For all of their fast growth, Asia’s economies are grappling with stagnant productivity. Much of Asia’s recent growth is driven by greater investment, and not by improvements in total factor productivity, or in how efficiently inputs are turned into outputs. At best, productivity growth is slowing down; at worst, it’s declining.
And even where productivity is still improving, it’s not doing so fast enough to catch up to leading firms in developed markets like the U.S. Throughout the 2010s, leading firms throughout Southeast Asia grew productivity below the global average. (China, by comparison, managed to keep up.)
“In just about every Asian market, productivity as a measure of GDP divided by GDP per capita is stagnating or declining,” says Simon Tate, Asia-Pacific president for Workday. “Every executive that I talk to is worried about productivity,” whether owing to aging populations, poor public policy, or the rise of remote work.
In the past, Asian firms had an easy solution to the productivity problem: Just throw more people at the problem. Cheap labor allowed manufacturers and firms to expand without hurting margins.
But as Asia’s economies get richer and older, hiring more people is no longer the easy solution it used to be. “There are no more people,” Tate says. “There is no more productivity to be gained from just throwing people at the problem.”
Let the youth take over
Executives like Tate often argue that AI, particularly “agentic AI,” can help lift productivity. In theory, these newer forms of AI can autonomously carry out user-defined tasks, freeing up the human employee to do more.
Almost all Asian companies say they want to adopt these new technologies. A February survey from Accenture found that nine out of 10 Asian businesses were preparing to adopt some form of agentic AI in the next three years.
But actually putting these models into practice is another question, particularly for older executives with little experience working with AI at all, let alone AI agents.
Tate notes that Asia’s workplaces will soon be home to five different generations, spanning from boomers all the way through to the youngest workers, the so-called Generation Alpha.
“Generation Alpha will have a higher degree of digital fluency than the other four previous generations combined,” Tate says, adding that today’s HR officers are “not at all prepared” for the flood of AI-savvy young workers.
Around 80% of Gen Z workers in the Asia Pacific region want to have the most modern technologies in their workplace, according to a recent report from Workday. Just over two-thirds of these workers would see the lack of cutting-edge technology as a negative.
But Tate thinks the answer is more than just giving younger employees the space to thrive in the office. He suggests Asian companies go one step further, and treat younger generations as a source of much-needed expertise.
“When you look at the makeup of boards of the top 100 public companies across APAC, board positions—even advisory board positions—are still very much made up of baby boomers and Gen Xers,” he says, with “close to zero” positions held by those in their twenties and thirties.
Tate suggests companies consider “reverse mentoring,” or getting a younger person to train up older cohorts in how new technologies can be best applied. In much the same way that a millennial or Gen Z founder might ask someone from an older generation to serve as a board director, Tate suggests that established companies consider appointing a younger member of society to provide their own expertise on technology and business.
“We just falsely assume that they’re too young and they don’t have any good ideas,” he says. “If you put a bunch of really bright, superambitious people in a room and throw a problem at them, they will add value in helping to solve it.”
