10 Sep 2020 20:42 IST

How will automation and tech affect India’s job market

Developing skills that can’t be automated, and continuously, will help protect future jobs

The world was already moving towards the fourth industrial revolution and the Covid-19 pandemic has only further accelerated this pace. With the rapid evolution in the technological landscape, artificial intelligence, machine learning, IoT, cloud computing, augmented reality, and so on, are definitely going to transform the way we work in the future.

This poses a new challenge for developing countries like India in terms of re-deploying a large workforce across jobs that are to be impacted by the adoption of many of these exponential technologies.

Widening skill gap

A disproportionately large section of the Indian workforce functions without formal job contracts, social protection, and growth prospects. Around 80 per cent of employment lies in the unorganised sector and 90 per cent of employment is informal. Agriculture and construction, which require comparatively low skills, continue to be the largest employers in India, using 63 per cent of the workforce. The service sector, whose contribution to GDP growth in the previous decade has been nearly 63 per cent utilises only 25 per cent of the workforce.

What this suggests is that the Indian workforce comprises of a large segment of low and low-medium skilled workers. Attributing to the labour costs, low education and skilling levels, and high capital costs for automation, the agricultural and construction sector may not feel strong shocks by technological interventions. However, they will continue to experience increasing mechanisation and the opportunities of labour, if not decline, may well be limited.

IT’s tectonic shift

The sector that is expected to feel the greatest impact is the service sector. A significant portion of routine and repetitive tasks may be automated. IT services and BPOs, a key component in driving India’s growth, will find itself undergoing a significant change, not only in terms of workforce composition but also in terms of business models and organisational designs.

According to a EY report, in 2022, demand for 10 to 20 per cent of the jobs in the IT and BPM sector will be for roles that don’t even exist. Around 60 to 65 per cent of the workforce of this sector would be deployed in jobs with radically changed skill sets. Thus, the premium for higher skills in the IT, and to a large extent, in the services sector too, would gradually increase and thereby increasing the inequality between low to medium-skilled and the high skilled populace.

As the medium-skilled jobs like receptionists, legal aid, financial tellers, and so on, get automated, the upward mobility of labour from low-medium skilled to high skilled, and thus highly paid, will face serious constraints. Low-medium skilled and organised jobs have been an important driving factor in social mobility. In India, youth living in extreme poverty have conventionally used them as a vehicle to improve the quality of life. This widening gap between the low-medium skilled workforce, in terms of skill, pay, education, and resulting social benefits, and the high skilled workforce needs to be bridged.

Tackling IR 4.0

In order to tackle the upcoming revolution, India needs a comprehensive approach to discern the interplay of factors like socio-economic constraints, globalisation, demographic dividend, adoption of exponential technologies, and the indispensable need for sustainability.

For India to be able to tackle these challenges, the government needs to take a multidimensional, simultaneous, and resolute approach. The skilling and re-skilling, of new entrants or those who are already in the workforce, need to be taken up, in a mission mode. The existing outdated technical education curriculum prevalent in most of the institutes in the country needs to be rapidly modified so as to equip the upcoming workforce with new skills. The learning outcomes of the curricula need to be continuously monitored for employability.

Also, since the automation will confer greater importance to human cognitive and interpersonal skills, the institutions and organisations should take a priority approach towards developing these skills in the students and employees.

Strengthening the manufacturing sector

In the direction of bridging the skill, and resulting gap between low-medium and high skilled labour pool, the government needs to invest in a comprehensive human capital development programmes, which combine education and health, especially catering to people at the bottom of the pyramid. In order to be able to accommodate the eight-million strong workforce that enters the labour market every year, the government should focus on expanding the labor-intensive manufacturing industries, such as, textiles, handicrafts, and revamp the ailing MSMEs with updated technological infrastructure and enhanced integration with national and international markets.

The National Policy on Electronics which has envisaged the creation of $400 billion electronics manufacturing industry by 2025, needs a renewed focus as this will not only help in expanding the manufacturing sector but will also augment the software industry, which has been lagging support of strong hardware manufacturing, paving way for indigenous automation for the future.

Shifting focus

The current pandemic has immensely impacted different income groups and job roles. According to a study, even in an advanced economy like the US with a much larger formal sector, only 29 per cent of the people can work from home.

In order to be able to alleviate such sudden blows to the workforce, India needs to identify the post-pandemic high-growth sectors and start upskilling the workforce for the same. In addition to the indispensable manufacturing sector, or more broadly the MSME sector, a significant portion of the workforce can be aligned to the health sector which has been long overlooked for its job creation potential. Public and private investment in the health sector is bound to increase in the post-pandemic world and medium-skilled jobs, such as paramedics, medical device technicians, medical lab assistants, and so on, can be tapped.

Additionally, this pandemic has disrupted skill training programmes by imposing a shutdown of nearly 30,000 industrial training institutes and other skill training centres. For adapting to the new normal, the skill training infrastructure needs to be decentralised by building and expanding the utilisation of IT and emergent technologies such as AI, ML, IoT, and so on.

These changes in the nature of work are cyclical but subject to shocks such as this pandemic. With the right policy approach and resolute action, India can leverage it into its favour, or at the very least, minimise the plausible damage in the coming years.

(The writer is a student of MBA in Business Analytics at IIM, Bangalore.)