Industrial 4.0 new-age technologies are disrupting the jobs around the global. This is likely to have a marginal impact on labour surplus economy like India, where more important concerns are creation of more formal or decent jobs and rising non-standard form of work, which is replacing the limited formal or regular work in the organised sector.
The ‘Future of Jobs Report 2016’, a study by World Economic Forum, first highlighted that Industry 4.0 with new-age technologies such as artificial intelligence, advanced robotics, 3D printing and cloud computing may impact existing jobs & ways of working, particularly the entry-level, low-medium skilled jobs globally. New higher-value jobs will be created, but these will be fewer in quantity and require a different set of skills. Since then, there has been speculative numbers floating around on the job losses in India. The World Bank report also confirms that automation is threatening 69 per cent of the India’s jobs. A recent Ficci study suggests there will be a decrease in routine middle or lower skilled jobs and increase in creative high-skilled jobs referred as “job polarisation” in India. Over the past few years, policymakers, academics, workers, people from industry and civil society are debating what the future of work might look like in India in the context of emerging Industry 4.0 technologies.
India has made significant progress in terms of GDP growth in the past two decades, but without much increase in job numbers. The employment elasticity to output dropped to 0.03 from earlier 0.05, which means every 10 per cent rise in GDP generates only 3 per cent additional jobs. Even today, the large section of workers is engaged in agriculture (49 per cent), which contributes only 14 per cent to the economy. In contrast, the services sector, which contributes 58 per cent of GDP, barely generates 27 per cent of employment, and the share of manufacturing in both employment (13 per cent) and GDP (16 per cent) is much less compared with developed nations.
Bulk of the workforce (83 per cent) is engaged in the unorganised sector (employment terms are not fixed and regular, as well as enterprises, are not registered with the government and provide no social security benefits such as provident fund and insurance) and 91 per cent are involved in informal work (low wages/earning and casual or temporary work). On the other hand, more than half of workers are self-employed (52 per cent), 30 per cent casual daily workers and 18 per cent regular employees. But all those employed in the organised sector (17 per cent) are not formal workers; only 7.5 per cent of them are formally employed and enjoy regular jobs with social security benefits. In most of services sectors – financial services, real estate business, education, health – have witnessed higher employment of informal workers, and contract jobs are rising steadily in organised manufacturing, i.e. increase in contract workers accounting for 47 per cent of the total increase in employment in organised manufacturing.
In this scenario of large unorganised sector employment, self-employment, casual and informal workers, and increasing temporary workers in the organised sector, the likely impact of Industry 4.0 technologies in India’s job market is in quandary. Some studies also confirm Industry 4.0 technologies may only impact some select sectors such as organised manufacturing and service sectors – financial, legal, IT and BPO services – primarily because of the relative cost of labour and infrastructure constraints.
The capital-intensive organised manufacturing industries are expected to adopt more 4IR technologies such as the automobile sector, which is estimated to buy 60 per cent of all industrial robots sold in India. But the stock of industrial robots is India today (17,000) accounts for only 0.1 of total industrial workforce. Over 90 per cent of entrepreneurs and establishments in the manufacturing sector fall in the smaller category and the unorganised sector. Most enterprises within the unorganised sector still have limited access to financial capital, infrastructure and requisite skills to support the adoption of advanced technologies – relying heavily on manual labour. In services sector, works that involve routine and repetitive tasks have high automation potential such as IT & BPO sectors, which employs only 3.7 million people, despite contributing over 9 per cent to GDP.
This shows manufacturing and services sectors are not main employment generators in India, and creating largely temporary or non-standard jobs with emerging technology and gig work. In the organised sector, over 68 per cent of workers don’t have a formal contract, access to social protection or job security. The new technology-enabled informal service such as cab calling, like Ola and Uber, workers lack access to any formal social protection mechanisms. It implies that impact of adoption of Industry 4.0 technologies on net employment numbers is likely to be marginal, but important for new form of work with rise of informality in the organised sector. This will benefit those who have the requisite skills, aptitude, & social safety nets.
But only one-fourth (25.3 per cent) of workers have higher secondary level education and one-tenth (9.6 per cent) are graduates. Over 30 per cent of India’s youth are neither employed nor in education or training, one of the highest percentages in the world. Hence, the government need to focus more on reforms in education and skills to create a large Industry 4.0 compliant workforce, and enabling policies to drive its rapid industry adoption. In addition, existing workforce needs re-skilling to adopt new and emerging technologies. It’s argued a new technology does not destroy existing jobs but only replace it with new forms of jobs. A recent study says almost 16 million new jobs that do not exist today in India will be there in the next five years. The nature of these jobs – either formal or informal – will be more important. Hence, apart from skilling, the more important policy concern is creation of more formal or decent jobs and increasing non-standard form of work, which is replacing the limited formal or regular work in the organised sector.
(The writer is ‘Fellow’ at Institute for Human Development, New Delhi)