Are Filipinos ready for the Fourth Industrial Revolution?

MANILA, Philippines — These days, we use smartphones rather than watches to tell time. Smartphones and other gadgets also give us an opportunity to air our thoughts, engage in digital trade, and communicate instantly. When 5G gets deployed, we expect more diffusion of the Internet of Things (IOT), where devices are connected to the internet, with trillions of sensors communicating with these devices, and with one another. Working with sensors, these devices can monitor things like building elevators, checking them for status and possible problems, and using artificial intelligence (AI), predict failures before they happen. AI already powers up many applications, from voice assistants to driverless cars. Even the autocomplete feature on phones, recommendations from Netflix, and Facebook’s ability to recognize our faces in a photo posted by friends, are examples of AI.

Tech is amazing, and the trend in its penetration is phenomenal. Seven out 10 Filipinos use the internet, compared to one out of a hundred in 2000. The country is the leader in internet usage, with over 10 hours spent online. Nearly all Pinoy internet users make use of social media, especially Facebook, and most screen time is thru mobile devices. Increasing use of gadgets, search engines, sensors and satellite imagery are global, and as a result, data are growing rapidly. From the beginning of recorded time until 2003, five exabytes of data were collected. By 2012, this amount of data was collected every two days, and by 2025, it will be collected every 15 minutes. We are in the midst of big data, with more and more digital footprints left behind by tech users.

Across history, we find periods called industrial revolutions, when industry improved considerably by the use of new tech. The first three industrial revolutions involved steam and water power, then electricity and assembly lines, then computerization and digitization. Now, we are transitioning to Industry 4.0, also dubbed as the Fourth Industrial Revolution, or FIRe by the Philippine Institute for Development Studies (PIDS). FIRe is driven by breakthroughs in many areas, including automation and robotics, AI, IOT, nanotechnology, quantum computing, big data, blockchain, 3D-printing, virtual and augmented reality, biotechnology, innovative materials, as well as energy capture, storage and transmission. What makes Industry 4.0 a revolution is the fusion of the physical, digital and biological worlds.

Businesses are striving to keep up. A few fast food chains have piloted automation in orders and payments through kiosks. New business models such as ride-sharing, accommodation-sharing, media service are being offered to consumers through digital platforms. Driverless vehicles are being tested in several cities globally, including Singapore; when such cars get deployed here, these can reshape living spaces of cities, architecture, and roads themselves.

Although a lot of good is expected from FIRe, unintended consequences can arise. Negative effects may include technological unemployment, increased inequality, erosion of personal privacy, increased spreading of fake news, and weaponization of technology. The late physicist Stephen Hawking warned that AI provides an existential threat to humanity. Nobel laureate Joseph Stiglitz also cautioned that inequalities will become larger if we are not prepared to manage FIRe.

How agile is the Philippines to vulnerabilities, uncertainties, complexities and ambiguities? In its 2017 assessment of the level of preparedness of 100 countries, the World Economic Forum categorized the Philippines and Thailand among seven ASEAN countries as legacy countries, with a strong production base today, but at risk for the future due to weaker performance across drivers of production, which include technology and innovation, human capital, global trade and investment, institutional framework, sustainable resources, and the demand environment. In contrast, Malaysia and Singapore were considered leading countries; while Cambodia, Indonesia and Vietnam were nascent countries.

Nowhere is disruption more likely to be felt than in the workplace, but this is complex, evolving, and not fully predictable. Conceptually, three impacts of tech can be thought of: it substitutes for labor; it complements labor; or, it creates new jobs. Net effects will depend on which effect dominates.

According to the International Labor Organization, nearly half of wage workers in the Philippines are at high risk of getting affected by AI in the next few years, and those at high risk tend to be women more than men, those with low education, and those who work in BPOs (where chatbots are increasingly used). David Autor of Massachusetts Institute of Technology argues that the extent of machine substitution for human labor is overstated: though computers substitute for workers in performing routine codifiable tasks, they also amplify the comparative advantage of people. When ATMs were invented in the 1990s, it was thought that banks would have no need for bank tellers, but three decades later, banks have hired more bank tellers although bank tellers now also conduct activities on customer relationship management.

While it is clear that some current tasks in the workplace are codifiable, what remains uncertain is when and if these tasks get automated. Some point out that markets do not always reallocate resources for tech adoption. Regardless of the extent and timing of disruptions, it is clear that human capital investments are critical to prepare for what is to come from FIRe, and to make us globally competitive. 

The introduction of K to 12 provides the Philippines a way to radically change basic education. But are these changes enough to prepare our future workforce for future jobs? The nature of work is vastly changing. Skills and competencies should be like Lego blocks, which can used to create different figures using the same building blocks. In another report, the World Economic Forum describes future skills required and clusters them into three groups, namely, foundational literacies, competencies, and character qualities. Thus, learners need technical and soft skills. Quality education, particularly in basics, such as reading, writing, science and mathematics, is vital but providing quality education for all is a challenge. Data on mean percent scores in achievement tests are below 50 percent for problem solving, information literacy or critical thinking, and among Grade 10, scores are even least for Math and Science.

Bright prospects though for improving the workforce are available. The Dynamic Learning Program developed by physicists Christopher and Victoria Bernido in the Central Visayan Institute Foundation can be upscaled. The country can also learn from human capital investments of China in the late 70s, which worked with the US in providing massive scholarships to those intending to specialize in science, technology, engineering and mathematics. We can also learn from Singapore, which re-skills workers through its SkillsFuture Program. Full implementation of the Inclusive Innovation Industrial Strategy (i3S) is also critical. We should also provide social protection to those who may not be to adjust as easily, but work on using tax reform to fund these investments aside from the Build Build Build program. Government must safeguard public interest, especially since control over personal data and profit from its use and sale are largely in the hands of a few tech giants. Blockchain promises to change that by giving everyone a sovereign digital ID. The adoption of tech and management of its impact however require partnerships across government, business, civil society, media and the citizenry. While we do not know definitively what is to come, we should have a Whole-of-Nation action agenda to improve our readiness for the future today so that whatever great divides we have will not get wider.

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Dr. Jose Ramon G. Albert is a senior research fellow of PIDS, the government think-tank. He was seconded to the now defunct National Statistical Coordination Board as Secretary-General from October 2012 to February 2014. He is a professional statistician with interests in technology and innovation, poverty and income distribution, social protection, education, gender equality, climate change, econometrics and data analytics. Author’s views are those of his own.  - Jose Ramon Albert