires a lot of breakthroughs in education and training, labor market policy, social policy, low income differentiation, inequality; ensure social security and poverty reduction. Therefore, it will create new opportunities, challenges for labor – employment in Vietnam.

Keywords: Industrial Revolution, labor, employment, human resources

 1. Setting

The 4th industrial revolution is a new trend based on the physical internet, a combination between new technology in the fields of physics, digits, automation and biology, creating completely new abilities and having profound impacts on the global political, social, and economical systems. Within the last century, the world has witnessed the explosion of information technology, internet, automation and digital revolution which has been developed based on knowledge and artificial intelligence. A huge range of modern technologies have been introduced over the last time such as: 3D printing technology, internet for everything, robot technology, biological technology, nanotechnology and automation…., breaking the distances among physics, chemistry, digits and biology. Under the revolution, people will put more and more effort in one products regarding STEM (science-technology- engineering- mathematics)

Apart from positive advantages and influences, the new industrial revolution also presents challenges for countries, governments, businesses and laborers to solve and get ready.

With the advanced and rapid development, the introduction of robots, automatic systems, massive digit data and artificial intelligence, a large number of human activities will be gradually replaced by machines and automatic system. Robots with the abilities to learn, feel and even to conduct complicated tasks without being programmed are predicted to be produced in the short time frame. The world economic vision is expected to witness dramatic changes within the next 10-15 years. The industrial revolution would have potential to basically change the lifestyle and working style along with completely reforms the production method globally. New technologies would adjust the economic influences on its scale and lead to the changes of global demand – supply chain regarding geography. Automation would have practical influences for enterprises and also minimum the labor cost, yet, leading to unemployment and social evils as negative results.

  1. The influences on labor and employment

According to the World Economic Forum, that a number of technologies namely modern robot and automatic transport, artificial intelligence, new materials, biotechnology and genetic technology will be applied on the industrial scale is foreseen to create breakthroughs concerning labor since 2018. Its impacts are still controversial though. For example, Frey and Osborne claimed that within the next 15- 20 years, automation would put 47% of jobs in America at risks. Another research on OECD countries based on analyzing job-related tasks showed that only 9% of jobs in OECD countries can be automated and only 9% of the American jobs would be under the influences accordingly, not 47%. Nevertheless, 30% of the employed people would experience new training as a must to take over new skills- required tasks.

The research by  Melanie Arntz, Terry Gregory, Ulrich Zierahn (2016), however, indicated that the influences of the 4th industrial revolution would take place gradually, in the next 20 years at least due to the delay applying new technology, task adjustment at workplaces and macro – economy policies alternatives and other indirect impacts. Jobs would be continually created but completely changed in nature. Repetitive and tedious jobs would be the first victims.

The revolution will not only re-shape how people produce goods but also manufacture venues. The labor cost will be less important, by which instead of moving to low – cost labor countries, several investors are planning to bring their factories back to their home land.

This is not because the foreign labor cost is increasing but they want to closely approach to their customers for timely reaction in responses to the demand changes. Moreover, complex- structured products are now requesting designer and manufacturer to be at one place. Boston Consulting Group Corporate realized that fields such as transportation, computer manufacturing, alloy and machine which is now accounting for 10- 30% import value of American products from China can be entirely generated in United States by 2020, pushing the U.S. economy value by $ 20- 55 annually.

From now  to 2020, technologies movements will have influences on different aspects, jobs will be in a high demand in the fields of ,architecture, engineer, computer, mathematics,  and decline in manufacture, assembly and drastically fall in administrative and office works.  Jobs in other aspects including businesses, finance, sale and construction will suffer from fewer changes.

A recent ILO research conducted in 5 ASEAN countries including Cambodia, the Philippines, Indonesia, Thailand and Vietnam in 5 fields: car manufacture and assembly, electronic and digital, textile and garment showed that the era of utilizing automation in manufacture is realistic in ASEAN countries.

ILO research was carried out based on the philosophies developed by Carl Frey and Michael Osborne form Oxford University (2013) and technology trend and industrial change forecast within 10 years to 2025 in ASEAN countries. In the context of Vietnam, researches using investigated data o labor workforce 2013 of General Statistics Office of Vietnam showed that in the next 10 years, 70% will suffer from the high risks, 18% will suffer from the neutral ones and 12% will suffer from low ones. Risks can be comprehended as jobs can be replaced as systems and automated machine.

Notions on professional and professional stability will be gradually altered. Businesses will shorten the deadlines required for jobs.

We had to spent decades to construct training system and necessary labor market institution to develop skill groups on the large scale before but now under the 4th industrial revolution, this is no longer a choice. Rapid changes of technology will make skills become outdated in only few years. Besides hard skills, business owner are now even taking soft skills and adaptable capacity – problem -solving skills along with practical experiences into consideration.  According to WEF, by 2020, ⅓ of the basic skills will be altered by brand- new ones.

The 4th industrial revolution also have breakthrough influences on education and training, social equality policies, minimizing income streaming, inequality and ensuring social protection system as well as poverty reduction.

  1. Opportunities and challenges regarding labor and employment in Vietnam

Opportunities and challenges for Vietnamese labor force depends: first, on the the economy capacity in catching up with the new trends of the industrial revolution by investing in different fields, aspects of high technology to improve the productivity and competitiveness; second on the adaptability of education system and training to respond timely to the skills required by the enterprises and labor market, third, on the active professional  preparation, working skills (hard and soft) and personal ability to grasp their own opportunities.

3.1 Opportunities

Like other earlier revolution, the 4th industrial revolution has potential to boost the productivity, save manufacturing time and costs and enhance the product’s quality and labor safety, improve labor income and people living standard. Many opportunities will be generated.

This industrial revolution will offer Vietnamese businesses with opportunities in innovative sectors and fields of high productivity and efficiency. The 4th industrial revolution is now opening new  fields such as like computer science, computing, program engineer, robot manufacturing, in which Vietnam training center and labor may have strength in.  According to WEF, till 2020, businesses will have encountered difficulties in recruiting computer, mathematics experts and in the fights for talented people between the states and enterprises.

The rapid changes in technology and the needs for new skills under this revolution also provide Vietnamese laborer with opportunities, especially when Vietnam is now having golden population structure with the major proportion of young labor. The young people are expected to be flexible in job moving, attain new skills and meet the requirement of the recruiters.

The industrial revolution will encourage the laborer to be eager and hunger to improve their knowledge as well as their creativities. The rapid changes of technology, the requirement for new skills and experience will trigger and develop the energetic and learning spirit of Vietnamese people.

By applying information technology widely, the working model is quite flexible, mobile jobs will be seen in popularity, helping laborer to balance their work with their family. Besides, physical demands will decrease, therefore raising the needs for creativity and getting women more involved in the labor market.

3.2. Challenges

a. The most challenging obstacle regarding labor is the outdated labor structure and low-skill labor. Both ILO and Frey research revealed the striking inverse correlation between 2 variables: one is job qualification and salary and one is the risk of being automated. In the meantime, the majority of Vietnamese jobs are  characterized as low-skilled jobs which could easily be automated. That is the most problematic challenge for Vietnamese labor to overcome.

The breakthrough in the production and business model will present new requirements for skills, qualification and professional manner. For the sectors requiring high productivity, qualification and skills will offer higher incomes. Whereas, low-skilled or unskilled labors will be more likely to lose their jobs or encounter difficulties in finding jobs (as being replaced by robot). Businesses still using outdated technology or employing low-skilled labor will lose ground gradually, be left behind and face bankruptcy as the results.

Labors in the field of manufacture and assembly will be replaced by automatic technology, 3D printing. This reformation is now promoted due to the aging population trend and the increasing in the labor costs in many countries. The technology renewal will even threaten the hundreds of enterprises and laborers. Hundreds of company may go into bankruptcy; millions of jobs may be replaced by automation or smart machine. WEF predicted that from 2015-2020, there would be over 5.1 million labors internationally will be unemployed due to significant movements of labor markets. In 5/2016, Foxcom, a Taiwanese country specialized for Apple device assembly declared on the South China Morning Post to use AI robot in replacing 60.000 assembly laborers.

Likewise, in Vietnam, the 4th industrial revolution will surely lower the competitiveness of cheap laborers. Low-skilled laborers working in sectors namely textile and garment, electronic assembly,   Aquatic Food Processing, sale services

in which a large number of businesses and laborers are working will be at risks of being replaced by automation and robots.

b, Challenges to the education and training system. The technology changes are resulting in the increasing for qualified labor while the ability to response of the education and vocational training system is still limited. Additionally, the rapid changes of technology and demands for new skills also ask the education and vocational training system to adapt flexibly and keep updated to the needs of businesses.

c. The 4th industrial revolution can increase inequality. According to economists Erik Brynjolfsson and Andrew McAfee, this revolution can widen the inequality. The labor market will be divided into “low-skilled/ low income” groups and “high-skilled/ high income” groups. Being streamed, the income gap will be intensified, raising tension and reducing social solidarity.

The rapid changes of technology may lead to massive unemployment, breaking the labor market structure, requiring building a social protection system with core elements including: employment, incomes, social insurance, and supporting society to avoid social instability and even crises

d, Challenges to the management and administrative system. According to Klaus Schwab “to develop, the government and business leaders will have to actively initiate innovative ideas even the ones the have never been thought of. They will have to question themselves about everythings from reconsidering strategies, business models to making investment decisions and training human resources  or conducting researches”. In the new setting, traditional business models and decision making method is being outdated when people are asking for rapid changes in science and technology, methods of production organization, changes of the labor market, employment model and requirement for skills

According to Mr. Schwab, there are some concerning problems now and in the near future: organizations cannot adapt themselves to the changes, the government may fail to use and adjust new technology to make advantages of them, which will create security concerns, inequality and social division.

  1. Some recommendations

According to the Director of the Gender Activity in Using labor Office Deborah France-Massin “Competitive countries based on cheap labor need to change their approaches. It is no longer enough with cheap labor. Policy – maker need to create a more transparent business environment, focusing on human development and human resources, researches and development and high value producing.

a. To the government

Need to adopt new strategies on developing creative resources in strong cooperation between training centers and enterprises. The strategies are expected to get women involved in the labor market. Strategies to overcome knowledge, vision obstacles in order to mobile the resources for human resource training are greatly in need and taken into account by enterprises as the country’s future.

Need to enhance creativity elements in building education and training policies as well as labor policies in response to new skill requirement, bettering the education environment. Need to introduce positive labor market policies with clear and definite targets and labor assisting programs. The labor market and social policies needs properly building with new working manner.

Need to have transparent regulations and laws and create fair playground for every businesses and have encouraging policies for enterprises to invest in R&D, technology reform to make full use of the 4th industrial revolution.

Need to complete the social protection system for every individuals with minimum wages, have ability to prepare, overcome and mitigates potential risks, complete public services to provide basic social services on health, education, housing, clean water and information for people.

b. To the vocational training system

The new industrial revolution has presented requirements of combining knowledge on information technology with operational technology (OT) in training and vocational learning programs. For examples, “For the 21th century” initiatives by U.S. National Science Fund have sponsored a multi-sector and multi- field training programs, assisting laborer in the new setting.

ILO also warned the labor force to equip themselves with fundamental skills to adapt to high- technology environment and modern technique and skills, therefore having capacity of operating new technology and working efficiently with automated machines.

In the new settings, several jobs will require higher awareness among labors including creativity, logical thinking, problem sensibility, and meanwhile manual jobs will decrease by 31%. Establishing new skills and retraining are top priorities in training human resources. Therefore, focusing on vocational training having encouraging policies for student to participate in majors of science, technology and technique are necessary, Vocational education needs to improve the system capacity, attract more learners, and focus on practice and core skills (creativity, critical thinking, presentation, information technology, languages…) technique skills and social etiquette for later working in modern environment.

c. For enterprises

Need to put human in the center of the competition and development process. To adapt with the changes in this industrial revolution, enterprises need to focus on human resources training and tighten cooperation with research institute, university, vocational training center to improve their technology level. Retraining will be regarded as frequent missions.

Several new ideas in labor management need to updated namely talent management, applying flexible working methods and digitized talented sources

d. To the labor

Each laborer need to identify their own strength and choose the right career path. Laborers need to facilitate themselves with suitable skill and always keep updated. Laborers needs to be more flexible and prepared for “non-standard” working situations. According to Frey and Obsborne, to win in the race with automation process and computerization, laborers need to master ‘creative skills and social skills”

“Learning for life” Slogan has special meanings; each and every labor should keep in mind about the need to improve their ability and get to know new technology, meeting the job requirement through learning consistently. The government and the business need to create more opportunities to ensure that the laborer have enough time, motivation and tools in seeking for being re-trained.

Ph.D. Dao Quang Vinh

 Director of Institute of Labour Science and Social Affairs

References

  1. Erik Brynjolfsson và Andrew McAfee, (January, 2014) The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Technologie
  2. Frey, C.B. and M.A. Osborne (2015), Technology at work: the future of Innovation and Employment”
  3. http://namplus.vn/foxconn-tu-dong-hoa-qua-trinh-lap-rap-san-xuat-iphone-19162.html
  4. ILO, ASEAN in transition: How technology is changing jobs and enterprises, 7/2016
  5. ILO, ASEAN in transformation (2016)
  6. Melanie Arntz, Terry Gregory, Ulrich Zierahn (6/2016), “The risk of Automation for Jobs in OECD countries”
  7. The 4th Industrial revolution, things to tighten the link between IT and OT, SOGETI, 2014
  8. The next production revolution, OECD, Copenhagen, 27 February 2015;
  9. Wolrd Economic Forum, The future of Jobs, Employment, Skills and the Workforce strategy, 1/2016.