Automation could displace 19.3 M PH workers – study

Published December 12, 2020, 6:34 AM

by Bernie Cahiles-Magkilat

Automation and digitalization in the operations of various industries are expected to displace 19.3 million Filipino workers if they failed to upskill or reskill, according to a study.

Bo Huang, Expert Associate Partner at McKinsey & Company, said in a presentation at the Manufacturing Summit 2020 that “automation will impact all sectors and millions in the Philippine economy” adding that “19.3 million workers will need to be skilled or reskilled.”

 The McKinsey study showed that the manufacturing sector, which employs 3.4 million Filipinos, will be the hardest hit because 61 percent of employee activities can be automated.


He said this calls a systematic way to drive Industry 4.0 to help people to plug in the IoT (Internet of Things) ecosystem.

 Notably, digitalization and automation are not only affecting big firms but also small firms. According to Huang, because of the COVID-19 pandemic, 90 percent of companies are digitalizing and 80 percent of companies are investing in Industry 4.0 adoption.

A study conducted by the Department of Trade and Industry in 2019 showed that there remained low technology utilization in the manufacturing sector. Most manufacturing firms in the country are still making the transition from Industry 2.0 to 3.0. Among the key findings of the DTI study were: 44 percent had no maintenance system; 35 percent collect and manage data through paper documents; 46 percent have no established cybersecurity; and more than 50 percent had no manufacturing equipment connected to a network.

The second most affected domestic sector would be transportation where 55 percent of its 2.9 million jobs are potential for automation.     

In the accommodation and food services sector, the study showed that 54 percent of their 1.3 million workers may be affected due to the onslaught of automation.

The study further said that 48 percent of jobs in agriculture and retail and wholesale sectors can be automated. While the impact may be lower on these two sectors, these sectors have higher number of workers. Agriculture has the highest number of workers at 10.9 million while retail and wholesale employs 8.9 million Filipinos.

Another sector with strong automation potential includes construction where 41 percent of jobs can be automated, thus affecting its 4 million workers. In addition, 41 percent of employee activities in the administrative and support sector are strong candidates for digitalization. This sector alone employs 1.5 million workers.

Automation will also affect the 500,000 workers in the healthcare sector where 39 percent of employee jobs can be automated. Education with 1.2 million workers and the finance sector with 600,000 workers, will be affected with 28 percent and 35 percent, respectively, of employees can be done by machines.

“Millions of people will need to be reskilled in the next 10 to 15 years,” said Huang.

Globally, he said, close to 2.6 billion people would be in need of upskilling and reskilling so they can transition to new more value jobs.