As computers become increasingly more powerful and sophisticated, a World Bank official has warned that it is increasingly replacing medium-skilled, medium-pay jobs.

World Development Report 2016 (WDR 2016) co-director Uwe Deichmann told reporters in Kuala Lumpur today that education programmes need to teach students skills that can complement the increasing automation, rather than skills that technology would replace.

He said the biggest risk of increasing automation would not be mass unemployment, but the polarisation of the labour market between low-skilled jobs and high-skilled jobs.

"In Malaysia, like in many other countries, it is estimated that half of all the current jobs can actually be automated or computerised.

"Traditionally that used to be factory-type jobs such as automobile manufacturing and so on, but increasingly there are also white-collar jobs. Office jobs are being automated.

"What is happening is when people lose this kind of jobs, some of them would have the skills to move to a higher-paying job, but many of them don't and would have to compete for lower-level jobs that are non-routine but don't pay very much such as being a janitor," he said.

Deichmann said globalisation and urbanisation play a role in the phenomenon as well, but digital technologies are nevertheless an important driver.

This would take many years to play out and would increase overall productivity, but is also socially disruptive as it increases income inequality.

"The key implication, of course, is that education becomes more important, and not just to provide any education but what type of education is provided.

"So you want to provide the type of education that would be valued in a 21st century labour market," he told reporters after a presentation of the WDR 2016's findings at the report's Malaysia launch.

Deichmann also highlighted that Malaysia is well-poised to take advantage of the adoption of digital technologies owing to its healthy business environment, which he said is on par and even exceeds that of many European countries.

However, the actual adoption rate of digital technologies is lagging.

'Start-up ceiling syndrome'

Meanwhile, Multimedia Development Corporation (MDEC) CEO Yasmin Mahmood lamented that many Malaysian start-ups have languished under what she terms the 'start-up ceiling syndrome', where the company is unable to consistently rake in an annual revenue exceeding RM1 million.

This afflicts 92 percent of companies in the Multimedia Supercorridor (MSC), she said, and only two percent of MSC companies were able to become global players that earn over RM100 million in annual revenue.

"Hopefully with the Malaysian Global Innovation and Creativity Centre (Magic) in the ecosystem now, the quality of the start-ups is going to improve, and therefore we'll have the commercialisation for start-ups be on the more aggressive trajectory," she said.

As for the financial sector, she said the industry's productivity growth has flatlined and even declined despite heavy investment in digital assets, while productivity in the manufacturing sector is not increasing as quickly as it should.

On its part, she said the government has conducted a pilot programme at a vocational school in Jeli, Kelantan, to teach digital marketing.

She said the government has gone as far as lifting a ban on civil servants from holding a second job so that the teachers can become practitioners themselves, and the students have enjoyed some success in their online businesses.

Also on the panel are Treasury secretary-general Mohd Irwan Serigar Abdullah, who highlighted Malaysia's efforts to promote access and skills in digital technology such as by teaching programming at the primary school level.