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With The New Budget, How Long Will Our Jobs Exist?

Posted by Nitish in Business and Economy
January 25, 2017

As the budget session draws close and state elections start to take place, policy makers are starting to weigh the political implications of their proposals along with the economic ones. While the Election Commission rules bar any populist announcements; there are always blessings in disguise. In this short article, I draw the audience’s attention towards challenges India will face owing to its demographic trend.

India has grown phenomenally in the past two decades, both in size of GDP and in population. This places India as one of the largest potential markets and manufacturing hubs in the world. The present Prime Minister’s public relations campaign has attempted to brand India as the top destination for foreign investment, with domestic acceptance due to the narrative around job creation. In reality, the policy makers are either out of touch with global manufacturing trends or choose to ignore them conveniently. The focus here should be on identifying what kind of jobs are created, and whether these jobs are likely to continue in line with global automation.

The global focus at the moment is to automate tasks, and reduce the need for human intervention. A prime example is that of Google building a computer to replace human programmers, which is likely to reduce human role to mere oversight. Similarly, manufacturing systems are increasingly automated to save labour costs and standardise quality. The question for the government is whether the investment sought will create sustainable jobs, or merely short term jobs that will soon be replaced by technology?

Jobs in manufacturing, logistics and retail could be replaced easily by automating the process. McDonald’s for instance internationally uses self-check out kiosks to take orders. The challenge for the government is to incentivise companies to hire more people, without compromising on efficiency, which when compared to the efficiency of automation is a tough challenge. After all, we are competing with countries where the majority of population is above the age of 35 and can afford to shift focus towards automation. But can India afford to follow the same path?

The challenge for policy makers is whether they can incentivise labour intensive systems, while promoting technological advancement. President Trump has time again hinted at repealing the enactments promoting free trade and movement, in favour of domestic manufacturing and job creation. The question is whether Indian policy makers can watch Indian labour interests, or will they succumb to demands of capital seeking above-market short-term returns at the expense of the work-force and long-term gains?

The answers to these questions are not simple, but policies in the budget incentivising investment in healthcare, education, agriculture, textiles, creative services, and tourism will be a good shift towards job creation. The question then would be how do we make these jobs sustainable?