Unravelling The Jobs Riddle
The government must focus on vocational training to boost both the number and quality of jobs
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The conventional wisdom is that jobs will decide the outcome of the 2019 Lok Sabha election. Like most pieces of conventional wisdom, the truth is more nuanced.
Jobs will play a crucial role. So will caste, development, welfare schemes, religion and that ‘X’ factor called political charisma. Opposition leaders lack it. It would be a mistake, however, for the BJP to imagine that Prime Minister Narendra Modi’s oratory will carry them to victory in a close general election. While they are not the only factor, jobs will play a key role in both urban and rural India.
Credible statistics on job creation are hard to come by. The data from the National Sample Survey Office (NSSO) is awaited. It will bring clarity to the festering debate on how many jobs have been created annually since the BJP-led NDA took office in 2014. Complicating matters is India’s informal sector where the bulk of jobs are generated. Add to that an indeterminate number of new self-employed people through schemes like Mudra loans for MSMEs. India’s official unemployment rate is below 5 per cent but practically no one believes it. Figures from those employed in the farm sector are notoriously hard to collate accurately. Schemes like MNREGA, which offer seasonal work, add a layer of complexity to the jobs debate.
There is light though at the end of the jobs tunnel. Technology is the driver. Innovative work practices by progressive employers are playing a part as well. For example, Pepsi India will now allow employees to work off-location. Pepsi staff in disciplines like HR, finance and information technology can report directly to headquarters from their chosen location. The flexibility saves costs to both employer and employee: infrastructure, commuting and myriad overheads.
But it is technology that could enable the next jobs surge. India needs to generate 10 million new jobs a year in both the formal and informal sectors. This is apart from the growing number of “temp” workers and small entrepreneurs – not just pakoda sellers but tiny outfits repairing computers and air-conditioners or home-delivering fresh-cooked meals.
Certain sectors are doing better than others. According to The Economic Times, “There is a boom in hiring by non-banking financial institutions but not in pharma, E-commerce and startups are on a roll, while telecom and life sciences continue to be laggards. IT services and product companies have started to see an uptick in the last six months. Both ends of the job market —temps and CXOs — are growing at a fast pace. Headhunters, placement firms, and market watchers are unanimous about the state of the market – it is growing and doing well, barring some pockets of distress. Human resource services provider Team Lease indicates strong job creation opportunities in the near future. Its assessment is supported by indicators in the macroeconomic environment, signalling a healthy increase in overall economic activity levels.”
So is India on target to create the promised 10 million jobs a year? A recent CMIE study suggested it is not. The study claimed only 1.4 million jobs were created in the last financial year. Other surveys using EPFO data showed that over 7 million jobs were generated last year. The economist Surjit Singh Bhalla argued that his calculations indicated more than 12 million jobs were created last year.
Whatever the long-awaited NSSO job numbers reveal, it’s important to focus on not just the quantity of jobs generated but their quality. Low-paid or temp jobs are not necessarily sustainable. They don’t add to productivity and consign people to years of poor remuneration and job dissatisfaction. To make things worse, technology can be a double-edged sword. While it creates new jobs, it can make others redundant. Automation is seen as a big threat. In advanced automobile factories around the world, robots are increasingly taking over the shop floor. They assemble car parts with often only a lone human supervisor to monitor them.
Blue-collar jobs are obviously most at risk as companies like Maruti shift to automated assembly lines in their factories. And yet history has demonstrated that for every job lost to new technologies, a new one is created in an ancillary function. Britain, for example, one of the world’s biggest coal-mining nations in the 20th century, today has virtually no coal mines. New jobs though have emerged in fintech, robotics, auto design and machine learning. In the United States, technologies like fracking, riding a wave of high crude oil prices, have set off a shale oil boom, generating new blue-collar jobs lost to the traditional automobile industry. It prompted United States President Donald Trump to tweet: “Blue-collar jobs are growing at their fastest rate in more than 30 years, helping fuel a hiring boom in many small towns and rural areas.”
Blue-collar jobs in India too are expanding. As The Economic Times reported: “Blue-collar job growth in manufacturing is mainly incremental. The more prominent growth is primarily at the front-end, which is the customer-experience side. There’s growth on the services side too – courier and delivery staff, hands to manage last-mile connectivity in e-commerce, etc.”
The challenge for India therefore is to boost both the number and quality of jobs. The government can help in two ways. First, by improving infrastructure, reforming labour laws, making taxation more predictable and ensuring regulatory diktats are less arbitrary. This will encourage businesses to create higher quality permanent jobs. Second, the government must focus on vocational training. During a visit to one of India’s most technologically advanced facilities, I was struck by how the firm spent significant resources on training school dropouts in tasks like electrical work, carpentary and fabrication. These jobs will become vital and more high paying than they are today because there is a shortage of vocational skills in the workforce. Just as Uber and Ola cab drivers have doubled their earning power, so one day will skilled electricians and plumbers. In London, a plumber (often an immigrant from Poland) makes as much money as a school teacher.
In India too that will come to pass as the jobs market matures at both ends of the scale.