In the late 18th century, the English clergyman and writer Thomas Robert Malthus put forward his theory of an overpopulated world, arguing expansion in human numbers would always outpace the earth’s capacity to provide food. Over two centuries later, a very different Malthusian problem challenges the world: the commodity in short supply this time is not food but jobs, at least formal jobs, recognisable as such by human society as we have known it.
No country faces this mismatch between job opportunities and population more than India. As a society, it is approaching the peak of its demographic boom, which will hit a high in 2030 with a youth population of 485 million aged between 15 and 34 (of a total population of 1.5 billion). That will be the biggest such cohort in human history. The oldest in this group are already job seekers (more important perhaps, they are voters); the youngest have just been born.
Yet, these job seekers have and are coming of age in a world where technological change is driving many jobs and many types of jobs into obsolescence. The Fourth Industrial Revolution, the prospect of manufacture by way of robotics and 3D printing, the replacement of not just blue collar but even certain types of white collar jobs by machines, automation and digital technology is moving at a furious speed.
Many of these innovative technologies are still just about arriving in India, but the impact of automation is already being felt. In the period 2001-11, the rate of growth of labour force (2.23%) was significantly higher than the rate of growth of employment (1.40%). As India’s baby boom becomes more pronounced, so will the ferocious impact of a technology revolution that will add value but take away jobs.
Job-consuming innovation is now ‘collar blind’. No longer is it threatening merely manufacturing jobs
This is not a problem limited to India. In a frequently quoted study from 2013 (The Future of Employment: How Susceptible Are Jobs to Computerisation?), the Oxford University academics Carl Benedikt Frey and Michael Osborne identified 47% of jobs in the United States as being at risk of replacement by machines. The number for Japan was similar. In Singapore, government officials speak of “30 to 40% of the jobs we have been training people for disappearing in the coming decade”.
The Millennium Development Goals Report 2015 says the world’s employment-to-population ratio fell from 62% in 1991 to 60% a quarter-century later. In 2015, 204 million people worldwide were unemployed. A further 1.45 billion people are in what is termed “vulnerable employment”, largely in the informal sector, with minimal social security benefits, and in danger of losing out to market volatility or an efficient machine.
India reflects these figures, in fact it substantially contributes to them. As per the World Bank, only 30 million Indians work in the organised sector. A massive 440 million are in some indeterminate state of informal or semi-formal employment in the unorganised sector. This skew is further threatened by technology and digitisation driving out a variety of jobs, from the shop floor to office desks.
Job-consuming innovation is now “collar blind”, as the expression goes. No longer is it threatening merely manufacturing jobs. Rather, it targets semi-skilled jobs in factories as much as the lawyer who claimed his fees drafting wills for clients. Template wills can now be printed off the Internet. Financial services firms and banks too are adopting automation to the detriment of those pinning hopes on the probationary officers’ examination or its equivalent.
This article is a part of FICCI publication “Economy of Jobs” that was released during our 89th AGM in December 2016. It presents essays from India’s leading business leaders and eminent thought leaders who share views and suggestions on job creation. The articles cover varied issues: demographics, education, skill development, entrepreneurship, impact of technology, labour laws, and as well as specific issues across sectors.
More articles from this series can be viewed here at: Economy of Jobs
Industries in India that have developed world-class capacities have already experienced such tectonic shifts. Take automobile manufacture. Between the early 1990s and the end of the first decade of the 21st century, Mahindra Auto grew dramatically as a company. Its product range and numbers increased enormously. Nevertheless, in that phase personnel costs shrunk from 13% of all costs to only 5%.
Companies and communities across the globe grapple with such concerns. As the Harvard University economist Dani Rodrik wrote in an acute article1 in January 2015: “A spectre is haunting the world economy – the spectre of job-killing technology.” Three paragraphs from Rodrik’s article are worth noting:
“The potential benefits of discoveries and new applications in robotics, biotechnology, digital technologies and other areas are all around us and easy to see. Indeed, many believe that the world economy may be on the cusp of another explosion in new technologies.
The trouble is that the bulk of these new technologies are labour-saving. They entail the replacement of low and medium-skilled workers with machines operated by a much smaller number of highly skilled workers …
A world in which robots and machines do the work of humans need not be a world of high unemployment. But it is certainly a world in which the lion’s share of productivity gains accrues to the owners of the new technologies and the machines that embody them. The bulk of the workforce is condemned either to joblessness or low wages.”
In a nutshell, this is the brave new world of work, employment, jobs – and joblessness. India is caught right in the middle of it. Domestically, its teeming youth population means its job creation aspirations cannot afford to fail. Internationally, with the advance of technology and the decline in global trade and demand, those job creation aspirations don’t have the space to succeed.
Ashok Malik, Distinguished Fellow, Observer Research Foundation writes this piece for FICCI publication “Economy of Jobs” Post continues on page 2.