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Creating Jobs In A Changing World: Why India Cannot Follow in China's Footsteps

15/12/2015 8:10 AM IST | Updated 15/07/2016 8:25 AM IST
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An Indian laborer cuts iron rods at a construction site in Ahmadabad, India, Monday, Feb. 23, 2015. The government of Asia's third-largest economy is this week expected to present in Parliament the budget for the fiscal year ending March 2016. (AP Photo/Ajit Solanki)

The generation of more jobs has become the concern of governments everywhere, in developing as well as developed countries. The realization of a looming global problem is evident in the World Bank's latest Human Development Report which has focused on the changes in the nature of work and employment and the International Labor Organization's underway project on the Future of Work. Citizens can enjoy the benefits of economic growth only if they have adequate and secure incomes. Inadequately employed youth are fuel for social and political trouble.

Not only is the world of 2015 very different to the world of the 1990s when China took off, India is not China.

India has the largest stakes in the future of work and jobs. Its much mentioned "demographic dividend", expected from having the largest numbers of youth in the world, is contingent on these young people earning adequate incomes. In addition to India's own internal challenges, global forces affecting the nature of work and jobs will challenge India too. India envies China, which, by growing a huge manufacturing industry -- employing hundreds of millions of persons making almost everything from low-end toys to high-speed trains -- has lifted hundreds of millions of people out of poverty, much faster than India has. Prime Minister Modi's government has launched several programs for India to catch up: Make in India (for manufacturing), Stand Up Start Up India (for entrepreneurship and small enterprises) and Skills India. However, India will have to follow a very different strategy to China's. Not only is the world of 2015 very different to the world of the 1990s when China took off, India is not China.

The force that is changing the future of work and jobs dramatically is the convergence of new technologies -- the internet, digitization, mobile phones, and automation -- which have proliferated exponentially in the last 10 years. These technologies are radically altering production and service delivery processes. New forms of nimble, networked enterprises are emerging in production, services, retailing, and media, displacing both large factories and big box retail stores. Automation is making redundant the long assembly lines of workers assembling products and codes in manufacturing and software companies. Distinctions between manufacturing and services are blurring. An "internet of things" is emerging, enabling these factories to even manage themselves with little human intervention.

Automation is making redundant the long assembly lines of workers assembling products and codes in manufacturing and software companies.

Advances in automation, and the emergence of new shapes of work and new forms of enterprises, pose many challenges for policy makers who must ensure that there are enough good jobs for people. A big challenge is the uncertainty about what the contents and numbers of the jobs will be. Old ways of developing skills in the economy, by estimating how many people must be developed with what skills, and then setting up "assembly lines" of vocational training processes extending back several years through vocational training institutions into school curriculums, will not work any more. They could produce people skilled for work which will no longer be available. Which will lead to further social unrest. Skill development will have to be more "just in time" and "task aligned". Enterprises will have to take more responsibility for developing the skills they need as the enterprises evolve. And individuals must learn to adapt and learn.

New forms of networked enterprises, and smaller units, will also require new strategies for guaranteeing social security. The Indian government wants to make it easy for small enterprises to form and do business. It is relieving them of many laws regulating continuity of payment of wages, provision of social security, etc. Uber, a new form of technology-enabled "labour contractor" provides labour on demand to customers. It is not clear who is the "employer" in these contracts responsible for payment of fair wages and safe working conditions. When many countries, including India, are being pressed to regulate even the contracts of domestic workers, regulations of other forms of contract work cannot be avoided.

Old ways of developing skills in the economy... could produce people skilled for work which will no longer be available.

New problems with the nature of work, skills, and social security are confronting all countries. Where India differs from China in particular is the process with which it has to find solutions to these challenges. India and China have different political systems. India's democracy is often blamed for the country's slower development. "If only India had development before it became a democracy," some wish. But history cannot be rewritten. India must develop democratically. The reforms of laws and institutions India needs to grow more enterprises and more jobs will require consensus amongst many stakeholders: unions, employers, land-owners and others.

Moreover, the situations of China and the world in 1995, and of India and the world in 2015, are quite different. The Chinese government played a strong role in compelling foreign investors to transfer technology. India has not displayed the stomach for this so far. The situation is that while China and India were comparable in their industrial technology levels in the early 1990s, China is now far ahead. Tied into international trade agreements, and into a bias towards opening markets further, India will have to learn how to, at the same time, induce foreign companies to share their technology and make in India.

Multi-faceted scenarios, describing the consequences of convergence of many forces -- technological, social, environmental, economic, and political -- are required to steer government policies and business strategies.

The stakes for India are very high. Its policy makers must envisage the new forms of enterprises that will emerge. Many consultants are describing the likely shapes such enterprises will take and scenarios of work within them. However, these enterprises cannot exist as self-contained islands. If they employ fewer people, how will enough people earn to pay for the goods and services of these enterprises? How will standards of living be improved? How will social security be provided? Therefore, policy-makers and business strategists too must envision what will happen in society outside the walls of the enterprises. Multi-faceted scenarios, describing the consequences of convergence of many forces -- technological, social, environmental, economic, and political -- are required to steer government policies and business strategies.

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