Robotisation could boost economy by $100b in 2030

This GDP growth comes with a high robotisation rate of 44%, according to Oxford Economics.

The economy could get boosted by as much as $100b should Singapore achieve the optimal growth rate of robot installations across all sectors, according to an analysis by Oxford Economics. The firm calculated a 20% difference in Singapore’s GDP by 2030 with the high- and low-robotisation scenarios that it established.

Sung Eun Jung, economist at Oxford Economics, explained in a note, “Our scenarios were based on historical periods of growth in Singapore’s operational stock of robots. In the high scenario, we assumed that the robot stock will grow 44% above our baseline projection, continuing to accelerate at the rate achieved since the global financial crisis. In the low scenario, we assumed it will slow 33% below the baseline projection, returning to a historical trend in keeping with the decade before the global financial crisis.”

Despite Singapore’s relatively small global market share, robots feature prominently in its industry. The stock of robots increased rapidly after the global financial crisis, growing at an average rate of 20% per year from 2010 to 2016. According to a 2019 report by the International Federation of Robotics (IFR), Singapore had the highest robot density in the world (number of robots per 10,000 workers) for the first time in 2018.

The structure of Singapore’s manufacturing sector is largely built upon robotic innovation. The electrical industry represents more than 60% of Singaporean industrial production. Mirroring this structure, about 84% of the robots in Singapore are installed in the electrical industry, according to an IFR report.

“This sector has seen the most accelerated rise in robotic applications globally in recent years. According to the 2017 IFR report, fuelling this trend are the rising demand for electronic products, price competition, and the increasing need for batteries, chips, and displays in a wider variety of products. Robotic installations in Singapore are skewed towards the manufacturing of semiconductors and computer peripherals, but recent innovations mean they are increasingly diversifying into sectors such as warehousing and logistics,” Sung wrote.

As it stands, robotisation may likely displace poorer populations and create gaps between lower-skilled and higher-skilled populations. Singapore, on the other hand, is relatively well-placed to manage such pressures. More than 60% of workers in Singapore’s manufacturing sector are classified as highly skilled, a share that continues to grow, Sung noted.

“Another unique feature of the Singaporean labour market is the large, non-permanent foreign workforce, which is heavily employed in occupations that are vulnerable to future automation. Around 70% of the country’s 1.4 million foreign workers hold a “work permit” visa, suggesting employment in labour-intensive occupations with lower wages. Should the government face pressure to further tighten foreign worker quotas, robots could fill the void in several applications,” he added.

The investment towards productivity payoffs comes with risks, however. As new applications roll out in the service economy and close to 85% of Singaporean workers are already employed in service roles, technology is already beginning to compete with an ever-larger share of jobs. The number of Singapore’s resident workers employed in low- to medium-skilled service sector jobs hasn’t diminished over the years, and they’re increasingly vulnerable to automation as robotic capabilities expand, the report said.

Small and midsize enterprises and the large retail and food and beverage sectors could be particularly vulnerable. “Many workers will need to retrain and learn new skills to take advantage of the new opportunities that a more automated service economy will present. If automation is to be pursued at pace, this cohort will need continued government support to ease the transition,” Sung said.

The Singaporean government has been actively pursuing the vision of “Smart Nation 2020” and has introduced measures to heighten innovation and promote research in the field for robots. The National Robotics Programme ($450m) was launched in 2016 with the goal of developing robotics technologies in health care, construction, manufacturing, and logistics. “Ongoing incentive programmes, such as the Automation Support Package, that provide incentives for firms to adopt off-the-shelf technologies are positive for the future healthy growth of robot stock,” Sung commented.