Martin Ford’s Rise of the Robots: Technology and the Threat of a Jobless Future, a best seller in 2015, has continued to create apprehensions for new, young and aspiring job seekers in India due to threats of job destruction of modern technologies of automation and robotics (artificial intelligence). These technologies are obviously highly capital-intensive and have already made remarkable in-roads into manufacturing and customer-based services including telecommunications, transport, health, trade and hospitality. Will expansion of these technologies lead to a massive technological unemployment in India? Does such unemployment matter for design of current and future economic policies?
Lessons from the recent past
Apparently, in a globally competitive era, agents of productions and service-providers aim at maximisation of profits by achieving higher productivity and lower costs than their competitors. On the demand side, consumers have always welcomed new technologies if they provide goods and services at high quality and low price.
Modern technologies have decisively proven to strengthen the required competitiveness of the production agents, if their investible resources (including foreign investment) are sufficient and size and scale of production are viable and sustainable for such technology-adoptions. In general, large-scale industries and enterprises with a strong export-orientation, or facing a stiff import competition in domestic markets, have always had and continue to have a first-mover advantage in adopting newer technologies. Historically, this pattern of technology adoption has lead to technology gap between the size-class of industries and enterprises. Thus, incentives for technology upgradation and adoption by medium, small and micro enterprises have been the key elements in the policies and programmes at the national and state levels.
Given the fact that new technologies are generally neither relevant nor applicable/appropriate for all size-class of enterprises, there is a reason to be less apprehensive on their mass destruction of jobs. In fact, available recent estimates of employment elasticity are supportive for a positive productive employment generation. For instance, the estimate of employment elasticity based on Population Census data (2001 to 2011) is 0.24, NSSO (1999-00 to 2011-12) is 0.19, Economic Census (1998-2004) is 0.41 and Annual Survey of Industries (2003-04 to 2012-13) is 0.54. Interestingly, organised manufacturing sector has shown the highest employment elasticity (i.e. 0.54), although it is presumed to be a major adopter of job-killing technologies!
Estimates of technological unemployment
Officially, no estimate of technological employment and unemployment is available in India because it is not estimable from the above sources of data. Certainly, such an estimate is a policy imperative to monitor the employment effects of economic policies. This calls for a revision in the data collection framework of the official agencies.
The most recent private estimate of technological unemployment was given by the HfS Future Workforce Impact Model, in July 2016, on India’s IT services and BPO industry. The projected shrinkage of workforce in this sector was 0.48 million. This is about 14% of the sector’s current total workforce (3.5 million comprising 80% low skilled workers).
India’s current total labour force (using the combined criterion of usual principal and subsidiary status employment) is estimated at about 476 million comprising about 25 million unemployed. IT and BPO sector’s employment is about 0.7% of the total workforce and projected job losses in the sector are about 2% of current size of total unemployment in India. However, this sector-specific estimate is unique and small. It should not be used to exaggerate the problem and create unrealistic apprehension in the minds of job-seekers because jobs are being generated elsewhere in the economy.
Jobs for our millions
Jobs for current stock of unemployed and annual addition new force (about 5 million) are our current targets of employment generation. In addition, the pattern of India’s age structure transition may result in highest share of working age population (25-59 years) over the years up to 2050 and beyond. For instance, using the United Nations population projection (The 2012 Revision: Medium Fertility Variant), total size of working population of India would be 817 million in 2050 (or 47% of total population of 1,736 million). Jobs for these millions in the productive age group are essential to reap the demographic dividend or maximisation of growth effects of population age structure transition. Further, gainful employment is equally important for a long term reduction in poverty and inequality.
India has been partially experiencing the effects of modern technologies because they seem to be appropriate to enhance and strengthen global competitiveness. Further applications of the modern technologies do require specialised skills and training for job seekers to be employable in select sectors. This can be met by improvement in employability of current and future working-age population. This is a challenging task given that, of the current total labour force, about 88% have no tertiary education and about 90% are employed in unorganised sectors.
We must gladly acknowledge that the on-going “Make-in-India” programme does include few initiatives to enhance employability of job seekers in the manufacturing sector. Such initiatives of skill development deserve expansion to other sectors and lower educated job-seekers, otherwise, unemployment will persist and grow. More so, unemployability and modern technologies cannot be blamed for unemployment. Thus, what matters for India is not technological unemployment but unemployability.
The author is MR Narayana, professor of economics, Institute for Social and Economic Change, Bengaluru, Views are personal