Beijing: Technology is transforming jobs and wages in East Asia and Pacific, creating opportunities but the benefits are not being evenly shared.
According to World Bank, where technology is adopted depends on which tasks can be automated and profitably so; who benefits depends on whether a worker's skills are complements to rather than substitutes for the technology.
Industrial robots have become increasingly economically viable, with factories around the world using them for routine tasks such as welding on assembly lines. Their cost and economic viability vary widely across sectors. Robots used in more sophisticated sectors, such as electronics and vehicles, can cost significantly more than those used in less sophisticated ones, such as rubber and plastics. Over the past decade, EAP countries have increased their use of robots and narrowed the gap with high-income economies.
Analysis of labor markets in Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam finds that the adoption of robots has boosted employment and labor earnings. For instance, in Viet Nam, locations with greater robot use have seen gains in employment and labor income of about 10 percent and 5 percent, respectively. The productivity gains from automation appear to be generating scale effects that more than offset any job displacement effects. However, the benefits have not been evenly shared, with skilled formal workers gaining around 2 million jobs between 2018 and 2022, while 1.4 million low-skilled formal workers were displaced.
Artificial intelligence is increasingly being used to perform tasks such as financial analysis and translation, augmenting human efforts in strategic, creative, and social tasks. However, these kinds of jobs are about a third as common in the developing countries of EAP compared to high-income economies. This makes EAP countries less vulnerable to AI-driven job displacement but also less equipped to benefit from AI.
Digital platforms like China’s Alibaba, Indonesia’s GoTo, and Singapore’s Grab have improved market intermediation by connecting users to e-commerce, delivery, and ride-hailing services. They have broadened job access, especially for those requiring flexible job hours, but have also negatively impacted workers in traditional sectors. In Viet Nam, for example, informal sector motorbike drivers saw a 20 percent income boost after the emergence of ride-hailing apps, while traditional taxi drivers faced reduced job security and earnings.
Policymakers can help ensure that technological advances are a blessing rather than a curse. As new technologies become cheaper, their adoption is likely to spread, transforming labor markets more profoundly. To prepare for this transformation, policymakers must invest in skill development, facilitate capital and labor mobility, address factor price distortions, and ensure a social safety net for workers in the new digital informal economy.
The World Bank recently launched a series of in-depth reports exploring the nexus between new technologies, jobs, productivity, and green and service sector-oriented growth in EAP. These reports highlight how new technologies are transforming the region.