Automation; a menace or saviour for Singapore?

How can Singaporean companies adapt to the twin challenges of changing workforce demographics and a rise of automation?

The population time bomb?

Singapore is facing an impending crisis over the next five to 10 years: the workforce population time bomb. Declining birth rates coupled with an ageing population have resulted in the median age of the entire working population increasing from 40 to 43 years old over the last 10 years. By 2020, for every one local exiting the work force, only 1.1 locals are expected to enter, down from 1.4 in 2015. As a result, a tighter labour force occurs which results in higher salaries being paid by organisations to attract and retain their workforce. While this is a short-term benefit for the workforce, the long-term effect is negative for Singapore economy.

The continual increase in cost of doing business due to labour and other factors in Singapore means that companies may choose to move their headquarters to less expensive or more strategically located cities.

However, the solution to this problem may be at hand: automation. Automation may be the key to ensuring Singapore’s continued prosperity and competitiveness in the global economy.

What is automation?

While some may think that automation only impacts the manufacturing industry, the truth is such that automation is much broader than that. Here is a brief snapshot of what automation now encompasses: 

  1. Artificial Intelligence (AI) are self-learning systems that are trained to recognise patterns. They are machines that have a measure of “intelligence” that individuals will recognise. Take, for instance, Google’s own AI AlphaGo, an AI designed to play the game Go. It was trained with massive sets of data compiled from past matches and competing against itself. AlphaGo went from being bad at the game Go to beating the current world number one player Ke Jin 3-0.
  2. Autonomous automated systems which are systems that can take input from the environment and decide a course of action without any need for human suggestions or input. The most well-known example of such a system would be the self-driving vehicle, where based on its sensors like the GPS system or laser rangefinders, is able to analyse the road conditions and decide the direction and speed to travel.
  3. Robotics is a branch of technology that deals with the design, construction, operation, structural disposition, manufacturing and application of robots and computer systems for their control, sensory feedback, and information processing. This includes sub-categories like assistive robotics, the creation and use of robotic parts to assist and improve the quality of life of the aged or the physically disabled to create an improvement in the quality of life of the individual.

This is just the tip of the iceberg.

With such advancements being made in the field of automation, the following benefits can be obtained in Singapore:

  1. There will be increased productivity in the workforce across industries. From manufacturing, where with the use of automation, better quality of goods can be produced at a cheaper cost as machines will be more accurate. To transport, where with the help of AI, logistics companies like DHL are unlocking increasing efficiencies due to better planning, scheduling and handling of goods. An increase in productivity can help companies better compete with regional rivals by offering better quality products at a cheaper cost.
  2. It addresses the manpower issues in Singapore. From the manufacturing industry, where automation allows the hiring of seasoned workers and senior citizens for what were previously physically demanding roles. Now they can use assistive robotics. Another area that may benefit is the food and beverage industry. For example, McDonalds can reduce the number of workers needed by replacing cashiers with self-order kiosks.
  3. It could provide cost savings for the organisation in the long term. While there may be a significantly larger upfront cost due to the investment needed to purchase automation, by reducing headcount and increasing production, the cost would eventually be recouped.
  4. Automation provides a new competitive advantage. The companies that are the first to become adopt this technology will have a competitive advantage over their competitors. For example, through the use of smart sensors, preventive maintenance can reduce downtime of the equipment and thus be able to produce larger volumes of product.

While the benefits may sound too good to be true, a real life example of a country benefiting from automation or assistive robotics is Japan. Due to declining birth rates, they too have embraced automation. For example, in the construction industry where automation is used to build new roads and carry heavy equipment to the service industry where robots collect the trash. As a result, this has helped cushioned the ageing demography issues.

Given how quickly the automation industry is innovating and growing, what steps can Singaporean companies take to prepare for automation and the new world of work?

  1. Consider what roles and jobs will exist. Perhaps your company needs a chief technology officer (CTO) to guide the company towards this new wave of work.
  2. Begin allocating funds for trial projects and prototyping of how automation can disrupt and evolve your business.
  3. Create a system for storing data. While there may not be artificial intelligence ready to help analyse and make business suggestions regarding data now, having an organised system to analyse the data will help inform business decisions down the line.
  4. Consider how to redeploy employees. While some workers roles will be filled – especially those with highly repetitive skills – retrain existing employees for more complex and advanced roles. This ties back into looking into the future to see what roles and jobs will exist.

In conclusion, while organisations in Singapore may face headwinds such as skilled labour shortages in certain roles and retrenched workers, with prudent preparation and even early adoption, some of the shocks can be absorbed. 

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