The unemployment rate in India rose to 7.2 percent in February 2019, the worst in 28 months, according to data compiled by the Centre for Monitoring Indian Economy. The labour force is also down 25.7 million since September 2016 and the number of employed persons has declined by 18.3 million in the same period.
Compiling data on jobs in India is complicated. We have organised and unorganised sectors and many layers in between. Add to that the issue of skills and measurement, and you have a massive puzzle that very few want to solve.
Manish Sabharwal, Chairman of Teamlease Services Limited, is an expert in subjects related to employment and employability. Before co-founding Teamlease, he co-founded India Life, a payroll and pension services company in 1996 that was acquired by Hewitt associates in 2002. Consequently, he was chief executive officer of Hewitt Outsourcing (Asia) based in Singapore. Here, Sabharwal, who serves on various state and central government committees, shares his thoughts on what really ails the Indian job creation scenario and what he thinks are the best job roles of the near future.
What according to you is the Future of Work?
The future is impossible to predict; most attempts at predicting where jobs will be in a few decades from now have the predictive efficacy of palm reading or astrology. But as an organisation you can invent the future and as an individual you can make yourselves worthy of the future. So where you stand on this issue depends on where you sit. But the future of work is more exciting, inclusive and knowledge intensive than it has ever been in human history. The industrial revolution represented a break with the past (per capita GDP had been flat for about 2000 years before that) but it was not always inclusive and this is surely different about the future.
What is ‘really’ ailing the job creation scenario in India?
India does not have a job problem; we have a formal jobs problem. Our official unemployment rate has bounced between 4-7 percent since independence and is not a fudge; everybody who wants a job has one; they just don’t have the wages they want. Wages reflect productivity and our wages are lower than what people want because too many Indians work in low productivity geographies (Karnataka has the same GDP as UP with a third of the people), low-productivity firms (our 63 million enterprises only translate to 19,500 companies with a paid up capital of more than Rs 10 crore), low-productivity sectors (50 percent of our labour force work in agriculture and generates only 14 percent of our GDP), and low productivity skills. What really ails our labour markets is productivity
How large an issue is youth unemployment? What should be the steps we collectively take (both public and private sector) to work towards a solution?
Historians warn against a disease called Presentism; the belief that today’s circumstances are so unique and special that no generation before us has faced them. Youth unemployment has always been a challenge for India but agriculture and marginal self-employment were the shock absorbers of the labour market since 1947. But kids born after 1991 have higher aspirations and are no longer willing to accept the self-exploitation that was inherent in those shock absorbers. The only sustainable solution to give our youth jobs with the wages they need are massive formalisation, financialisation, urbanisation, industrialisation and human capital.
According to you, what would be the skills of the future?
This again is impossible to predict. But it is clear that in a world where Google knows everything, knowing is no longer as valuable as learning how to learn. The traditional notion of 25 years of learning, 25 years of earning and 25 years of retirement no longer works. But it is clear that robotics, automation, machine learning and artificial intelligence make soft skills like being curious, confident, risk taker, team player and communicators more valuable than traditional hard skills.
Are we having a skills crisis too? What can we do to correct that?
The supply side of skills is perpetually behind the demand side in all dynamic economies; when asked how many people worked at his company US Steel, Andrew Carnegie in the late 1800s said "about half". India's skill crisis is amplified by our scale (our demographic dividend), our regulatory cholesterol (that has blunted the productivity of formal enterprises), and a fragmented education system. We need massive improvement in the ease-of-doing business, explode apprenticeships, fix government schools, create performance management at ITIs, reboot employment exchanges and vocationalize higher education.
What are currently the best jobs roles/ profiles to have and why?
India's farm to non-farm transition is very different from China’s because it is currently not driven by manufacturing exports but by services. The fastest growing segments at the bottom of the pyramid are sales, customer service and logistics.
Entrepreneurship or employment – what would you bet on for the future?
India has the most self-employed people in the world; about 50 percent of our labour force is self-employed. But this high self-employment is not a child of some overweighed entrepreneurial gene among Indians; the poor cannot afford to be unemployed so they are self-employed or ‘self-exploiting’. Not everybody can be an entrepreneur and not all entrepreneurship is viable. We have to distinguish between firms that are babies (small firms that will grow) and dwarfs (small firms that will stay small). India is a nation of corporate dwarfs because of our regulatory cholesterol, poor infrastructure and weak human capital. But this is changing rapidly. But I don't think we should expect the proportion of our labour force in self-employment to grow in the future.
A new trend is where people in their 40s are looking for new career opportunities – what is your advice to them, how should they skill up?
Lifelong learning is no longer optional; we need to make sure we devise ways to create new skills before we need them. Unfortunately human beings don’t change for a better option; they change when they have no option. People need specialisations but need a deeper understanding of other functions, industries and organisations. We need to dig our wells before we are thirsty.
What are India’s strengths from a Future of Work perspective?
You will misjudge India if you judge us from our per capita income or infrastructure. Our institutions, capital markets, elite higher education, entrepreneurship and much else is much higher than a country whose per capita income is $2000. I think the next twenty years will be very different from the past as we accelerate our five work transitions that create higher productivity; farm to non-farm, rural to urban, subsistence self-employment to decent wage employment, informal enterprises to formal enterprises, and school to work.
India is entering a unique cycle of higher productivity for our firms and workers. This will put poverty in the museum, where it belongs. The new world of work plays to many of India's strengths. Harvard historian Samuel Huntington used to say that the gap between India's aspirations and its reality is not a lie but a disappointment because our aspirations are very high. We are finally starting to narrow or even end that disappointment and recently crossed the GDP of the UK. Over the next few years we will cross Japan, France and Germany. And then India will be positioned to strategically take on China and the US.
Nisha Ramchandani is the principal author of 'The Future of Work' series.
Published Date: May 02, 2019 06:05 AM | Updated Date: May 02, 2019 02:05 PM IST