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BW Businessworld

Population Profit

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McKinsey has come up with a calculation that enables India to beat the whole world hands down, namely estimates of employable hands. In the decade up to 2010, India added more workers to its labour force than China; both added somewhat less than a fifth of the increase in the world labour force. In the next 20 years, India will add more than twice as many workers as China — over a quarter of the increase in the world's labour force. As its population stabilises, China will be endowing its labour force with more and better skills. So will India, but because its labour force will increase so fast, the average level of education will improve little. In other words, China is well on the way to joining the rich countries with their highly trained workers; India will continue to plod in its low-skill, labour-intensive path.

One trend the McKinsey report on ‘The World at Work' notes is the shortage of workers in advanced economies. In 1980-2010, they added 165 million jobs — about 40 per cent of their 1980 stock. Of these, 77 million were women; their work participation increased considerably. And 65 million were migrants from developing countries. Advanced economies will run even shorter of workers in the coming years. In the past 30 years, the proportion of their workers with tertiary education increased from 12 to 24 per cent. Since they will face greater competition in labour-intensive activities, they will have to move further into skill-intensive activities. So they will have to expand their educational facilities even faster than hitherto. They need to do so not only to maintain their international competitiveness, but to stop the deterioration of their social structures: incomes in advanced economies have been becoming less equal; the share of better educated rich has been growing at the expense of poorly trained poor; and unemployment among the poor is much higher than among the rich.

Migration from developing to advanced countries was huge, but it was exceeded by the number of new workers making exports from developing countries — 84 million. Over a half of them were Chinese. There were 13 million Indians too, but they were less than a third of the Chinese workers. A third of China's new workers were in export production, against a fifth of India's. India exported some workers to the US information technology industries, and employed even more of them in IT exports or outsourcing. These were jobs requiring some education, and led to a revolution in Indian tertiary education. But the Chinese took the poor and the villagers and gave them skills, which enabled it to become the world's leading manufacturer. Of China's non-farm workers, 29 per cent went into manufacturing, against 12 per cent for India. So where did India's workers go? Over two-fifths became construction workers, against a sixth in China.

One of McKinsey's most significant observations is that as population growth slows down, productivity growth will have to accelerate virtually everywhere if overall growth rates are to be maintained at levels achieved in the last 30 years. If the normative tone is removed, this means that growth is likely to slow down — most in Latin America, Mediterranean Europe, Arab countries, and advanced economies. This constraint does not apply to India; its growth can accelerate relative to the rest of the world — provided it gets the right policies and leadership.

McKinsey is emphatic about what India would need to do — to expand and improve its education. While India has well-developed tertiary education, it is about the most backward country in the world in terms of children getting secondary education. The point is well taken, but embodies insufficient thinking. We need to ask why India has fallen so far behind in secondary schooling. It is because the government dominates schooling, and brings to it an extremely mechanical approach. It builds four rooms in a row and calls them schools, asks politicians to recommend unqualified young people and calls them teachers, and calls these sweater-knitting teachers surrounded by bored children schooling.

There is too little school education in India because its quality is so poor that parents and children consider going to school a waste of time. If India is ever to catch up with the world, the government must engage professionals instead of running schools itself. And it must allow use of technology and experimentation in teaching. It is shameful that a country that leads the world in information technology regards installation of one computer in each school as progress. Remote-teacher and distance teaching should become the rule rather than the exception if India wants to improve its education.

(This story was published in Businessworld Issue Dated 02-07-2012)