A recent research has amplified this bi-polar view as it foresees the creation of 58 million net new jobs — rendering 75 million current roles redundant — as the division of labour between humans and machines finds a new normal by 2022.
Specifically, smarter technology puts the future of 15 per cent of the global workforce, 26 per cent of jobs in Japan, 24 per cent in Germany, 23 per cent in the US, 16 per cent in China and 9 per cent in India at risk over the next three years. The consensus view, however, is that as Industry 4.0 moves to its next logical frontier, an intelligent India has an innate advantage over other nations facing a multitude of growth challenges. This is because the world’s fastest growing economy can master new tools such as the Internet of Things (IOT), AI, Augmented Reality (AR), Blockchain, Machine Learning (ML), robotics and additive manufacturing at a faster pace than other nations by building on its comparative advantage as well as sprucing up its competitive edge, we are told. It is said that the degree at which the ‘jobocalypse’ or ‘technological unemployment’ is poised to pinch jobs in different geographical jurisdictions depends on a slew of factors specific to each nation. These include individual and collective capability to respond to change in time, willingness to change, a nation’s place in the world production system matrix, access to capital and skill levels.
In such a dynamic setting, the base case for India is to churn out a smart workforce with attendant skills which are in sync with the requirements of new roles. This may be done by leveraging inherent and acquired strengths on an ongoing basis backed by investments in knowledge economy leading to sustained skill updates.
A major factor that tilts the scale in favour of India is the accelerated pace of domestic activity which is poised to touch the 8 per cent mark in the near term. Driven by shifting technology frontiers, a young and large workforce and pro-business reforms, the size of the economy is expected to touch the $5 trillion mark by 2022.
The elevated growth is abetting large-scale workers’ migration from farm to factories boosting innovation, value addition and employment.
A well diversified manufacturing sector that generates 17 per cent of economic output and 15 per cent of total employment, cost competitiveness, natural resources that support broad-based industrial growth, and a rich pool of English-speaking scientists, researchers and engineers add to the positives. The reassuring fact that India ranks fifth in the Global Manufacturing Competitiveness Index reveals this. A series of prudent policy steps such as Start-Up India, Make in India and structural reforms in areas from tax to land acquisition and intellectual property rights, solving the stressed assets issue, and back-to-back bank mergers to eliminate systemic risks and improve capital efficiency have reinforced global optimism in Indian economy and improved investor confidence. This year, India moved up 30 notches in the Ease of Doing Business and has bettered its ranking in Global Innovation Index by moving up five notches to 57th in the universe of 126 nations. However, factors such as lack of adequate infrastructure, mismatch with global supply chain, inadequate innovation and myriad legal and bureaucratic gray areas remain as major risk factors. By shrinking the lead time in adapting faster technologies may remove such structural roadblocks.
Key drivers like global trade and investment, growing domestic market, increasing global demand, foreign direct investment and investment in new projects and fairly open and less-restrictive trade practices all work to India’s favour. The country could capitalise on the wave of disruptive technologies better by building a more robust institutional framework, a better technology and innovation ecosystem and by training workers for the production systems of the future.
There is also an urgent need for the Asia’s third largest and fastest growing economy to step up its spending on knowledge-intensive sectors to retool and hone skills of its workforce for future roles. India’s R&D spend at 0.85 per cent of the national income is way below the 3 per cent being shelled out by advanced economies for knowledge acquisitions and needs to be stepped up, though a beginning has been made by setting up innovation labs and incubation centres.
Broadening the bandwidth of these knowledge factories to the benefit of small and medium-sized enterprises, which are not only job-making machines but engines of growth as well, is the need of the hour.
India’s scope for wage arbitrage stands capped in a technology-powered production system. And the solution is to leverage advantages of the demographic dividend. The country, home to one of the world’s youngest populations, by 2050 would account for over 18 per cent of the global working age population. 100 million new hands may enter the workforce by 2022.
This throws up both challenges and opportunities. Scaling up skill-sets of over 300 million workers and training 100 million new hands to keep up with technological transitions is a tall order. Initiatives to develop relevant skills, technical and vocational training programmes and enhanced public-private partnership are keys to secure the future of employment.
India has progressed considerably in creating a business-friendly ecosystem with an evolving manufacturing architecture. But this is no time to remain complacent. It is imperative to simplify bureaucratic procedures and make greater use of digital platforms to bolster their institutional framework. There is also a felt need to build upon existing capabilities and developing new capacities. Collaboration and coordination are central to build such a sustainable and innovative production system that secures the future of jobs. However, what should nag the policy makers is the apparent disconnect between economic growth and employment. A recent study by an independent think-tank points to this disconcerting fact. The study finds that in the 1970s and 1980s, when the economic growth averaged 3 per cent to 4 per cent, employment growth was around 2 per cent. Since the 1990s and 2000s, when economy grew at an elevated level of 7 per cent per year, employment growth slowed down to 1 per cent or even less. Further, the ratio of economic growth to employment growth was pegged at less than 0.1. Instead of the quibble ‘my growth v your growth’, findings of the study broach the wider issue of ‘whose growth is it anyway?’, or ‘for whom the economy grows?’ The plot gets thicker if one wades into the baffling issue of stagnant or declining real wages for workers at a time of accelerated economic growth and swelling corporate profits. These, however, are different topics that need to be treated differently.
Read more: Asianage