Book review: ‘The Jobs Crisis in India’ by Raghavan Jagannathan

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Updated: December 9, 2018 4:26:01 AM

Is the job market dead, or are new avenues being created that require reskilling?

The author takes up issues like technology being a threat to the future of job creation and the necessity of one getting reskilled to keep up with the times.

The issue of employment will always have political overtones as the topic is a favourite of any opposition party to showcase the failures of the ruling regime. As elections are always round the corner in some state in a five-year period, the noise level just increases on ‘job creation’. R Jagannathan has sought to clear the issue in his amazing book titled The Jobs Crisis in India, where he tries to separate the ‘noise’ from reality with no preset notions or political inclination.

It cannot be denied that there is a crisis of jobs today if one sifts through various studies, as the pace of job creation has been slower than the GDP growth. The unemployment rate, according to the author, can be anywhere between 2% and 6%. But this is because unattractive wages keep several people out of the employment circle. Thus, it is not surprising that the majority of people are either self-employed or contractual.

The author takes up issues like technology being a threat to the future of job creation and the necessity of one getting reskilled to keep up with the times. Otherwise, the so-called positive demographic distribution will be a liability. He has his suggestions—which are practical—about what you as an individual should do and what the government can do to alleviate this phenomenon.

Throughout the book, Jagannathan focuses a lot on the disruption caused by technology on employment, as existing industries, companies and people become redundant when the skill sets held become anachronistic. The accelerated pace of technological progress has fertilised and irrigated the entire chain of manufacturing and services, and threatened myriad jobs in various sectors. Telecom, BFSI and IT are some sectors where we have witnessed a sea change with the advent of technology. Mergers in telecom have made people unnecessary, while technology in banking with digitisation requires fewer branches and ATMs, which makes even ancillary services like security, maintenance, etc, less relevant.

Now, in such a situation, if we have aggressive privatisation of PSBs, one can visualise the labour disruption that will be caused. Already, given the stringent labour laws in India, companies are reluctant to hire more than is needed and have resorted to outsourcing to control costs. Therefore, he argues that regulatory overreach or excessive zeal to protect workers has actually worked against them.
In the past, when technology replaced labour, the degree of sophistication was different and it was possible to adapt to it. Now, with rapid strides in AI or blockchain, not everyone can do so, which will lead to displacement. The author indicates that even new ventures like Uber can undergo change, where driverless cars can make labour irrelevant. This will, however, take time, but one has to be prepared for such changes. Blockchain and P2P lending do away with the need for bankers as such and what we are talking of in the form of fintech companies has hardly any human interface.

At what levels are jobs under threat? This is interesting and he feels that at the high level one can still learn and get reskilled. At the lower level, there will be opportunities, as you move from delivering pizzas to, say, retail goods. But there is a threat of saturation. How long will a pizza delivery boy continue to risk his life rushing delivery or a cash counter girl keep scanning bar codes? Uber drivers are already a disillusioned lot, as their payoffs have diminished. At the middle level, there will be a squeeze and office jobs like clerks, peons, accountants, brokers, etc, are under threat. The author is concerned here as, given our demographics, the dividend can turn into a nightmare.

Can the government do anything? The UPA government had the MGNREGA programme, which gave artificial work and wages, and though controversial, has provided employment and wages. The NDA government has worked more on creating entrepreneurship with Mudra loans and campaigns such as ‘Stand up India’ and ‘Start up India’. At the policy level, we may have to dovetail our policies to ensure that there is planned urbanisation. Taxes must be tilted towards income from capital, a la Piketty, which will lower overuse of capital and make automation less attractive.

The focus must be on SMEs as they will create jobs. Land and labour laws have to be liberalised so that urbanisation takes place and employers hire more people rather than opt for capital-intensive investment. Direct transfer instead of subsidies is meaningful as they make industries more competitive and create jobs. He sees a future in industries like construction, retail, logistics, transport, apparel, furniture, etc.

Can we as individuals do anything? Yes, he has a series of recommendations that are quite doable. Reskilling is continuous and tops the list and, here, he also talks of honing soft skills. Job mobility is on and one should be flexible with physical mobility, as this is the only way one can grow. Working couples are always practical, because if one loses a job, the other has one and you get time to search. One must get to do something on the side like write or teach so that one can fall back on something in the eventuality of becoming redundant. He is against building liabilities like buying a house as the EMIs can get onerous if you are out of a job. One must also strive to work post retirement.

The harsh reality, according to Jagannathan, is that the case of regular jobs will be diminishing over time. He sees what he calls a ‘gig’ economy where the concept of assignments catches on and skilled professionals have an advantage and can work from home. But others may not be that lucky and, therefore, self-skilling is very important to survive. ‘Platform-based jobs’ will dominate and Uber kind of jobs will be important at the lower skill level.

Jagannathan’s book is well-researched and loaded with data to prove his hypothesis. It is disturbing because it highlights the problems we are going to face going ahead. The present debate on whether jobs are created or not is only peripheral and we need to prepare for this revolution that is catching up. In short, things will never be the same.

-The writer is chief economist, CARE Ratings

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