Job loss concerns raised amid digital disruption in Indonesia

An Acehnese vendor waits for customers at a traditional market in Banda Aceh, Indonesia, on Sept 25, 2017.
An Acehnese vendor waits for customers at a traditional market in Banda Aceh, Indonesia, on Sept 25, 2017.PHOTO: EPA-EFE

JAKARTA (THE JAKARTA POST/ASIA NEWS NETWORK) -Disruptive innovation in digital technology is on the horizon, with bankers and toll road operators beginning to replace manual jobs with digital machines, raising concerns that millions of jobs in the finance and service sectors will be replaced.

In the most recent example of this, state-owned toll road operator PT Jasa Marga is moving thousands of ticket gate officers to other divisions, as it will implement an e-toll system for all of its 988 gates starting on Oct 1.

Meanwhile, banks are opening fewer physical branches, putting more money into developing digital banking and digital offices.

State lender Bank Mandiri, the largest bank in terms of assets, has announced that it plans to open only 100 branches this year, far fewer than the annual plan of 400 to 600. Such a move will lead to a reduction in the number of new recruits taken on.

"This disruptive innovation has apparently got us worried about whether or not we can create as many jobs as we did in the past," said Mr Sanjay Bharwani, Mandiri senior executive vice-president of human capital, during the bank's first Human Resources (HR) Symposium on Tuesday (Sept 26).

Other lenders joining the digital wave include private lender BTPN, which spent 1.3 trillion rupiah (S$131 million) on developing a digital platform, dubbed Jenius, over the past three years, while DBS Indonesia launched Digiland, an entirely paperless and signature-free banking experience.

The risk of losing millions of conventional jobs also comes from the emerging peer-to-peer lending fintech, which is targeting the micro, small and medium enterprises (MSME) through digital services.

"Banks must prepare themselves, because fintech may disrupt them. The impact could be similar to that of online taxis," Asian Development Bank (ADB) economist Priasto Aji told The Jakarta Post on Tuesday.

The World Economic Forum (WEF) has forecast that disruptive innovation will only create 2 million new jobs in 15 major economies - including China, India, the United Kingdom, the United States, plus the Asean countries and the Gulf Cooperation Council (GCC) - in the period from 2015 to 2020.

However, at the same time, it would cause 7.1 million conventional jobs to be lost.

Disruptive innovation comes from mobile internet, automation of knowledge work, the internet of things, cloud computing, advanced robotics and autonomous vehicles.

According to the WEF, they will replace manual jobs mostly in the office and administrative sector, followed by manufacturing and production, construction, extraction, arts, design, entertainment, sport, media, legal, installation and maintenance.

New jobs, meanwhile, will appear mostly in sectors such as business and financial operations, followed by management, computer and mathematics, architecture and engineering, sales, education and training.

Mandiri Institute chairman Chatib Basri added that job automation would create new business models and new highly analytical and creative positions to fill.

"Disruptive innovation will make jobs and business models that are relevant today become irrelevant in the future," he said.

Consequently, HR management needs to adjust its evaluation system to be based on results, not on working hours, as the millennial generation, who will soon dominate the workforce, seek flexible working hours instead of a career path, said Mr Chatib.

The former finance minister added that the government also needed to create flexible laws to accommodate these new business models and respond to the possibly widening wage gap between white-collar and blue-collar workers. The government, for example, could tax the commercial use of robots.

Separately, business people acknowledged that automation was inevitable, saying that companies needed to adapt to the new technology in order to survive and contribute to training local workers, 60.39 per cent of whom are junior high school and lower education graduates.

"Indonesia needs to improve its education system so that the demographic bonus that we will have in 2030 won't become a curse," said Dr Sutrisno Iwantono, Indonesia Employers Association (Apindo) expert team head.

However, Mr Sanjay of Bank Mandiri refused to give in to the risk of losing millions of jobs, saying that disruptive innovation would also create new jobs. "But it is our task to look for what new jobs we can create, and prepare the right system to anticipate them," he concluded.