T N Ninan: The lack of jobs

World Bank says India stands to lose 69% of its jobs on account of automation

As warnings go, it could not have been direr. Citing research based on his organisation’s data, the World Bank president told a questioner in Washington earlier this month that India stood to lose 69 per cent of its jobs on account of automation.  The research paper was not cited, but Jim Yong Kim made the familiar argument that the traditional progression from improving productivity in agriculture to light manufacturing to full-scale industrialization may no longer be a feasible option for many countries, because technology would be disruptive of this process. Observers in India, like Nandan Nilekani, have already been warning of disruption in major employment-creating sectors like financial services, while the slowdown in headcount-based IT services is there for all to see. Today’s omnipresent car drivers (numbering a few million) may also be threatened if driverless vehicles become the norm, while developments like 3D printing have to be reckoned with.

So, for sure the problem is going to hit the country just when it has been hoping for a one-time demographic dividend, on account of a higher percentage of the population becoming of working age. But whether the potential job loss could be as high, or indeed as precise, as 69 per cent is open to question. In any case, close to half the workforce is engaged in farming, and most of them can continue to be employed there if the country’s agricultural productivity can be raised to global levels for most products, thereby raising farm incomes. The country also needs millions more teachers, policemen, judges, doctors and nurses. Even if digitisation and other new technologies reduce the need for factory labour, other opportunities will be created. Car factories may need fewer workers, but the number of cars will double from today’s 25 million in less than a decade from now. That will mean more jobs in servicing and maintenance, as will more apartment blocks. In other words, an economy growing at a good clip will create millions of jobs, mostly in the service sector, even if the official statistics are incapable of capturing them because most of them are not in the “organised” sector.

The problem with accepting jobs in the unorganized sector as a solution is that these usually involve lower productivity, and translate into lower incomes. If the economy is not able to improve its education system and simultaneously create millions more high-quality jobs in the organised sector, what it risks creating is a large, permanent under-class of half-educated people who can hope at best to stare into shop windows, or work at shop counters, not buy the wares on display. Politically, this should be unacceptable, and socially it will create tensions that boil over periodically.

In its 2014 election manifesto, the BJP excoriated a decade of “jobless growth” and promised a variety of solutions: more jobs in textiles and electronics assembly, a boost to self-employment, and skills upgradation. In the last two years, it has tried all of that; but initiatives like Start-up India, Stand-up India and Mudra (refinancing for micro-enterprises) are either too recent to deliver results or have limited potential. Similarly, policies to boost jobs in textiles and electronics assembly are yet to deliver. And initiatives to close the gap between farmer and retailer (like the e-Nam programme) don’t seem to have made much of a difference. You can’t fault the government for not trying, but as with some other aspects of its functioning, there is loud thunder but little rain.

Meanwhile, frustrated youngsters belonging to traditionally peasant communities like Jats, Patels and Marathas are out protesting, with job reservations among their demands. Other youngsters, among them people with sub-standard engineering degrees, have become vigilante gau rakshaks—there is money to be made through extortion. The government might try to keep a lid on the frustrations created by joblessness by drumming up nationalist and majoritarian sentiment, but in the end that will only add a fresh layer of problems onto the economic discontent.