ADB study: Incentives vital to spur investment in 4IR
The 4IR refers to a range of new technologies that combines the physical, digital and biological worlds and that has profound effects on the workplace
Countries in Southeast Asia, including the Philippines, should start providing incentives and support programs in order to encourage firms to train and reskill their employees for the Fourth Industrial Revolution (4IR).
This is among the key recommendations proposed by a new Asian Development Bank (ADB) study that looks at how four Southeast Asian countries — Cambodia, Indonesia, the Philippines and Vietnam — can transition their economies effectively to the 4IR.
According to the ADB, the 4IR refers to a range of new technologies that combines the physical, digital and biological worlds and that has profound effects on the workplace.
These technologies include cyberphysical systems, the Internet of Things, Artificial Intelligence (AI), cloud computing and cognitive computing.
Dubbed “Reaping the Benefits of Industry 4.0 Through Skills Development in High-Growth Industries in Southeast Asia,” the study found that employer-led training efforts in the four countries remain limited.
In fact, surveys found that less than one-fifth of firms in Cambodia and less than a quarter of those in Indonesia provided formal training for their employees, the study disclosed.
While four percent more employers in the Philippines and five percent more in Vietnam would rather hire new staff with the required skills than retrain existing workers, and that 74 percent in the Philippines and 68 percent in Vietnam simply expect employees to pick up skills on the job.
Limited awareness of employers
These low training rates, the study noted, are due to a limited awareness among employers regarding the need to take up new skills for 4IR, and a lack of understanding of different types of 4IR technologies and their productivity benefits in some industries.
The report also noted that 59 percent of employers in Indonesia and 44 percent in the Philippines cited insufficient time as among the top reasons for not undergoing training courses, reflecting a lack of priority accorded to training.
Given these challenges, it is critical to develop a set of support programs to encourage firms to invest in relevant 4IR training for their workers.
About 40 percent of employers in Indonesia and the Philippines also cited not knowing what courses their employees should take to skill up in AI knowledge as reason for not providing formal training to workers.
Similarly, employers in the four countries were generally unaware of the relevant courses available and the training institutions that offered them.
The study found that the low training rates were likewise the result of weak market-driven economic incentives for employerled training efforts. This is a result of thin budgets available for training and a strong reliance on short-term contracting in some labor markets.
Critical support
“Given these challenges, it is critical to develop a set of support programs to encourage firms to invest in relevant 4IR training for their workers,” the report said.