Singapore should embrace automation for its next stage of growth

An advanced economy with a low birth rate, Singapore needs to adopt an ‘automation first’ mindset to drive its next stage of growth.

Singapore, by most measures, is enjoying many of the trappings that come with being an advanced, developed economy. Low unemployment (around 2.1% in 2018), high GDP per Capita, high levels of education, low crime etc. It also suffers from a number of pitfalls, too, notably lower growth than its less developed neighbours, higher exposure to global economic and geopolitical trends thanks to its more open economy, a lower birth rate and higher prices.

Last year, the number of babies born in Singapore fell to its lowest in eight years with 39,039 babies born, a 1.5% drop from 2017. This comes at a time when the Singapore economy is starting to experience the side effects of the US-China trade war and the results of the global economic slowdown – particularly with trade.

Another Asian country that is similar in many ways to Singapore is Japan. With a stagnant birth-rate and declining population, the country’s growth in the 90’s was at least 1.5% slower than the rest of the world resulting in economic stagnation, known as the ‘Lost Decade’ (though it should be two decades, from 1990 to 2010).

Following an economic crash in the early 90’s the country’s growth slowed and it took on considerable debt largely thanks to social welfare spending on its aging population. This was exacerbated by its shrinking tax base thanks to low birth rates and declining population. The consequences were a decline in GDP from $5.33t to $4.36t in nominal terms and real wages falling by about 5%.

Whilst Singapore today is very different to Japan of the early 90’s – it is arguably in a much better position – we should still look to learn from Japan. The most obvious area is low population growth and how to generate economic growth with an ageing population.

First on Singapore’s list is automation and leveraging automation technologies to both address productivity issues arising from an aging and/or declining population and generate more economic growth. Technological innovation and advancement can be disruptive and there are a number of new, powerful technologies emerging that will transform companies. However, those firms that resist automation inevitably fall by the wayside, but most importantly, an advanced economy such as Singapore with an educated workforce will be best positioned to reap the benefits automation brings.

Singapore already has a good record on workplace automation. According to the survey, The Global Future of Work, automation is expected to perform almost 30% of all work done by Singaporean firms by the end of 2020. That figure was just 7% in 2014 so automation growth has risen considerably.

One of the main obstacles to the wider adoption of automation is the perception that this can lead to widespread job losses. Headlines about robots stealing jobs and a dystopian future where humans are subservient to robot ‘bosses’ usually catch our attention but are rarely accurate. Not only will automation technologies not take away Singaporeans’ jobs, but it will make work better.

For example, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) deployed Robotic Process Automation (RPA) to automate a number of tasks and processes. It is estimated that they automated over 3 million-man hours over three years, yet without any forced layoff.

Significantly though, work is getting better because of automation. One of the main causes of long-term stress is boredom and there are few things more mind-numbing than doing rote, repetitive tasks such as data entry, or manual rules-based work on a factory floor.

Ask a Singaporean if they’re excited about automation and they may have reservations. Ask a Singaporean what tasks they find boring at work and whether or not they would like these tasks automated and my guess is they will respond with a resounding yes.

Importantly for Singapore, automation will allow employees to be more productive as it enables them to do more value-added work that involves creativity and innovation. A more productive workforce will allow it to grow economically with the same number of workers.

Yet in order to enable this we must start inculcating an ‘automation first’ mindset earlier, in our schools and universities. Students need to understand that robots will not replace them, rather they will allow them to do more and better things. It is therefore imperative that schools and universities teach and build skills amongst their students from a young age, something that is already starting to happen thanks to partnerships with leading universities in Singapore. these partnerships will allow the workers of tomorrow to be taught how to work alongside robots in the workplace, positioning them for more success in the automated economy of the future.

Lastly, we need to encourage more communities and ecosystems of businesses and experts/developers. Whilst automation technology may be complex we should make it more accessible by connecting those who use and benefit from this technology (businesses, governments etc) with those who are driving the technology forward (developers etc).

With recent news surrounding Singapore’s lower GDP growth figures thanks to the US-China trade war now is a good time to think how we should equip ourselves for an economy that will only get more complex. Artificial Intelligence (AI) and other technologies are here to stay and we should embrace automation and understand how it could continue our economic growth.