As developed countries of the world slowly become saturated and exhibit a fairly predictable linear growth story, it has been the emerging economies that have off late become a center of interest and rapid economic growth in the world. Countries like China, Brazil, and India have often been highlighted for their robust economic growth with China and India being two Asian giants that boast high growth rates and a significantly large working population. In addition countries like South Korea and Japan have established themselves as strong economic performers in the past few decades, with Japan being the only developed country in the region for a long time.
When it comes to emerging economies, one often contends individual countries to assess growth projections. But when it comes to gauging the performance of regional blocks, the ASEAN group of nations have showcased a strong case of positive future growth. A recent report McKinsey Global Institute put the region as one of the world’s best performing emerging economies. Fuelled by growth-oriented economic policies by countries in the region and the presence of dynamic companies the report noted the region to be one of eight ‘outperformers’ with long-term outperformers" comprising Indonesia, Malaysia, Singapore, and Thailand, which averaged at least 3.5 percent annual per capita gross domestic product (GD) growth over 50 years. Cambodia, Laos, Myanmar, and Vietnam also made the cut as "recent outperformers" by clocking 5 percent annual growth over 20 years.
The report mentions how the growth of has been for a large part due pro-growth stance by financial institutions along with positive domestic and external demand. But the report also comes with its own cautionary tale for the future of the region. As the region enters a more digitized and tech-driven business world, the need to have a technically capable and skilled talent that can address the rise in the consequent demand of technical qualifications. Technical qualification here means the ability and familiarity to work on new age technologies like machine learning, big data, digital platforms, a familiarity with working and building nuanced algorithms. These and many similar areas fall under the umbrella term of tech skills. An area where southeast Asia is projected to face a significant gap.
Let us begin with Singapore. The port country has always been an important player in trade route that connects much of Asia with the rest of the world. A country which due to its exports and access to developed markets has had a high economic growth for the past couple of years might soon enter troubled waters. As the global shift towards more tech-driven business process widens its scope from developed economies in the west to many of the emerging economies in Asia, its impact on Singapore was recently stated that about one-fifth of Singapore’s full-time equivalent workforce (20.6 percent) will have their jobs displaced by 2028. Other major economies in the region have similar albeit a less significant percentage. The figures for Vietnam (13.8 percent), Thailand (11.9 percent), the Philippines (10.1 percent), Indonesia (8.1 percent) and Malaysia (7.4 percent) pointed how collectively the southeast Asian markets have to prepare of tumultuous times ahead. However if one were to convert this to real numbers, Indonesia finds itself it the toughest spot with a projected 9.5 million workers expected to be displaced, followed closely by Vietnam at 7.5 million.
The above-mentioned percentages were released recently as a part of the World Economic Forum report that was released earlier this month. In a different report by Adecco that exhibited a similar sentiment, it was noted that although the demand for qualified staff has risen in southeast Asia, there still remain significant shortages in many sectors, especially in information technology, digital, healthcare, analytics, automation, and robotics. It also noted that workforce mobility in the region has been specifically low.
What makes the impact of such factors even more relevant such a talent gap threatens how successful future companies are in the region. The improvement of it needs to be two-fold. One where companies are able to widen their network of looking for the right talent and should be ready to adopt progressive HR practices leverage workforce flexibility through a mix of contingent, freelance, and contracts based workers.
Additionally, companies need to take a more data-driven approach to talent management. From the government side, there should be a more explicit focus on developing skill levels. Countries like Thailand, Vietnam, and Cambodia require greater cooperation between governments, academia and businesses in this region need to fill the talent gap that country might soon run into. It is necessary to ensure that the right skills needed in the workplace are being taught by the academic institutions to help proper absorption into the formal markets.