Mr Modi, just how do you plan to get youth the jobs?
In a recent interview to news channel Narendra Modi lamented our jobless growth in the past. He also reaffirmed his government's commitment to job creation.
If Modi is serious about his commitment then in a country with 54 per cent of the population below 25 years of age, he certainly has a job cut out for him. Even a cursory glance at the ongoing turbulence in the global labour markets makes it quite obvious that the growing problem of unemployment cannot be addressed by just making a few cosmetic changes in our past policies for employment creation and entrepreneurship. The prime minister needs to come up with an innovative skills development plan to fulfil his commitment.
The West is currently struggling hard to cope with the problem of high economic inequality and social tension caused by declining employment. This has been happening despite continuous growth of their GDP. As per the US Bureau of Labour Statistics published in February 2015, 33 per cent Americans of age 16 and above are not employed. In an interview to The Washington Post in March this year, the former American Treasury Secretary Lawrence Summers said that if one in 20 men between age 25 and 54 were out of job in 1960, then the same figure now probably was one in six or seven. In countries like Greece and Spain youth unemployment has crossed the 50 per cent mark.
The growth of unemployment in the last few years cannot be attributed to shifting of manufacturing jobs to China from the developed economies. According to a research paper from the University Chicago, even China and India are experiencing declining share of labour in GDP.
Technological unemployment (an expression first used by John Maynard Keynes) is a major reason for declining labour participation in the economy. Though Keynes had envisioned such unemployment many years ago, his caution was quickly forgotten during the decades of post-war boom. Keynes' own assessment of such unemployment as a "temporary phase of maladjustment" also provided an added motivation for ignorance.
As exponential growth of computer technology (popularly known as Moor's law) is now producing incredible results at a breakneck pace disrupting all kinds of businesses, the spectre of growing number able-bodied people remaining unemployed is looming large for every country. Substituting capital for labour through automation is turning out to be more and more attractive for owners of capital. Hence, labour's share of the world's income is set to fall further as capital captures more of it.
In contrast to the period of industrial revolution when machines were replacing physical labour on a large scale, factory automation, computer-controlled machining centres, scheduling tools, etc are currently eliminating many screen-sitting white-collar jobs (described as "bullshit jobs" by David Graeber of London School of Economics). An Oxford University research paper predicted that as a result of skill-biased technological changes some jobs like telemarketers, accountants and auditors, retail salespersons and real estate agents would almost disappear very soon.
Modi certainly has reasons to worry since in India, the middle class - his main support base - is primarily employed in these types of jobs. The situation appears more worrisome if one considers the fact that the middle class is supposed to be the major attraction and strength of the Indian economy. With the process of automation picking up further the hollowing out of the great Indian middle class probably has already begun. To create more jobs for the population under the growing threat of rapid skills-obsolescence, the Modi government has to come up with an innovative and dynamic system of skills assessment and training.
A team of researchers from Massachusetts Institute of Technology and Masdar Institute, Abu Dhabi, conducted a study of 674 occupations to understand the changing nature of skills that jobs required in 2006 and 2014. They found a significant reduction in skills that were competing with machines as computers took over more routine jobs involving rote information processing, supervision and perception. Even if the job category remained the same, the content of the job in many categories had undergone a change in 2014 when compared to 2006. By contrast, demand for skills that complemented machines such as deductive reasoning and written expression grew in importance. The research results also revealed increasing requirement for skills to carry out jobs in areas requiring interpersonal skills, where machines were still no-match for humans.
Against the backdrop of such far-reaching changes in the skills market, the slew of labour reforms introduced by Modi last year at the highly publicised Shramev Jayate Karyakram was quite an eye-opener about his perception of the present and future problems pertaining to our workforce. The prime minister's call for restoring the respect for people who work with hands instead of admiring only people doing desk jobs would make one feel that he is trapped in the traditional dichotomy between the blue-collar and white-collar workers. The draft national policy for skill development and entrepreneurship 2015 of the Ministry of Skill Development and Entrepreneurship (MSDE), a ministry Modi curved out separately for creating employable skills and entrepreneurs, also demonstrates the same old thinking. The government certainly doesn't understand the nature of the brewing crisis in skills market.
Modi governemt's draft national policy for skill development, in essence, is a mere reiteration of the previous government's National Skills Policy. Frequent use of the word entrepreneurship and its inclusion in the title of the document cannot be considered as a notable difference between the tow documents. There is nothing in the policy to show that the current government really understands the nature of entrepreneurship that is required today to foster high-growth job-creating firms.
By looking at today's labour problems through the prism of white-collar and blue-collar dichotomy - the way once upon a time Luddites treated machines with contempt - Modi, it seems, while living in the 21st century is trying to solve a 20th century problem with 19th century mindset. Today, one cannot remain oblivious of the fact that in a world dominated by Big Data and Internet of Things (IoT), when billions of machines are talking to each other and generating tsunami of consumer information, machines are capable of doing a wide variety of both physical and mental jobs. Hence many blue-collar and white-collar jobs (both "bullshit" as well as "non-bullshit") will soon become completely extinct. We need to develop very different types of skills to ensure employability of the new workforce that is entering the market.
Chinese achievements in manufacturing during the last few decades are already losing sheen as new production system based on a variety of very new skill sets are set to replace mass manufacturing with mass customisation. Modi government's skills development strategy for implementing its Make in India initiative and replicating the Chinese success story (though without publicly admitting it) is woefully outdated. The draft national policy for skill development and entrepreneurship 2015 is full of grandiose plans for creating a centralised system of quality, certification, examination, marking system, etc for skills training, which probably is best suited for a centrally planned economy of the bygone era.
More entrepreneurship along with developing employable skills at a time of innovation-driven growth is critical for our survival. No two ways about it. However, it needs to be acknowledged that in an environment dominated by sensors, applications, smart communications and big data the type of entrepreneurial skills required now are very different from the past. Design thinking, business model innovation and networking are some of the critical skills that are going to determine the success of an entrepreneurial venture. The run-of-the-mill entrepreneurship and skills training that the government plans to proliferate and even export to other less developed countries will only end up as a sheer wastage of public funds.
There is a widely accepted view about the centrality of education reforms to achieve sustainable competitive advantage in today's knowledge-driven economy. For harnessing creativity, divergent thinking and interpersonal skills from an early stage, the reforms must encompass all levels of education, starting from primary up to tertiary level. India must figure out how to educate its huge number of illiterate or semiliterate people to make the country Modi's skill capital of the world.
Technological progress indeed now makes it possible for a country to bypass an entire stage of development in the education sector, like what India could do in the telecommunication sector. In a matter of few years the country was able to provide widespread connectivity to a huge population of impoverished people living on the fringe. The same is now possible in education. Every person, whether a child or a grown-up individual can be given access to world's best quality education - providing cutting-edge knowledge and job skills - at an affordable cost.
Unfortunately, education has the least priority for the Modi government and the draft national policy on skill development and entrepreneurship 2015 does not even acknowledge that the formal education has the most critical role to play for skill building in the emerging economy. Under these circumstances converting India to skill capital of the world and creating jobs for our youth can be considered nothing more than a Mungerilal ke Haseen Sapne.