Our April KBF was an experiment in that we held a debate rather than the usual presentation with interventions. After the customary economic and social update, (including the preliminary Q1 GDP figures due two days before), and taking into account the results of the mayoral by elections, Eric Kim of Datacrunch and I conducted a discussion on the present state and future of digitalization in Korea.
Eric described the processes and motivations of the companies that he works with are aiming to achieve in their digitalization plans, and the kind of results which they have achieved to date, mainly in the financial sector. I reviewed the government’s latest iteration of its digital plan, especially progress on smart factories and smart cities. We both gave our take on how change in the market in general has been accelerated by the covid years.
I am expecting that the digital disparity between companies will increase in the coming five years, and those in the digital vanguard will accelerate ahead of those who are slow adopters, because they are still doing good business the old way. But Eric’s experience suggests that all companies will adopt digital processes which reduce labour inputs. High degrees of digitalization are expected in the financial sector and many e-platforms which means a reduced demand for staff in high productivity service areas as well as manufacturing.
Based on Eric’s observation that the main reason companies are pursuing digitalization is to reduce their direct labour force, and that adoption of AI threatens areas of business which have previously been the preserve of the professions, or at least junior professionals, we will move to consider the labour market as a whole.
McKinsey and WEF predict that while manufacturing jobs disappear, those in the service sector, particularly health increase. I shall continue my argument that this is not the most probable conclusion since many of the digitization processes and automation processes will be applicable in health care and the care of seniors. Eric will raise the need for some kind of universal income, and ask how this could be funded, or if there is any other answer for permanent joblessness.
Managing Director, KABC Ltd.