In S'pore's automation drive, execution is key

The Singapore government's automation push is, in broad terms, a good thing; but how it is executed will be crucial, if it is to amount to more than just a waste of public funds.

After all, a great deal of money is at stake. In Budget 2016, Finance Minister Heng Swee Keat revealed that over the next three years, the government will provide more than S$400 million in support for the Automation Support Package, and over S$450 million for the National Robotics Programme.

Said Credit Suisse economist Michael Wan: "A lot of the success will depend on the details - how the government implements these things to ensure that the use of funds is efficient. If there's even more spending and subsidies on sunset industries or companies which are going to fall away over the next 2-3 years anyway, then it's just bad money chasing after a bad situation.

"The broad thinking is right. But the risk is that it could potentially end up as another PIC scheme - just repackaged in a different box and wrapped in a different ribbon," said Mr Wan, referencing the govern-ment's flagship Productivity and Innovation Credit (PIC) scheme, which has been criticised as being lavish and prone to abuse.

In general, though, no one is arguing with the need to embrace automation technologies - given the "demographic and evolutionary realities" of today, as Mizuho economist Vishnu Varathan put it.

"It's really very rare that the human race has ever managed to stem the tech tide. There's also the fact that we're a lot more averse to allowing perfect labour mobility via migration - and that means our society is ageing very quickly. So in the eldercare segment, automation is becoming more and more important," said Mr Varathan.

On the one hand, automation solutions could go a long way in helping to plug gaps in the workforce - by taking on jobs that people are either unwilling or unable to do. For example, chemical plant inspections (which are often dangerous and toxic affairs) could be conducted by sensors or robots in the future, eliminating safety issues for human assessors.

But the integration of automation gets trickier when jobs start to be entirely replaced by artificial intelligence (AI) - especially jobs that are sought after by Singaporeans, and add value to the economy.

Already, robo-adviser services exist - for example, providing automated, algorithm-based portfolio management advice, without the use of human financial planners. Accountants and taxation experts, meanwhile, both have a 95.3 per cent risk of being replaced by automation, according to projections from an Oxford University study.

(In fact, the news reporter's job is no exception, either; the Associated Press already uses a robot journalist - a ro-porter? - to write quarterly earnings stories.)

Even so, analysts seem to think that the Singapore government, at least in the initial stages of its robotics drive, will first focus on jobs that are physically strenuous.

Added UOB economist Francis Tan: "I think for a start, the automation will be applied to things like logistics and warehousing - where robots are used to solve the problems of manual labour . . . The introduction of robo-advisers will probably be led by the private sector."

The government, for its part, has identified the healthcare, construction, logistics, and manufacturing sectors as potential areas for robotics and automation technology application.

While economists warn that a period of labour market adjustment will occur, they are sanguine about the government's ability to manage the transition by using a phased approach.

Said Mr Varathan: "It's one thing to acknowledge this technology as revolutionary, but it's another thing to concede that its adoption is going to be more phased in. It's not the same as adopting a gadget like the iPhone."

He thinks the labour market will feel "the major impact" of automation in 30 years' time - although changes will begin to be felt in the next 15-20 years.

"There will be a transition phase where all these imperfect labour immobility issues will come up. Let's make no mistake: it will be a structural shift. But it's not going to be a serious impediment on a durable basis, because somehow we will adapt. The job market is going to evolve on a needs basis, (as will the) different skillsets necessary."

Credit Suisse's Mr Wan also acknowledged the Singapore govern-ment's proactive approach to managing such disruptive shifts.

Said Mr Wan: "I'd give the government quite a bit of credit, because compared to a lot of other countries, it has been at the forefront of thinking about these issues."

He stressed that the government's automation push should not be seen in isolation, but in conjunction with the SkillsFuture and Smart Nation initiatives, which ultimately seek to improve Singaporeans' career prospects and standard of living.

This article was first published on May 16, 2016.
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