ADB Study Outlines Transformational Impact of Industry 4.0 on Skills and Jobs in the Philippines

News Release | 20 January 2021

MANILA, PHILIPPINES (20 January 2021) — The Philippines should consider developing industry transformation maps in key sectors to enable the transition to the fourth industrial revolution (4IR) with adequate investment in skills development for new and repositioned jobs, according to a new study by the Asian Development Bank (ADB).

The finding is one of seven key recommendations emerging from ADB’s study Reaping the Benefits of Industry 4.0 Through Skills Development in The Philippines. It is part of a four-country study of ASEAN nations that also includes Cambodia, Indonesia, and Viet Nam.

The study examines the IT business process outsourcing (IT-BPO) sector and electronics manufacturing industries in the Philippines, which are both important for growth, employment, international competitiveness, and 4IR.  

Firms in the Philippines are showing good progress in implementing 4IR preparedness, with at least half of the employers surveyed having adopted 4IR technologies into their operations. Among employers surveyed in the IT-BPO and electronics industries, 63% and 55%, respectively, expect to see productivity improvements of more than 25% by 2025 from adoption of 4IR technologies.

The study finds that while 4IR technologies will eliminate around a quarter of jobs in both the IT-BPO and electronics manufacturing industries, these would be more than offset by new jobs resulting from a net increase in labor demand in both sectors. Automation will disproportionately impact men in IT-BPO and women in the electronics manufacturing industry.

“To support those at higher risk of job displacement, we must look at new approaches to strengthen inclusion and social protection in the context of 4IR, to ensure that no one is left behind in the new economy,” said ADB Philippines Country Director Kelly Bird.

The study calls for the Philippines to develop dedicated 4IR technical and vocational education and training programs. Flexible and modular skills certification programs that recognize skills attainment outside traditional education channels are also important. Against a backdrop of rapidly evolving technology, the study also recommends speeding up the pace at which the country’s education system can incorporate curriculum changes to meet industry needs.

In the electronics manufacturing industry, the study recommends supporting 4IR knowledge transfer from large multinational companies to micro, small, and medium-sized enterprises; addressing the potentially disproportionate impact of technological disruption on women; and developing a standardized set of 4IR skills requirements and training quality standards.

According to the study, 15% of training institutions reported using virtual platforms for training in the Philippines. 26% of surveyed training institutions reported using augmented reality and virtual reality tools—the highest proportion among the four surveyed countries (10% in Cambodia, 15% in Indonesia, and 18% in Viet Nam).

The study found a mismatch in perceptions between training institutions and employers in the preparedness of graduates to work. While 90% of training institutions surveyed reported that graduates were adequately prepared for entry-level positions, only 58% of IT-BPO and 56% of electronics industry employers agreed.

“As 4IR technologies spread rapidly, extensive investments in digital skills will improve the chances of the young and old to access higher-quality jobs and lower the risk of job losses,” said ADB Principal Education Specialist Shanti Jagannathan. “Now is the time to rethink delivery of skills using virtual platforms and mobile technologies, and to develop agile training institutions with courses and credentials that match market needs.”

While the coronavirus disease pandemic is accelerating digital transformation, the study finds that companies deploying 4IR technologies are likely to recover faster from the disruptions caused by the pandemic and be more resilient in the future.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.