Govts must incentivise private sector to hire fresh grads amid declining entry-level roles: President

BANGKOK – With global hiring for entry-level roles falling due to disruption by artificial intelligence, governments will have to partner the private sector to encourage the hiring of fresh graduates, said President Tharman Shanmugaratnam on Oct 12.

Tertiary education systems must also shift their academic focus towards applied learning through work-study programmes, attachments and internships, he added.

President Tharman was speaking during a panel discussion on AI and jobs on the sidelines of the annual International Monetary Fund (IMF) and World Bank Group (WBG) meetings in Bangkok.

The discussion, which also involved IMF managing director Kristalina Georgieva and World Bank Group president Ajay Banga, focused on how developing countries can harness small AI – affordable applications built for local languages, infrastructure and budgets – to drive growth and employment.

Noting that the advent of AI was in its early days, President Tharman, who is co-chair of the WBG’s High-Level Advisory Council on Jobs, said: “This is not a one-off shock. This is a whole new era.”

While economic growth remains critical to securing good jobs, growth alone will no longer be sufficient, as shown by the weak job creation in countries such as China and India, which are growing quite well, he noted.

AI will widen this divergence between growth and job creation if the world is too passive about how it deals with the technology, he added.

“We’ve got to do everything we can to, first, use AI to create good jobs, and second, to create jobs that can be done well by humans despite AI,” he said.

An urgent task is for governments to address the issue of disappearing “first-rung” employment – the entry-level jobs where fresh graduates traditionally gain experience. 

Such jobs have been declining, particularly in the most AI-exposed sectors such as technology and across other sectors, said President Tharman.

He urged governments to work with the private sector to ensure fresh graduates can land their first job and build a pathway to a career ladder.

These will have to be structural measures rather than temporary crisis responses like those rolled out during the Covid-19 pandemic and the Global Financial Crisis, he said.

Such public-private collaboration should give fresh graduates the first foothold in the labour market, where they can learn on the job.

“We can’t afford to lose that. Because if you lose that, and a cohort of young people waits, say, a year before getting a job, you are not only then competing with the next cohort the following year, you also lose skills, you lose intangible aptitudes, and you lose trust in the future,” he said.

At the same time, universities and tertiary institutions, which are now “overwhelmingly academically focused”, will have to adapt to the shifts in the workplace.

President Tharman warned against a K-shaped economy where automation displaces the broad middle of the workforce.

The data already shows that the link between academic credentials and career prospects is weakening, he said, citing US data where demand for graduates fell for the first time in a century.

These early signals of the new era must be taken seriously, and education systems must shift towards more applied learning, with a greater emphasis on work as part of education, he said.

This issue is particularly crucial for developing countries, where the applied education pathway still has to be developed, he added.

Small AI as an engine for developing nations

World Bank Group’s Banga said while AI is estimated to cause some degree of job disruption, especially in developed countries, small AI presents enormous opportunities for creating jobs and improving productivity for middle- to lower-income countries. 

These are in infrastructure and construction, agriculture, primary healthcare, tourism and manufacturing, he said.

These sectors are critical in generating locally relevant jobs, rather than relying on the traditional model of outsourcing from developed countries, and are ripe for a boost from simple AI tools, he said.

In India, for instance, a platform is being built in cooperation with Google to connect small farmers and cooperatives with better fertilisers, seeds, crop insurance and credit, and help them sell their produce at better prices.

With such a system, an illiterate farmer can point a mobile phone at a diseased plant to procure the correct insecticide without having to know the disease, he said.

The rise of the one-person company

President Tharman said AI will also blur the distinction between being an employee and an entrepreneur, and result in the rise of the one-person company.

He cited the example of Zhejiang province in China, where a service alliance for one-person companies was set up, providing shared access to computing power, AI models, and professional services.

Such companies may hire more people when they succeed, and this is a new growth sector in the job market that should be encouraged, he added.

IMF’s Georgieva said the next wave of AI would be in adoption, where everybody can participate. 

She added that if the world works hard to ensure access to electricity, digital connectivity and protection against bad actors, this adoption phase can be “as democratic as the cell phone”.

The AI tsunami

During the discussion moderated by BBC World Service chief presenter Rajini Vaidyanathan, all three panellists agreed that AI was a tsunami coming for all countries.

Said Georgieva: “It is a slow moving tsunami, but tsunami nonetheless.”

They agreed that countries will have time to adapt if they act now to rethink education, employment, and even fiscal policies.

Job displacement will happen task by task, and that gives workers and workplaces time to pivot while people are still employed, said President Tharman.

“It takes time to be diffused through the economy, and what’s critical is to keep learning on the job,” he said.

He also called for humility in education planning. “Being clear-eyed means recognising that the future is fuzzy, and we just have to be agile. Not just within firms and industry, but in pathways within education itself,” he said.

Georgieva said with AI likely to change the structure of the labour market to one with less labour and more capital, governments will have to study how they tax and generate the much-needed revenues to help societies adapt.

“If revenues are shrinking, they would be in a tough spot,” she added.

“We cannot today imagine what exactly the world of work will be five years from now. But we can be disciplined and carefully assess what is happening and then draw lessons. But most importantly, act on them.”

Royal audience

President Tharman, who was in Bangkok on Oct 12 for a one-day working visit, also had his first royal audience with Thailand’s King Maha Vajiralongkorn and Queen Suthida Bajrasudhabimalalakshana.

They agreed that bilateral relations are in excellent shape, and reaffirmed the substantial and multi-faceted partnership as well as the warm ties between the people of Singapore and Thailand, said the Ministry of Foreign Affairs in a statement.

President Tharman invited the Thai monarch to visit Singapore.

He also met Thai Prime Minister and Minister of Interior Anutin Charnvirakul and they acknowledged the strong and mutually beneficial partnership of the two economies.

They also discussed regional developments and agreed that both sides should boost regional cooperation in areas such as energy cooperation and the digital economy.