The directorate general of taxes at the ministry of finance to implement the 10 percent of value added tax (VAT) mechanism in every item in 10 digital firms like Tokopedia, Bukalapak, and Lazada - Photo : Special

JAKARTA (TheInsiderStories) – The rapid development of digital  revolution leaves main problem in job creation for several emerging countries, including Indonesia.

The Southeast Asia’s largest economy, is not spared from the digital disruption–which has on one side help more efficiency for the companies operation and on the other side created a less dependency on human resources to run the businesses.

For an example, in infrastructure sector, the state-owned toll operator PT Jasa Marga Tbk (IDX: JSMR) started implemented cashless payment since last year in their toll roads. The new system is expected to affect some 20,000 workers, half of whom are in Jakarta, who may stand to lose jobs.

The banking sector is also on the way to reduce employment as its smart banking technology is capable of replacing human services, including automated teller machine, after it already lost human control in ticketing purchase for transportation means like planes, trains and ships.

Research consulting firm McKinsey & Co, in the end of 2017, predicted about 800 million workers worldwide may lose their jobs in 2030 as their jobs are replaced by robots and automation technology.

At the time, when Indonesia is facing the digital disruption era, the country is undergoing a demographic transition. Meanwhile, its working-age population is projected to continue to increase as a share of total population until 2030. This young and growing workforce will need quality jobs.

Last year, the Indonesian unemployment rate fell to 5.3 percent, yet the unemployment among youth stood high at 19.4 percent, a much higher rate than the global average.

That is why now is the time to implement structural reforms to step up growth, so that the country can grow prosperous by reaping its demographic dividend before it grows old.

While the Indonesian government is eyeing investment of US$500 million in the digital industry and start-ups, which are expected to create 10,000 jobs, the country also needs to prioritize infrastructure development.

The government has embarked on an ambitious infrastructure development plan that includes 245 national strategic projects with a total cost of 32 percent of GDP or Rp5,100 trillion.

Infrastructure development would also spur private investment and raise potential growth, which would result in faster job creation and more employment opportunities for the young labor force.

At that same time, Indonesian government has officially launched the roadmap called “Making Indonesia 4.0” earlier this week. Industry 4.0 is a term that refers to the fourth industrial revolution in manufacturing and industry.

It includes major innovations in the digital technology, biology and hardware automations, and also implies that cyber-physical systems can make their own basic decisions, hence becoming increasingly self-ruling.

The manufacturing industry is targeted to contribute between 21-26 percent to the nation’s GDP by 2030. Meanwhile, on the back of the thriving manufacturing industry and export performance, job creation through the roadmap is estimated at 7-19 million by 2030.

However, the technological advances have transformed the two billion worker Asian labor market, helping create 30 million jobs annually in industry and services over the last 25 years, drive increases in productivity and wages, and reduce poverty according Asian Development Bank (ADB) report.

ADB research shows that even in the face of advances in areas such as robotics and artificial intelligence, there are compelling reasons to be optimistic about the regions’s job prospects.

However, ADB research shows that even in the face of advances in robotics and AI, there are compelling reasons to be optimistic about the region’s job prospects. It is because: (1) new technologies often automate only some tasks of a job, not the whole, (2) job automation goes ahead only where it is both technically and economically feasible, and (3) rising domestic demand offsets job displacement driven by automation and contributes to the creation of new professions.