Digital Geoeconomy
In a number of seminars and discussions over the last three months, I found that students were anxious about several professions that were believed would shrink dramatically with the development of the digital economy.
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In a number of seminars and discussions over the last three months at Yogyakarta’s Gadjah Mada University, Bandung’s Padjadjaran University, Padang’s Andalas University and Makassar’s Hasanuddin University, I found that students were anxious about several professions that were believed would shrink dramatically with the development of the digital economy.
Their key question was: "If many professions and human jobs will be replaced by machines, how will we, the young people, find jobs?"
The World Economic Forum (WEF) estimates that in 2015-2020, millions of jobs will decline and be replaced by machines, robots, artifical intelligence and other computing tools. The WEF has set six categories of jobs whose number will decline significantly over the next five years. Office administration is the top sector that will stop employing people, with about a 4.8 million drop in jobs. This is followed by manufacturing and production with 1.6 million. The third ranked sector is construction and extraction, which are expected to marginalize half a million people, followed by design, art, entertainment and media with approximately 150,000 people. The regulatory and law sectors will shrink by up to 100,000 jobs, and installation and maintenance services by up to 40,000 people (Future of Jobs Report, WEF, 2016).
Two years after the report was released, the WEF\'s estimates have started to become a reality. The business sectors that are beginning to show employment disruption include banking and oil (extraction). In the banking industry, major banks in the country will open mechanical tellers starting this year that will replace human employees in serving their customers. Since September 2016, online banking transactions have exceeded physical transactions made at branch offices. The oil industry also started cutting the number of employees, especially in office jobs, from early 2017.
How to respond to this? As with all things under the sun, there is always another side to every reality. The following brief tries to sketch changes on the map in this new era.
New era, fields, opportunities
We are venturing into a new era, the so-called era of the fourth industrial revolution, or industry 4.0. There are a number of benchmarks in this era: the emergence and development of cyber-physical systems that combine the physical, digital, and biological world, the Internet of things (IoT), cloud computing and cognitive computing. Industry 4.0 will bring a number of disruptive impacts, with employment as one of the main disruptions.
This information on the massive decline in jobs, which is then consumed raw by young people looking for jobs and prospective job seekers, is not paralleled with news on the emergence of new professions that have never existed before. In the media world, for example, the position or occupation of digital media strategist was practically unknown before 2012. Also unheard of was digital media analyst. Today, these two positions have become key to the progress of the media industry, which inevitably has had to morph adaptively to the digital landscape.
In the field of informatics technology, the profession of programmers or web developers were previously known. However, in the last 4-5 years, this profession has been subdividing into more focused specializations. There are the so-called search engine optimizers. There are also user experience designers, or front-end developers. This specialization is in demand because of the broad spectrum of Internet users with a variety of increasingly personal needs.
When the banking industry was faced with the phenomenon of increased efficiency that resulted in job cuts, people immediately flashed back to Bill Gates\'s 1994 controversial statement that in the future, "... banking is necessary, but banks are not." At that time, everyone was shocked to hear the statement from the Microsoft founder, considering that the banking industry then was very strong. However, a quarter of a century later, his statement has become a prophecy come true. Just like the prophecy of the 1980s when he said computers would be in every house under the heavens, he was right. And not only are computers in every home, but computing devices are in every pocket today.
When assessed more deeply, the current financial services and banking industry, which on the surface seems to have buried hundreds of thousands of old jobs, are actually providing new opportunities and new fields that are no less great. Financial technology, or fintech, transforms administrative changes to creative solutions.
Even though in terms of taxonomy, job descriptions still use the old concepts such as analyst or project manager, thess classifications are also experiencing divisions into further specializations that give birth to new spaces in employment affairs. Understanding how cryptocurrencies work, for example, will increase employment opportunities in the financial sector in this digital age.
In the transportation and tourism industries, although many traditional travel agencies and tourist bureaus may go bankrupt, the emergence of digital transport and travel services, from Traveloka to Airbnb and to Tripal, have given birth to a wider variety of new and more specific job categories. In the business world, before 2014 the terms “data scientist” or “data analyst” still sounded unfamiliar among job seekers. Now both professions are badly needed, even in the field of government, which is generally considered slow compared to business.
Specialized expertise in the field of big data analytics, augmented reality and virtual reality will be urgently needed in strategists, whether in a private company or a government agency.
Accurate development planning requires not only data and evidence, but also the ability of planners who understand technocratic processes in the digital age. More specifically, the expertise of development planners and digital strategists is needed to ensure that development planning in this digital economy era will be relevant and not outdated.
Not only that, the coverage and impact of digital technology has penetrated even political organizations. In Britain 10 years ago, political parties used augmented reality to analyze their strengths and develop their electoral strategies. One of those cases even became a master’s dissertation at the University of Manchester that I guided myself. I am sure that this, too, will happen soon in Indonesia. Imagine the sophistication of combining big data analysis and artificial intelligence with augmented reality to map the electoral potential of a political party. Political research institutions will soon become defunct if they do not immediately improve their capabilities amidst this digital advancement.
The challenge is whether those who have worked for many years or decades, such as private employees or government bureaucrats and even community activists, are able to adapt and adjust to the description and type of new jobs in their sector or not. Because the law of natural selection will remain applicable: "Those who do not change will become part of the historical record."
Digital ecosystem
In a digital ecosystem, anything manual, natural and mechanical will be replaced by the digital. Digital assumes the accuracy and control of a system in real time. The anxiety of the young people I met at the country\'s leading universities shows the prevailing existence of the information imbalance and gap in responding to the new economic movement.
President Joko "Jokowi" Widodo, who diligently visited universities in the country, reminded us of the importance of moving fast and agilely to respond to this new economic model. He reminded schools and departments at leading universities to open new programs that were adaptive to the digital economy needs of the world. Two examples the President raised and mentioned were the media industry and logistics management.
In that context, President Jokowi desires a changing ecosystem at universities as the main supplier to meet needs in the world of work. To transform an ecosystem into one that is adaptive to change, universities are required to seek breakthroughs and innovations so that young people gain adequate insight, knowledge and skills in their field of expertise, concurrently with the digitalization of the fields of study the universities offer.
Not only that, President Jokowi repeatedly stated the importance of opening new horizons in entrepreneurship for young people. At this level, the government seeks to continue to develop entrepreneurial ecosystems so as to utilize the potential inherent in the movement of this digital economy era. The efforts President Jokowi is making resonates strongly with the success of the "rulers" in the digital economy. One of the characteristics unique to the digital start-up industry is its factor of differentiation and competitiveness based in the ability to identify problems and potential solutions at a very deep level.
Things that might be viewed as small by conventional organizations, such as the appearance of a user interface, can become a major differentiator in this industry. For example, one unicorn start up in the music field, Spotify, has successfully doubled its use simply by darkening the background color of its app. Sensitivity and susceptibility to identify social problems have never been as important as they are today. The capability of an organization to digitalize will inevitably be absent without the ability to identify precise problems. Therefore, soft skills and student exposure to social issues in developing their teaching capacity or hard skills training is of clear importance in the realm of digitalization.
Another differentiation factor is the ability to capitalize on corporate values that are often determined by soft skills such as networking. Capitalizing on the investment fund gains of companies and businesses is very influential in building startup companies. Almost all startup companies that are currently worth more than US$1 billion have not made profits or expanded through subsidized prices for its users. How have they done so? Investor fund injections.
Not infrequently, new companies that start with limited technical capacity manage to grow more rapidly than other companies with better technical capacity by taking advantage of the founder’s networking. Look at Tokopedia. At the beginning, it had to deal with big names like Lazada. However, William Tanuwijaya and his networking succeeded in bringing in investment. Investment means subsidy; subsidy means economic traffic and scale. Tokopedia is now the largest e-commerce platform in Indonesia.
To learn from this, the need for networking, intermediary institutions and technology consortia are increasingly inevitable if startups want to reap the benefits within the digital ecosystem of the digital economy era. Moreover, it is important to look at government policies in order to prepare policies to provide the right incentives.
This is needed because the digital ecosystem needs visionary policies. An example is the app-based transportation sector that is still burdened by conflicts with the conventional transport sector. Tax incentives should also be fairer so that SMEs can enter the realm of e-commerce or sell online without necessarily being afraid of "going against the higher class". Currently, they prefer to remain small traders because as soon as their move up in class to middle traders, they face a very high tax burden.
State-owned enterprises (SOEs) that operate in the digital sphere must also change their mindset and follow the competition more fairly in the digital ecosystem. This is important in order to encourage the emergence of digital creativity. Simply blocking a number of applications that are viewed as competitors of a telco SOE’s subsidiaries is no solution. Finally, the availability of internet connectivity and an adequate network infrastructure must be ensured immediately.
With the world population of 7.6 billion people, 53 percent of who have internet access, this new digital ecosystem has remarkable potential. However, there is no need to dream of reaching billions of people. With a population of more than 265 million, half of whom have internet access, the young generation of this republic have the potential to be welcomed into new areas that challenge their spirit and expertise.
The implication is clear: If we are to transform the young people of this republic in this digital era, we need to create an atmosphere that supports transformation. The digital economy is the central phenomenon of this fourth industrial revolution. The right strategies and policies to address these challenges and seize these opportunities will be key to realizing Indonesia\'s future goals.
Yanuar Nugroho, Deputy II to the Presidential Chief of Staff
