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EDUCATION AND WORK IN THE FOURTH INDUSTRIAL Figure 1: Human Capital Index 2015ranking of
REVOLUTION ASEAN countries
Disruptive changes to business models will have a profound
impact on the employment landscape over the coming ASEAN
Global Rank Country Score
years. Many of the major drivers of transformation currently
affecting global industries are expected to have a significant 24 Singapore 78
up working in completely new job types that dont yet exist. 69 Indonesia 67
occupations did not exist 10 or even five years ago, and 105 Lao PDR 56
Southeast Asian Nations (ASEAN) region is no exception to Note: Insufficient data to cover in 2015 edition: Brunei Darussalam.
these trends.
As a core component of its Systems Initiative on
Education, Gender and Work, the World Economic Forum
brings together the latest thinking of leading experts
from academia, international organizations, professional also integrated into the Forums regional public-private
service firms and the heads of human resources of collaboration initiatives to promote employment and skills.
major organizations with its own analysis.1 The Forums This briefing aims to support deliberations by our members
knowledge tools are intended as a guide to decision- and partners at the World Economic Forum on ASEAN
makers to bring specificity to the upcoming disruptions 2016 on how the regions talent can be best positioned for
to the global employment and skills landscape, and growthparticularly in the context of the Fourth Industrial
to stimulate deeper thinking about how business and Revolutionand how business and government can work
governments can manage this change. New insights are together to close skills gaps.
Figure 2: Human Capital Index 2015ranking and spread of ASEAN countries compared to world regions
Lao PDR 66% Singapore
Association of
Southeast Asian Nations
Myanmar Cambodia
North America
Sub-Saharan Africa
0 10 20 30 40 50 60 70 80 90 100
1
Figure 3: Labour market conditions in ASEAN
Human Capital Outlook: Association of Southeast Asian Nations (ASEAN)
Ease of finding skilled employees Average monthly wage Workers in vulnerable Incidence of
Country (7=easiest, 1=hardest) (US$) employment (%) child labour (%)
Cambodia 3.4 121 64 18.3
Indonesia 4.3 174 36 6.9
Lao PDR 3.1 119 83 10.1
Malaysia 5.3 609 22
Myanmar 2.4 89
Philippines 4.4 206 42 11.1
Singapore 4.8 3547 9
Thailand 3.8 357 56 8.3
Vietnam 3.4 181 63 6.9
Note: Workers in vulnerable employment refers to the number of unpaid family workers and informal sector own-account workers as a share of total employment.
ASEANS PERFORMANCE IN A GLOBAL CONTEXT than ASEANs workforce as a whole, having a median
The World Economic Forums annual Human Capital Index age in the mid-20s, leading to a potential demographic
benchmarks and quantifies how countries are developing dividend from an increasingly well-educated younger
and deploying their human capital, and tracks each nations population.
progress over time. It takes a life-course approach to While nearly 40% of the overall workforce in ASEAN is
human capital, evaluating not only the levels of education, occupied in agriculture, an equal number (41%) is engaged
skills and employment available to people across different in the services sector while 19% are involved in industry
ages, but also how well economies around the world are although this picture varies across the countries of the
leveraging this potential for the benefit of economy and region. Vietnam and Thailand have a more agriculture-heavy
society as a whole. Covering more than 120 countries labour market, while Singapore, Malaysia, the Philippines
representing 92% of the worlds people and 98% of its and Indonesia have more services-based workforces.
GDPthe Index measures a countrys present performance Malaysia has the regions largest share of the workforce in
against an ideal benchmark, and offers insight into how well industry. Across the region economic and developmental
a country is positioned for deploying talent in the future. indicators have improved steadily over the past decade,
In 2015, the development and deployment of ASEANs although more work remains to be done (Figure 3).
human capital potential ranged from 53% of the ideal Over the coming decade major drivers of occupational
situation in Myanmar to 78% versus the ideal in Singapore, changeincluding mobile internet connectivity, new energy
according to the Index.2 This is on a par with the wider Asia technologies, cheap processing power and data analytics
region as well as Latin America, and is some way ahead of and flexible and remote working practicesare expected
the Middle East and Sub-Saharan Africa but behind Europe to lead to significant net job creation, according to regional
and North America. The region features a cluster of solid business leaders and human resources executives surveyed
performers, a few countries significantly underperforming for the Forums recent Future of Jobs study.3 In particular,
their potential (Myanmar, Lao PDR and Cambodia) and the Transportation and Logistics, Sales, Management and
one global success story: Singapore. The key factors Business, Legal and Financial job families are forecast to
contributing to this performance are further highlighted expand. To meet these expectations, however, the countries
below. of the region will need to ensure their workforces are skilled
appropriately and able to adapt to the changing nature of
DEMOGRAPHICS AND WORKFORCE STRUCTURE these jobs.
Since 1990, ASEANs population of approximately 625
million people has almost doubled, and by 2025 it is EDUCATION AND SKILLS OUTCOMES
expected to reach 694 million. It accounts for 8.6% of the With growing pools of young, well-educated workers,
world total, is equal to the combined populations of Latin several economies in the region compare favourably
America and the Caribbean, and is larger than that of the with global standards on the availability of skilled talent.
European Union and double that of the United States. In particular, Malaysia, Singapore, the Philippines and
ASEAN is experiencing significant demographic change: Indonesia receive strong scores from companies evaluating
it will see 68.2 million new entrants to the labour force by the ease of finding skilled employees as part of the Forums
2025. There is high labour force participation among the Human Capital Index. However, the perceived quality of
regions population, as well as a relatively narrow labour skilling and training programmes varies widely between
force participation gender gap. High-skilled workersi.e. and even within countries across different parts of the
those educated to degree levelare noticeably younger education and training ecosystem. In Cambodia, Lao PDR
2
Population by economic activity, age and education
65 and over
55-64
625 million
45-54
population
35-44
25-34
15-24
Under 15
0 5 10 15 20 25 30
% of total population
inactive
population
population not
of a working age
informal
work
Women to men in the workforce
tertiary ed., inactive
tertiary ed., active
43%
economically
active population
formal
work
unemployed
36 38% Indonesia
38 8% Vietnam
39 17% Thailand
34 35% Philippines
36 - Myanmar
34 41% Malaysia
32 7% Cambodia
31 1% Lao PDR
40 21% Singapore
Note: The economically active population is defined as those in work or looking for work; the unemployed are the segment of the economically active population
looking for work; the inactive population is defined as those not in employment and not actively seeking work.
3
Human Capital Outlook: Association of Southeast Asian Nations (ASEAN)
Singapore 8 55
73,225 Farming, Fishing and Forestry
Malaysia 13 25
Thailand 9 14
23,280 Transportation and Logistics
Vietnam 41 10
19,101 Sales and Related
Indonesia 16 9
13,951 Management
Note: Job families as classified in the O*NET categorisation system; size of job families estimated based on labour markets of: Brunei Darussalam, Cambodia,
Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.
4
Current enrolment * Long-term attainment *
Thailand
2,497,323 Philippines
469,654
Thailand
Philippines 443,648
2,625,385
Students in 6,000
tertiary education
by field of study 5,000
Singapore
enrolment in thousands
4,000 Myanmar
Lao PDR
3,000 Malaysia
Thailand
2,000 Vietnam
Indonesia
1,000
0
Agriculture Education Engineering, Health Humanities Natural Services Social
Manufacturing, and and Arts Sciences Sciences,
Construction Welfare Business, Law
Quality of 7
education 6
as perceived
5
by countries
1 = poor, 7 = excellent
business 4
primary schools
community 3 education system
staff training
2 math and science
education
1
0
Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Vietnam World
average
Note: Recent graduates refers to students who have recently graduated from tertiary degree programs; long-term attainment refers to the number of tertiary
graduates in the overall population.
5
and Thailand, for example, on-the-job staff training is rated Building an integrated ASEAN labour market
Human Capital Outlook: Association of Southeast Asian Nations (ASEAN)
comparatively higher than the rest of the local education Regional integration is critical to the future of the ASEAN
ecosystem, pointing to local companies undertaking their region. For this vision of integration to work, labour
own measures to secure their supply of talent. mobility will be critical, as will a coordinated, forward-
Across nearly all industries, the impact of technological looking approach to education and skilling objectives
and other changes is shortening the shelf-life of employees across the region. Intra-ASEAN talent mobility has a key
existing skill sets. For example, technological disruptions role to play in optimizing the regions long-term human
such as robotics and machine learningrather than capital potential.4 Currently, labour migration patterns in
completely replacing existing occupations and job the region are centred on several one-way corridors: from
categoriesare likely to substitute specific tasks previously Cambodia, Lao PDR and Myanmar into Thailand (55% of
carried out as part of these jobs, freeing workers up to total intra-ASEAN labour migration); from Indonesia into
focus on new tasks and leading to rapidly changing core Malaysia (16%); and from Malaysia into Singapore (16%).5
skill sets in these occupations. On average, by 2020, In addition, the transferability and recognition of education
more than a third of the desired core skill sets of most and skills through common protocols of certification
occupations will be comprised of skills that are not yet will also be necessary for reaping the full benefits of
considered crucial to the job today, according to the integration. Upgraded mechanisms for joint skills training
Forums Future of Jobs analysis. The economy of the Fourth and mutual recognition of occupational qualifications and
Industrial Revolution will also need strong vocational skills standards between ASEAN nations are also highly effective
too often still regarded as poor alternatives in relation to approaches to alleviating geographic skills mismatches: they
traditional academic routesas well as social and creative can promote talent flows from economies with specific skills
skills. surpluses to those where such skills are in short supply.
Education reformers worldwide have often looked The aims the region has set itself include achieving
to Singapore as a role model for the kinds of reforms universal literacy, developing education networks at a
neededand the ASEAN region can certainly learn from variety of skill levels, establishing research clusters, and
its successes. However, other economies in the region programme-level initiatives such as regional vocational
have also begun reorienting their education and training training initiatives. As each of the regions economies
systems to align with their own future developmental paths continues to upgrade its human capital, there are significant
and skills requirements, moving beyond a narrow focus on cross-regional learning opportunities through the sharing
academic skills alone. For example, Vietnam has invested of best practices on foundational education, vocational
heavily in education and shifted its curriculum away from training, higher education, education to work transition and
rote learning. Malaysias 1Youth 1Skill vocational education lifelong learning.
scheme, set up in 2010, has helped improve the reputation
of vocational education in the country and reported higher Harnessing untapped talent pools
success rates at job placement than for tertiary education. Female talent is an often-wasted resource that entails
Finally, Indonesia has begun closer coordination between its opportunity costs for families, companies and entire
economics and education ministries. economies. Tackling the barriers to female labour force
Given the complexity of the change management progression in ASEAN will unlock further growth and
needed, business stakeholders, too, will need to realize that accelerate the regions performance by expanding talent
collaboration on talent issues, rather than competition, is pools, connecting better to diverse customer bases,
no longer a nice-to-have but rather a necessary strategy. enhancing innovation and decision-making, and improving
Multi-sector partnerships and collaboration, when they company performance. In recent years, the educational
leverage the expertise of each partner in a complementary attainment of young women in ASEAN has become
manner, are indispensable components of implementing equal to or surpassed that of men, across all skills levels.
scalable solutions to future skills challenges. Across the However, throughout the region women continue to enter
ASEAN region, there is a need for bold leadership and the workforce in smaller numbers than men, representing
strategic action within companies and within and across untapped human capital potential. The labour force
industries, including partnerships with public institutions and participation gender gap is highest in Malaysia (41%),
the education sector. followed by Indonesia and the Philippines (38% and 35%,
respectively). There is also a relatively small workforce
KEY AREAS FOR ACTION gender gap in Vietnam, Cambodia and Lao PDR.6 Still,
All of ASEANs economies are set to be impacted by the both Cambodia and Vietnam, as well as other countries
changing nature of work brought about by the Fourth across the region as a whole, retain high gender gaps
Industrial Revolution. To reap the benefits and minimize the in the progression of female workers to senior levels,
downsides, four key themes stand out for urgent attention suggesting the region needs high-level focus on recruiting
by the regions political leaders and business community, and developing female workers. This will become more
regardless of the current level of development and and more important for the region as it attracts global
education in a geography or sector. businesses that are increasingly recognizing the dividends
of developing female talent.7
6
Figure 4: Future workforce strategies and significant barriers to change for ASEAN employers
Target
15%
female talent
Preparing ASEANs future workforce and prepare for the rapidly unfolding changes occurring
Technological, social and demographic change is creating across all sectors. To ensure that the region taps into
an opportunity for the ASEAN region to be at the forefront new opportunities and mitigates the risk of large-scale
of the Fourth Industrial Revolution over the coming decade, unemployment and underemployment, urgent attention
and to harness it for the regions growing prosperity, must also be placed on lifelong learning and adult skilling
provided workforces in the region can adapt. In ASEAN, and training mechanisms to support workers who can no
like much of the rest of Asia, low-costand low-skilled longer expect to rely on skill sets acquired at the start of
labour has thus far been a source of competitive advantage. their careers. Both in school and in the labour market more
As the costs of automation fall, however, the region must broadly, education delivery and formats would benefit from
begin to compete through skilled talent, not cheap labour emerging global best practices, such as massive open
alone, and, in addition, ensure that those skills are relevant online courses (MOOCs) and flexible and modular nano-
to future growth. For example, in several ASEAN countries degrees that reflect the future of work.
a large number of students are studying Social Sciences,
Business and Law, while Engineering, Health and the Public-private collaboration will need to be at the heart of
Natural Sciences enrolmentareas critical to the evolving achieving all four objectives. The talent strategies of major
technological and demographic trends both regionally employers in the ASEAN region to equip their workforces
and globallylags behind. With a young demographic with the right skills to take advantage of these opportunities
profile and a rapidly expanding workforce, the region are rooted in expectations of deepening regional integration.
urgently needs to shift its approach to education curricula, Major perceived barriers to realizing this optimistic vision
bringing major reform to the education value chain, from include short-term profitability pressures as well as,
basic education through to vocational training and higher importantly, perceived insufficient alignment between
education. firms workforce and innovation strategies and insufficient
understanding of impending disruptive change.
Preparing ASEANs current workforce There is much that business can do alone. Across the
Many of ASEANs advanced economies developed by ASEAN region, businesses can more proactively prepare
pursuing export-manufacturing, pulling farmers into by taking a strategic approach to workforce planning, one
factories, and, ultimately, into services. This strategy is that extends beyond quarterly or annual results. This can
unlikely to continue to work for countries newly embarking entail partnering with training providers (both public and
on this journey (Myanmar, Cambodia, Laos and others) private) to create demand-driven training; collaboration with
if, as predicted by many, all three areasmanufacturing, educational institutions to expose students to workplace
agriculture and servicesare deeply transformed by skills, providing intra-regional job placement opportunities to
automation, 3D printing, robotics, mobile communications staff; developing programmes to facilitate the transition from
and other technologies of the Fourth Industrial Revolution. education to employment; and supporting entrepreneurs
Both the advanced and developing economies within the within their value chains. However, beyond the individual
region will now need to carve a new path and anticipate efforts of companies, there are likely to be gains in efficiency
7
and accelerated returns if businesses collaborate with
Human Capital Outlook: Association of Southeast Asian Nations (ASEAN)
NOTES
1 The analysis presented in this brief draws on data from the Forums
database on Education, Gender and Work. The data is constituted
from a blend of aggregates of independently verified international
statistics and the Future of Jobs employer survey (developed as
part of the work of the Forums Global Future Councils and validated
through their expertise). Products that similarly draw on this database
include the Forums Future of Jobs Report and Human Capital Report.
6 World Economic Forum, The Global Gender Gap Report 2015, 2015.
8
The World Economic Forum,
committed to improving the
state of the world, is the
International Organization for
Public-Private Cooperation.