II
Given this backdrop, where do the jobs lie for 21st century Indians? Packed into that query are a whole host of sub-questions – on geography and skilling, on manufacturing and services, on moving people off the farms and moving Make in India to another orbit, on social security and institutionalisation of informal jobs.
Traditional economic advance entailed a society graduating from agriculture to manufacturing. India saw the development of services, especially technology-led services, from the 1990s and its manufacturing suffered from what some term a “premature deindustrialisation”. The government’s “Make in India” endeavour hopes to reverse this trend somewhat and has ambitions of raising the share of manufacturing from the current 17% of GDP to 25% of (a much bigger) GDP by 2025.
Given the technological leapfrogging this will entail, it will certainly not create the volumes of direct low to mid-level manufacturing jobs that came about in Southeast Asia and China in the past three decades. This means unlike industrial economies of the past – from Germany to Japan, the United States to South Korea – India cannot look to large industrial corporations to provide jobs and social security to armies of workers.
Ninety per cent of India’s workers are in the informal sector and that percentage is unlikely to decline appreciably. India will become the first major economy to have such a large proportion of its workforce in the informal sector or in self-employment. Consequently, it will have to find affordable solutions to social security provisioning – in the manner of the contributory pension or insurance programmes that have already been launched by the government. More than a temporary or bridge mechanism, these are set to acquire permanency and become a norm.
There is also the issue of services, where India has comparative advantages and where technology – by way of precision manufacture or food processing or agriculture-related services – is erasing the traditional boundaries between agriculture, manufacturing and services. Is there conflation here, contestation or simply a trade-off? An answer was attempted in a provocative Economic Survey (2015) chapter titled “What to Make in India? Manufacturing or Services?”
In its concluding section, the chapter held out both the boundlessness as well as boundaries of Make in India:
“The choice for India is not manufacturing versus services but comparative advantage deifying (unskilled-intensive) sectors versus comparative advantage defying (skillintensive) sector development. This is both a positive and a policy question … The policy question is the following. Insofar as the government retains influence over shaping the pattern of development, should it try to rehabilitate unskilled manufacturing or should it accept that that is difficult to achieve, and create the groundwork for sustaining the skill intensive pattern of growth?
Attempting the former would be a history-defying achievement because there are not many examples of significant reversals of de-industrialisation. A lot would have to change in India – from building the infrastructure and logistics/connectivity that supports un-skill-intensive manufacturing to reforming the panoply of laws and regulations, or perhaps addressing corruption in the manner of their enforcement – that may discourage hiring unskilled labour and achieving scale in the formal sector.
Sustaining a skill-intensive pattern on the other hand would require a greater focus on education (and skills development) so that the pattern of development that has been evolving over time does not run into shortages. The cost of this skill intensive model is that one or two generations of those who are currently unskilled will be left behind without the opportunities to advance. But emphasising skills will at least ensure that future generations can take advantage of lost opportunities …
India can either create the conditions to ensure that its existing unlimited supplies of unskilled labour are utilisable. Or, it can make sure that the currently inelastic supply of skilled labour is made more elastic. Both are major challenges. What the analysis suggests is that while Make in India, which has occupied all the prominence, is an important goal, the prime minister’s other goal of “Skilling India” is no less important and perhaps deserves as much attention … The future trajectory of Indian economic development could depend on both.”
The preceding extract suggests multiple conundrums, ones that will interrogate India right to the middle of the 21st century, if not later.
India will have to find that happy mean between innovative technologies that transform manufacturing but don’t create jobs; entrepreneurial energies at the bottom of the pyramid that could create service-sector – or mixed-sector, such as food processing – (self)-employment; and a manufacturing story that could lend itself to telling but that by itself may not create too many jobs.
Also required will be a social engineering that will enable Indian society to discriminate between individual and family prosperity and a regular blue-collar job. In a sense, this may explain the emphasis on Start-up India, to complement Skill India and Make in India.
The gig economy is leading to consequences that are far apart in the West and in India
Ashok Malik, Distinguished Fellow, Observer Research Foundation writes this piece for FICCI publication “Economy of Jobs” Post continues on Page 3.
