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The upcoming Job Crisis in India | Unemployment Issue 2019

Published on August 11, 2019 | Education News| Eye Opener
The Upcoming Job Crisis In India 2019 | Navigus Blogs


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The Upcoming Job Crisis In India 

The unemployment issue in India is a hot topic and widely discussed across India. According to the statistics from the National Sample Survey Office job survey 2018, 

  • The national unemployment rate was pegged at 6% 
  • Urban unemployment rate (7.8%) was higher than the rural unemployment rate (5.3%)

Though it is not comparable to previous years’ data considering the new design methodology used, it still outlines that all is not well in the current job environment and calls for measures to stem the problem. 

“A prolonged consumption slowdown in various sectors in the face of a global slowdown, exacerbated with intrinsic policy shocks such as demonetisation, has resulted in the reduction of employment opportunities.”


Current State of Affairs: Factors impacting the job market 

Let us look at the key factors that have impacted job creation and employment opportunities in India. 

Rising aspirations of the educated youth 

With the rise in education levels in the economy combined with a rise in household income levels, the aspiration levels of educated youth have also risen.  They are not willing to join the workforce at lower remuneration and are overqualified for lower-skilled jobs. 

Drop in Central Government Jobs 

The total number of jobs created by the central government in 2018, dropped lower by 30% compared to the previous year. Not even 1% of those registered with the government employment exchanges could get placed. 

Slowdown in Consumption 

A prolonged consumption slowdown in various sectors in the face of a global slowdown exacerbated with intrinsic policy shocks such as demonetisation has resulted in the reduction of employment opportunities. For example, automotive and auto components industry stares at an unprecedented slowdown with a potential workforce reduction of 10 lakh workers in 2019, if the government does not step in with a policy stimulus. 

Changing Global Consumption Patterns 

India as an economy is also evolving and with the changing economy, the consumption pattern is also changing. The inherent purchase behavior of the middle class has also seen a paradigm shift. The  Car ownership has given way to a preference for the usage of ride-hailing cabs like Uber, Ola, and are giving way to a more robust rental economy. This has also resulted in the slowdown of the sales of automobiles. Similar patterns can be seen in the housing segment where the rental homes are preferred by the younger generation. 

Unique Paradox of High Unemployment rates combined with the Lack of Right Talent 

For decades India has consistently dropped the ball on making the right investments in education and health care for the youth, as summarised by data collected by the Human Capital Index on which India ranks at 115 out of 157 countries. This has led to a lack of proper education, training, and skill development programs aimed at providing better-paying high-skilled jobs for younger workforce. Thus resulting in India missing out on the benefits of its young demographic dividends. 

To find out more on the skills gap and the reason behind the high unemployment rates of engineers in India check out our blog post here.

 

Impact of New Technologies, Artificial Intelligence & Machine Learning 

Services and Information Technology industry is one of the largest employer industries in India, catering ~65% of global IT offshore work and 40% of global business processing. This is a humongous number, and it is estimated that 69% of the jobs in the space will be automated by 2030. The move towards automation, adoption of Artificial Intelligence and Machine Learning has already begun. It is impacting the products and processes of the future. 

 

The upcoming Job Crisis in India | Unemployment Issue 2019

 

The Future: So, is Job Crisis for real? 

Considering the above factors, is it time to estimate the doomsday? Of course not. Layoffs are inevitable in the short term, but what much of the noise ignores is that the future will also see widespread new employment creation, including jobs that are as yet unheard of. We go into the details about how automation will affect the workforce and the myths & realities of Artificial Intelligence

The solution to the job crisis problem lies in the 3 R Framework. 

3 R’s Framework

  • Re-skill Workers
  • Re-imagine the Economy 
  • Re-examine Policy & Employment Potential 

“In the range of ₹15,000 – ₹25,000 there are a lot of jobs available, however, the problem is with the expectation of the workforce for a higher wage and lack of required skills needed for the respective jobs”

  • Re-skill Workers

The World Economic Forum used the “fourth industrial revolution” terminology for the first time with reference to Artificial Intelligence. We live in an age of artificial intelligence (AI) that has radically transformed the way we process data and implement processes. 

Automation involves re-skilling the existing workforce and deploying a new workforce to cater to the new jobs that get created. The 2017 IDC cognitive user adoption survey for the Asia-Pacific region indicates that 70 percent of Indian firms plan to make additional investments in workforce-training to leverage the benefits of AI. 

The jobs will always be there, only the nature of the job will change. As per the International Labour Organisation (ILO) data, India has the lowest unemployment rate in the world in comparison to China and the Pacific region. In the current scenario, the lack of jobs is not the problem, but the mismatch of employable skills and wage expectations that have resulted in the unemployed workforce. 

According to Amit Vadhera, Head of Staffing (BFSI & Government), TeamLease Services, “In the range of ₹15,000 – ₹25,000 there are a lot of jobs available, however, the problem is with the expectation of the workforce for a higher wage and lack of required skills needed for the respective jobs”. 

With the widespread advent of automation and artificial intelligence, the skill gap is expected to widen unless it is addressed with futuristic skill development programs and an educational system that is more intent on increasing need-based employability than rote learning. 

  • Re-imagine the Economy 

Traditional sectors like Logistics are seeing a paradigm shift with the usage of technology and algorithms driving higher efficiencies and maximum usage of digital platforms. According to the TeamLease report on the Employment Outlook India for the period April-September 2019, the Retail sector currently leads the race in job creation in Delhi (8,250), Chennai (5,550), Bengaluru (4,960) while educational services come 2nd in estimated job creation

Fast forward to 2025, and the economy will not be the same.  According to the ‘Future of Jobs in India’ study, commissioned jointly by FICCI and Nasscom with EY, 

  • By 2022, 9% of India’s 600 million estimated workforces would be deployed in new jobs that do not exist today, while 37% would be in jobs that have radically changed skill sets
  • Non-tech firms are increasingly emerging as the source of information technology roles. For example, BFSI, Retail, Logistics, Healthcare and more
  • Employment in the organized manufacturing and service sector is expected to increase from the current 38 million to 48 million 

Some unheard jobs today might take prominence with Man-Machine Interface Manager, Automation Engineers for self-driving cars, AI-assisted technician, Intelligent Warehousing Manager and Blockchain Consultants for Supply Chain, to name a few. 

III. Re-examine Policy & Employment Potential 

Most warnings of job losses confuse AI and automation with the replacement of human resources; the truth, however, couldn’t be further apart. The greatest benefit of artificial intelligence is lost in this interpretation – AI augmentation which requires a strong complementary partnership between human and artificial intelligence to achieve the desired goals. 

The challenges that AI places before the Indian policy-makers is to do away with traditional, linear, and non-disruptive thinking. There is a need to look at new sectors beyond manufacturing and industries, which have the potential to generate paid work in the age of automation and artificial intelligence. 

The labour reforms and human resource development overhaul are essential. The Union Government needs to study and revamp the education and skill development programs to cater to the need of the hour and help create a skilled workforce who will fit into the requirements over the next 10-12 years. Currently, India spends 2.5% of its Gross Domestic Product over education; this allocation needs to go up to 6-7% by 2022. 

The Union Budget 2019 is a step in the right direction where special focus has been given to skill development and job creation, especially in rural areas. With the right demographic dividend, India is in a sweet spot and can walk its way to glory with the right policies and stronger public-private efforts towards developing a higher-skilled workforce that feeds into the jobs of the future.

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