Finance Sector To Reap Benefits As Automation Impacts Hong Kong And The Asia-Pacific: Deacons Research.
Legal News & Analysis - Asia Pacific - Hong Kong - Banking & Finance
25 October, 2017
Opportunities are on the rise for banking professionals as Fintech expands across Hong Kong. The increase in automation will allow clients to receive customised solutions, and banks and financial institutions are continuing to digitalise customer-facing functions.
New research, spearheaded by Deacons Hong Kong and Australian law firm Corrs Chambers Westgarth in conjunction with the global Employment Law Alliance (ELA), delves into the opportunities and challenges automation has brought to the service sector in Hong Kong.
According to the findings of this unique research project examining “the future of work” in the Asia-Pacific, the cumulative impact of automation, machine learning, AI and gig economy will be felt by businesses and employers of all nations throughout the region.
The research unveils a number of startling findings but the most revealing is that the disruptive effects of new technologies and the changing approaches to work will impact not only Hong Kong and China, but every country in the Asia Pacific – from Australia and New Zealand, through to Sri Lanka and Thailand.
The report research contains the responses from 15 top tier law firms throughout the Asia-Pacific region which provided the information based on the views of their clients, some the region’s largest and most successful corporates, governments and international companies. The ELA is a network of more than 3,000 lawyers who provide employment and labour relations expertise in more than 120 countries around with world.
Highlighting the implications of the research report’s findings for Hong Kong, Deacons Partner, Cynthia Chung notes:
“Fintech is fast becoming a reality for many businesses here, as it enables a variety of services to become more efficient and accurate through harnessing internet, mobile technologies and big data.”
“It is clear the local government is taking the advent of Fintech seriously and it is becoming a strong advocate of its development,” she says. At the end of September, the Hong Kong Monetary Authority released a plan to facilitate pilot trials of Fintech and technology initiatives through a Fintech supervisory sandbox.
Another core finding was that Hong Kong manufacturing firms continued to invest in China, undeterred by rising wages and increasingly pro-worker labour regulations. China remains attractive due to its proximity and lower rental expenses and other living costs.
Hong Kong has seen a proliferation in gig economy companies such as Uber, Deliveroo and Airbnb. And while their arrivals have been welcomed by consumers, the government has been more lukewarm and mixed in its response. Although there are concerns about employment safeguards, rights and the defining of the legal relationship between worker and employer, there still remains to be a formal discussion.
“While it is possible for the emergence of the gig economy to transform the workforce model, it is open for debate whether or not Hong Kong needs to adjust current regulatory guidelines or leave the laws as they are to retain some flexibility for the benefit of workers and companies,” says Ms. Chung.
Corrs Chambers Westgarth Partner, John Tuck believes that it is widely accepted that automation, robotics, machine learning, AI and the gig economy are all rising in prevalence in industrialised countries.
“But what is surprising,” he said, “are the findings that many countries and economies with ready access to huge, relatively inexpensive and underutilised labour forces are also embracing these disruptive trends with a passion.”
“In Bangladesh, for example, lightweight robots to handle fabric, select, place and sew threatens jobs in the garment manufacturing industry which represents 80% of the country’s total export earnings and is a very significant employer. The same issue is confronting the textiles, clothing and footwear (TCF) sector in Sri Lanka.
“In Korea, there are already 531 robots for every 10,000 factory workers – ahead of Japan, Germany and the US. Car production in South Korea is almost fully automated but technology is now impacting employment in retail, restaurants, banking and security industries.”
“In India the World Bank has estimated that automation may threaten almost 70% of existing jobs. Known as a global provider of skilled IT workers, India also faces challenges in this area with recruitment in its IT sector for 2016 showing a reduction from the previous year and companies reporting the elimination - or ‘release’ - of thousands of jobs due to automation.
“There are also larger issues that only now are governments and societies just beginning to grasp around the fragmentation of the workforce, the informal economy, the potential loss of tax income and the erosion of social safety nets – something the IMF has recently flagged. In its October world economic outlook the IMF said it was time to “re-engineer social security to cope with the global transition to less stable, more freelance-oriented work”.
For access to the full report, please click here.