INTERACTIVE: The Future Of Work

THE workforce of the future will be older and increasingly female but while they will be more educated, they should forget about degrees as the future of work will prioritise adaptability over any diploma, says an expert.

Institute of Strategic and International Studies (ISIS) Malaysia economics, trade and regional integration fellow Calvin Cheng said the key to thriving in the 2040's job market would not be traditional education but by possessing a mix of technical and soft skills that align with market demands and keep pace with evolving technology.

“We know from research that recent technological change has been “skill-biased”, which means that it disproportionately benefits high-skilled workers, while low-skilled workers lose out.

“This means that as skill-biased technological change intensifies in the coming decade, workers that have skills that can complement technological change will succeed,” he said in an interview ahead of Labour Day.

A study by Cheng and his colleague Harris Zainul in 2020, Projections in the Trends in Malaysia’s Future of Work, suggested three key demographic shifts in Malaysia’s workforce for the coming decades.

In the next two decades to 2040, on average, the future of the Malaysian workforce is one that will be older, more educated and increasingly female, according to the study.

With the aged nation status that Malaysia is forecast to reach sometime between 2025 and 2030, the study estimated that 11% of the workforce would be aged 54 and above in 2040 compared to 8% in 2019.

The study also predicted that the trend of female labour force participation rate (LFPR) - which had been edging up since 2010 while that of male LFPR had inched down - will continue.

Female LFPR, according to the study, will rise to 63.5% in 2040 from 55.6% in 2019 while male LFPR will decline to 77.6% from 80.8% in 2019.

The study in 2020 originally put that by 2040, half of the Malaysian workforce will have some kind of tertiary education as the number of workers with non-tertiary education continues to decline.

However, what has changed after study came out in 2020? Especially in the wake of the Covid-19 pandemic and the devastating impact it had on the work, economy and labour.

Cheng said four years after the study, in terms of labour supply, one important development that has changed the projections in the study is the economic and social impacts of the Covid-19 pandemic that struck early 2020.

“In terms of these three trends in worker demographic shifts - age, gender and education level - the pandemic has essentially decelerated the shifts towards more women in the workforce and accelerated the shifts in higher educational attainment.

“For the gender mix, this is because the pandemic has increased the unpaid work burdens traditionally borne mostly by women. Many women exited the labour force and women’s LFPR only recovered to pre-pandemic levels in early 2023.

“Today, there is still a far higher number of women outside the labour force than before the pandemic,” said Cheng.

In terms of education, Cheng said the pandemic had 'mechanically' increased the average educational attainment in the labour force since lower waged, lower skilled jobs were more severely affected during that time, while higher skilled jobs that required a tertiary education continued to grow.

“So it has accelerated the shifts in educational attainment of the workforce, not through greater human capital accumulation but through selective culling,” he said.

The pandemic, said Cheng, likely had a larger effect compared to generative Artificial Intelligence (AI) such as ChatGPT and Bard that caught the world by storm late last year in terms of changing the socio-demographic shifts in the workforce.

“Generative AI exacerbates skill-biased technological change. This means that it could displace or disadvantage workers in mid-skilled positions, older workers and those without digital access or skills.

“As a simplification, while robots were a way to automate manual tasks, generative AI is a form of cognitive automation, automating tasks that require understanding and reasoning. In this way, generative AI increases the displacement potential of jobs traditionally thought to be higher up the skill ladder,” he said.

The 2020 study also expected that the rising trend of Malaysians finding work in non-standard employment, including informal work and the gig economy, will continue into the future while at the same time, Malaysia's job market is found to be shifting towards service industries, with growth in data-related jobs.

The study also said that reports suggested that job losses from automation will occur in jobs that are likely to have a higher mix of routine, predictable, lower-skilled tasks, with about 50% of cumulative work hours in Malaysia susceptible to automation in the near future, displacing up to 4.5 million workers by 2030.

However, Cheng said certain essential human services jobs like elderly care, child care, vocations like mechanics, are less likely to be disrupted by automation and technological change.

As such, he said the Technical and Vocational Education and Training (TVET) system provides a practical pathway to employment in these essential sectors.

“So, someone seeking employment in 2040 may need to prioritise the acquisition of general cognitive, social and digital ability in preparation for a lifelong, continuous learning of new skills.

“Likewise, they should also look towards opportunities in human-centric services and skilled trades, for instance, through alternative education pathways like TVET.

“On the other hand, there is only so much personal agency people can have over their own economic outcomes, and we should also be aware of structural issues and inequalities that will be greater in 2040.

“There is a concern that technological change will continue to increase inequality and displace employment, and that less and less people will have good jobs. This is then an issue of public policy, less of an issue of personal choice and decisions."

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