Automation can’t be stopped, do not be afraid, it will improve our productivity

Thailand will face profound changes in the nature of work and jobs, even as it continues its current path of growth. In a recently published report, our colleagues at the McKinsey Global Institute (MGI) asserted that almost half the activities (not full jobs) people are paid to do globally – worth almost $15 trillion (Bt497 trillion) in wages – could potentially be automated using robots, data analytics, artificial intelligence, and other existing forms of technology.
The effects of automation in Thailand could be significant. MGI estimates that 55 per cent of employees’ activities, equivalent to 21 million jobs, have the potential to be automated to make way for new jobs. The largest share of potentially automatable work in Thailand, amounting to 7.5 million jobs, is in agriculture-related sectors, where occupations involve a large proportion of physical activity in predictable environments. Other sectors with large numbers of automatable work include retail (3.5 million jobs) and manufacturing (4 million jobs).
Manufacturing has the highest proportion of automatable work of any sector, at 68 per cent. And it’s not just physical activity that has a high automation potential: data collection and processing do, too.
A word of caution about these numbers: technical feasibility of automating tasks is not the same thing as actual automation adoption of these tasks. For these technologies to be put into the workplace will depend on a number of other factors, including the cost of labour relative to automation costs, as well as social and regulatory acceptance.

Fear of lay-offs 

Automation will enable Thai businesses to be more productive and prosperous. Some policy makers and employees worry that automation will increase unemployment. This need not be the case. History has shown that the adoption of technology leads to higher human welfare, with more new jobs being created than old ones displaced – in ways that people often did not imagine at the time.
For workers in Thailand, the scale of automation may prove to be less important than the pace. Will automation displace people from existing occupations more quickly than new jobs can be created to employ them? And will employees whose jobs have been automated be able to get the training they need to obtain work in other fields?
The frequent focus on employment implications hides one of automation’s key benefits: increased productivity and prosperity. Automation that relies mainly on software could be applied rapidly even in Thailand and other emerging markets, because software can be sold at low price points more easily than equipment such as robotics. If companies in Thailand start using automation software at a relatively early stage, they could create products and services that enable them to leapfrog their competitors.
The Thai private and public sectors could choose to capture the opportunity of automation and ensure that employment is safeguarded by growing the economic pie. They could do this by upgrading the workforce into new jobs, building up new capabilities in digital, and building new industries to participate in the global market.
While unemployment is very low in Thailand, at 1.3 per cent, there is a need to re-train existing workers periodically so that their skills remain employable and allow them to choose jobs that fit their needs.
Thailand is well positioned to become a regional digital hub, given the Thai government’s “Digital Thailand” initiative. Building digital capabilities can improve productivity and create new jobs at scale, and will put Thailand in a good position to make use of new automation technologies to come.
Finally, automation can boost competitiveness and productivity of Thailand’s newly defined 10 growth industries. For example, robotics is an industry that can position Thailand as a global leader driving the automation trend.
To capture the benefits of automation, business leaders in Thailand will need to reconfigure entire business processes. This will mean not only investing in technology, but also transforming their organisations and rapidly retraining workers. Policy makers will need to work closely with the business community to help ease employees through this transition and to allow the economy to capture productivity gains without increasing unemployment.

This article was co-authored by DR TOMAS KOCH, a senior partner in McKinsey’s Bangkok office focusing on B2B digital transformations and leader of McKinsey New Ventures in Asia; Harry Seip, an associate partner in McKinsey’s Bangkok office and leader of digital, McKinsey in Thailand; and Deep Shah, a senior research analyst in McKinsey’s Chennai office.