Beijing: Technology is reshaping the labor market in East Asia and the Pacific, altering jobs and wages and presenting both opportunities and challenges in the region. The transformation is driven by factors such as the adoption of industrial robots, artificial intelligence (AI), and digital platforms.
According to World Bank, the adoption of industrial robots has been particularly significant, with countries like China, Malaysia, Thailand, and Vietnam increasing their use of robots in manufacturing. This trend is closing the gap with high-income countries, where the average number of robots per 1,000 manufacturing workers was 17 in 2022. In comparison, China had 12, while Malaysia, Thailand, and Vietnam each had 8. The use of robots has boosted employment and labor earnings, with locations in Vietnam experiencing employment and income growth of about 10 percent and 5 percent, respectively. However, the benefits are not universally shared, as skilled formal workers gain while low-skilled workers face displacement.
AI is also making inroads, performing tasks such as financial analysis and translation. While AI is less prevalent in developing East Asian and Pacific countries than in high-income economies, it still holds potential for transforming the service sector. The digitalization of services is enhancing their tradability, and AI could further revolutionize production processes. However, the region’s limited presence in strategic, creative, and social jobs—where AI has a more significant impact—means its vulnerability to AI-driven displacement is lower.
Digital platforms like China’s Alibaba, Indonesia’s GoTo, and Singapore’s Grab have broadened job access by improving market intermediation. These platforms have created flexible job opportunities, boosting income for some, such as motorbike drivers in Vietnam, who saw a 20 percent income increase. However, they have also negatively impacted traditional sectors, reducing job security and earnings for workers like traditional taxi drivers.
Policymakers in the region face the challenge of ensuring that technological advances benefit all. To prepare for further transformation, strategies are needed to invest in skills development, facilitate capital and labor mobility, address factor price distortions, and ensure social safety nets for workers in the digital informal economy. The World Bank has launched a series of reports to explore these issues and guide policymakers in harnessing the potential of new technologies for growth and improved job opportunities in the East Asia and Pacific region.