Advancing technology and employment in India
Aabid Firdausi M.S. (University of Kerala)
Bala Kumar (University of Warwick)
The question of “technological unemployment” has persisted ever since the advent of the Industrial Age where machinery started to be widely used to complement or replace the efforts of labour. The term originally coined by Keynes in his essay titled “Economic Possibilities for our Grandchildren” (1930) refers to “the unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” The larger question of capital substituting labour has been modified considerably with the ascendancy of Artificial Intelligence (AI) that can perform several of the cognitively demanding tasks that humans do today, with lower costs, greater speed and reliability. In addition, there have been significant advances in the field of robotics, which is allowing robots to perform some of the physically challenging tasks that humans do today.
This raises further questions about the nature of work in emerging economies like India. How will the workplace adjust to this dynamism? Although the big changes are not predicted to take place immediately, technophiles claim that signs of technology’s improvement should start to appear in the next few years.
It is important to critically view the perspectives on this question since the topic of employment is vital to India’s future. The demographic dividend that India is set to experience in the next few years will be a crucial period for its development since it offers a potential path for development like China’s in the past few decades. However, if the claims of the technophiles are to be accurate, then the demographic dividend could be a demographic disaster since vast numbers of people would be unemployed.
We attempt to provide a multifaceted understanding of the “technological question” by looking at the major sectors of the Indian economy. This essay seeks to explore how these developments could bring about changes in employment – both in terms of quantity and quality.
The agricultural sector is of paramount importance while considering the Indian economy since it accounts for nearly 50% of the workforce. Though rural-urban migration rates are high in the country, there exists a significant trend of circular migration as the migrants do not permanently settle in urban areas, meaning that the agricultural sector is a source of livelihood for millions of people.
Currently, India’s average farm size is rather small, with 68% of farms being less than 2 acres and 95% less than 5 acres (for owned holdings). The small size of Indian farms reflects the financial conditions of the farmers, and tends to inhibit advancements in technology. In fact, only 10-11% of farms under 10 acres have any level of mechanisation (i.e. having a tractor, mechanized plough, or thresher) (Foster and Rosenzweig 2011, p.1/2). This, along with a number of others factors has led to poor yields in Indian farms. Despite India having the second largest amount of arable land in the world, India is only the second largest producer of rice and wheat that are staple products for the Indian diet. China manages to produce 40% more rice and wheat than India (Khandelwal and Krishnamurthi 2011). Foster and Rosenzweig (2017, p.32) argue that even after taking into account ‘supervisory-cost differentials for family and hired work, farms with greater area have higher profitability partly due to ‘scale-dependent mechanization’.
It is generally understood that the need is to either collectivise land holdings or adopt technologies suitable for fragmented land holdings that increase agricultural productivity. But, adoption of such technologies is beyond the means of the vast majority of the rural peasantry. However, the development of equipment to minimise the drudgery of the labourers is certainly a positive impact. Such changes represent gradual transitions to more efficient methods of production. Will such technologies reduce employment in the sector in the future? Though such trends are witnessed in advanced capitalist countries, it is likely to take several years till such massive displacements are likely to occur in the agricultural sector in India. Though this can relieve the sector of the scourge of disguised unemployment – a phenomenon which is prevalent in India, the question naturally arises as to whether the surplus labour that is released can be absorbed elsewhere. At the current pace of job creation, the answer would be an emphatic “no”. Moreover, top-down state interventions that impose new technologies that displace labour is politically unfeasible as it can lead to widespread protests.
Thus, there definitely exists the potential for a combination of increasing farm sizes (via collectivisation or redistributing land via land reforms), increasing mechanization and wholesale adoption of technologies to reduce employment in the field to a fraction of the level today. However, any adoption of new techniques should be rooted in local wisdom, so as to avert or minimise the negative fallouts of the transition (for example, ecological damage due to fertiliser usage or agricultural debt due to the purchase of expensive equipment).
Manufacturing is the sector through which economic development has occurred in many countries. It has allowed countries like South Korea and Japan to move up the value chain for their exports, allowing them to build internationally competitive companies (Krishnan 2015). Job creation in the manufacturing sector is apparently one of the key strategies of the present government, as seen through the Make in India program. The program envisages a spurt in job creation as the entire production process can be outsourced to India taking advantage of the reserves of labour. Multi-National Corporations (MNCs) can build the supply chain for their factories, creating further employment and contributing to the development of agglomerations. Theoretically, this involves the realisation of the twin aims of making India a global manufacturing hub and providing large scale employment opportunities.
However, this sector has been the focus of increasing technological developments which threatens to unravel the growth strategy that the government has proposed. When one envisions a factory, one imagines a large building with many people and many goods. Yet in a modern factory, there may just be a handful of humans, with the rest of the tasks completed by robots. And this trend looks set to continue as time progresses.
Ford (2015) mentions two different technologies which both lead to factories becoming staffed by robots. Industrial Perception produces a robot hand that is able to move boxes in a warehouse. Although this does not seem to be anything significant, in terms of the progress in computing it represents and its potential consequences, it cannot be understated. Despite its slow pace, it offers advantages over hiring a worker for the same role: the robot will never stop working unless configured to, it is more reliable than the average worker and it will not take part in union activities! In addition, with Moore’s law and the general decline in the price of other computing components over time, the robot will only become cheaper. However, the typical worker will demand a higher wage over time due to inflation. Thus, though the initial cost may be high, shifting to such labour-displacing technologies is highly convenient to the capitalist. Baxter is another robot technology that Ford analyses. Unlike the robot by Industrial Perception, Baxter can be configured to complete a number of tasks. Thus it has an even worse effect on employment compared to the previous robot. For any tasks which are routine and can be easily taught to the robot, it can complete with precision. Moreover, after being taught, the robot may demonstrate greater capability than the human it replaced: K’NEX, a toy company, used Baxter and found that it allowed for a 20-40% reduction in boxes used.
The explosion in both specialised and general robots will cause a reduction in the jobs available to workers. The development of these robots is not meant to complement labour in any way. Humans are only involved in the factory to fill the gap between tasks that the robots can complete or to supervise the entire process. Both roles require far fewer workers than would be required in an older factory. The increase in capability of robots combined with lowered costs means that it is economical for firms to replace labour with machines than to complement it. This represents a sea change in the logic of adoption of technologies in the workplace. That technology is evolving to the realm of Artificial Intelligence that requires very limited human input represents an existential threat to the conventional concept of labour.
And most worryingly of all, unlike other technologies which are only having a small or non-existent impact right now, robots in manufacturing are playing a crucial role in the manufacturing strategies of countries. In China’s Guangdong province, a hub of manufacturing, a company has managed to replace 140 workers with just 9 robots. And with an estimated doubling of productivity every four years, fewer and fewer robots will be capable of completing the work of more workers. (Bland 2016)
This does not bode well for the Make in India program, since the cost differential that exists between human workers and robot workers is getting narrower. For companies deciding to invest in India, not only will they consider the labour laws, infrastructure and other factors, they will consider whether the declining cost of robots outweighed by the generally increasing labour costs. If so, then it may be worthwhile for the firm to locate its factories in its target market. The International Labour Organisation has warned of this being played out in South East Asia, where nine million people depend on garment and footwear jobs, which are extremely susceptible to automation. Adidas has begun to produce shoes using robots in Germany, and it intends to expand the robot factory at the expense of workers in South East Asia. (Hoskins 2016) Although for the time being the scale of production by robots will be limited, the economic incentive for replacing labour will only increase with time.
In such a changing scenario, it is wishful thinking to emulate the Chinese model of manufacturing-led growth. This has grave implications for the creation of a middle-class that is vital to political and economic stability. The development of cost-reducing technologies is rapid and looks to substitute labour rather than complement it. This means that the vast reserves of labour are no longer as advantageous as it was for private investment. Hence, the concerns regarding the contradictions of the capitalist system are very legitimate. The new automation wave marks a paradigm shift in the remnants of industrial capitalism.
The crucial sector in the economy in terms of importance to the future is the service sector. This sector accounts for an increasingly large percentage of GDP and employs relatively fewer people when compared to its contribution to the economic pie. However, as industrial capitalism recedes, there exists a universal tendency to move towards what is called a post-industrial or service economy. We proceed to analyse the effects of technology on select services.
An industry where technology may have a positive impact on employment is the education sector. Literacy, a basic benchmark of education, is low in several Indian states. The national rate of 74.4% poses massive problems as it means that around 300 million Indians are illiterate – a number which surpasses the populations of most countries. (Kumar 2016). Of course, being literate is not equivalent to being educated, and being educated doesn’t guarantee employment since it doesn’t consider quality. But the figure is illuminating since it indicates the scale of the challenge that India faces in a production climate that is likely to be hostile towards uneducated workers.
Technology can play a significant role in the sector, in enhancing basic literacy and in providing advanced education at a lower cost. For the former, this can be done through the use of mobile phones. UNESCO has published a report arguing that literacy in many African countries has increased due to the proliferation of mobile phones. In areas where books are hard to obtain, digital books provide a lifeline to those interested in reading. Since most people in the country have access to a mobile phone, using phones in that manner may improve literacy. (UNESCO 2014) The initial cost associated with providing digital resources is growing ever smaller with time, and the marginal cost of providing additional books after a phone has been acquired is close to zero.
Technology can also help those who want to possess advanced knowledge in some topics. MOOCs are a way of spreading advanced knowledge to large sections of the population for free. These courses provide lectures, exercise sheets and a discussion platform for students to help them learn about the topic. Subjects covered range from mathematics to music. In India, access to higher education is prohibitively expensive for many and extremely competitive. Admission to elite institutions requires candidates to compete against tens of thousands of other candidates at a minimum for a comparatively small number of seats. To succeed in this process, many candidates use the services of tuition centres, which can charge more than 250,000 rupees per annum. (Pathak and Saraswathy 2015) In a country where the average individual has a median salary less than 4,000 rupees a month, it is an exorbitant sum (Business-standard 2013) MOOCs may be an alternative option. By providing world-class educational resources to those who seek it, MOOCs could help people to gain the skills they require in the labour marketplace. However, at the moment, the idea of using these courses to boost education among the mass of the population seems flawed. Research on MOOCs has shown that only 4% of people who sign up complete the course (Newton 2017), highlighting that motivational incentives vary with online courses compared to courses taught in physical establishments. In addition, statistics on India show that the educated tend to use these courses to boost their knowledge, rather than the uneducated using it to gain some basic qualifications. This may be attributable to the fact that internet penetration stands at 31%, so poorer people do not have the opportunity to access the platforms (Chopra 2017). In order to truly democratize the concept of MOOCs, high quality course material needs to be made available in local vernaculars so as to transcend the barriers of language.
On the other hand, their impact need not be restricted just to the 4% of the people who complete the course. Researchers have noted that a large percentage of the students who finish the material are people involved in the education sector as teachers or lecturers or professors. Watching how teachers in top institutions convey concepts can help them to improve their own delivery of their course material (Newton 2017). In India, barring a few excellent institutions, the majority of higher educational institutions fail to provide good skills to their students. Surveys on employability have indicated that a majority of graduates do not possess sufficient skills for the workplace. Use of MOOCs in this way could help to reform the poor quality of many institutions today.
Thus, technology does have the potential to cause massive change in India’s education, particularly higher education. Digital platforms like MOOCs reduce the cost of disseminating knowledge to a large scale. As for literacy and gaining basic qualifications, a lot of change can be driven by mobile phones, which are easy to purchase and get information on. However, whether or not the opportunities afforded by this are utilised depends on government policy.
Information Technology (IT)
A key industry within the service sector is IT, which is the home of many of India’s richest companies and employs a large portion of the Indian middle class. It currently accounts for more than 45% of the service export in 2016. (Vanvari 2017) The development of artificial intelligence can threaten the growth of employment in the IT industry. It is perhaps rather ironic and surprising that the technology sector will cannibalise itself, but this is projected to occur. After all, most workers in the sector do not work at firms which come up with AI. Rather, they work in the type of rule-based jobs which are most easily replaced by AI.
Analysis by HfS Research indicates that the IT sector will lose 640,000 ‘low-skilled’ jobs due to increasing productivity and automation (Alawadhi and Mendonca 2016). This needs to be seen in the context of a large number of layoffs in the sector. Though the turn of the century heralded the growth of a post-industrial knowledge economy, mass employment in the IT sector in the coming years is doubtful. Although the opportunities for those will high skills increase, the effect of this on employment remains to be seen. In India, a job in the IT sector was (and is) the aspiration of many young graduates and is also widely regarded as a symbol of modernity that the young can embrace. The threat of automation deals a blow to such symbolic conceptions.
It seems unlikely that any factor will prevent the continuation of this trend. Unlike earlier occasions where a reduction in employment in one field in IT was matched by employment elsewhere, it does not seem to be the case now: the industry as a whole is experiencing job losses.
Tourism is another industry in the service sector which is affected by technology. Unlike many other sectors covered in the essay, the impact of the sector by technology seems to be wholly positive. For example, the government can use the media to engage in marketing campaigns to attract foreigners. Technologies like e-visas simplify the process of acquiring visas for tourists. Job losses attributable to technological advancements in recent years in the tourism industry are non-existent. In the future, even if artificial intelligence were to make significant advances, tourism would not be impacted negatively.
A flipside of the development of tourism (and other industries in general) is the ecological damage that is likely to be created. There is a huge potential for developing local technologies that contain such negative externalities, which could generate employment.
Healthcare is also a key growth industry within the services sector. India faces an acute shortage of suitable technologies to address the health issues of its citizens. The WHO suggests that India needs to train around 500,000 doctors to meet its healthcare deficit. (Hindustan Times 2017) Hence, it is doubtful whether technological advancements will have a considerable impact on employment.
However, it has been suggested that advancements in AI could help to improve diagnoses in certain diseases, replacing some of the roles that doctors may have. Freedman (2017) writes about IBM’s ambitions in this area: Watson’s capabilities would be used in order to help doctors with cancer diagnoses. In the end, though, their collaboration with the M.D. Anderson Cancer Centre proved to be a failure not just highlighting a problem with AI in healthcare, but a problem in other sectors where similar assumptions about the data hold.
Why did it fail? To understand the reason, it’s important to understand the theory of how AI works at a high level. In essence, Watson and other machine-learning systems improve by ‘rejiggering its internal processing routines’ for the purpose of achieving the highest accuracy on identification (of whatever is relevant). In the case of cancer, it works to improve the system so that its results match those of experts.
The first major stumbling block for many applications of AI in healthcare is not having access to a dataset. Dealing with a lack of a dataset itself can be extremely challenging. For improving primary care, data is required on the ‘social determinants of health’ (e.g. ‘whether patients are drug-free, avoiding the wrong foods, breathing clean air, and on and on.’). Firms can either attempt to collect the data themselves or purchase it from other firms. IBM took the step of purchasing relevant data sets. However, it was not sufficient to continue their collaboration with the M.D. Cancer Centre, since they encountered another stumbling block.
The second stumbling block is that AI systems require that the datasets have already been sorted through for the AI to adapt its systems (this assumes that experts have a sufficient understanding of the topic so that it’s possible for the dataset to exist). In the case of cancer, there was no data set which was organised and sorted through for IBM to simply analyse. The time required to produce something like this by hand is not trivial since experts in the topic need to be hired or data sets procured in some other way.
In the case of India, medical records of patients are not stored in a single format in computer systems. In addition, the sheer size of the population combined with the relatively weak data collection capability hampers all attempts to get the type of data required for companies to make an inroad into India. Thus, particular industries like healthcare may not be affected even if there are significant advances in AI since the conditions for the AI to work do not seem to be existent anytime soon.
Logistics is another area in the service sector which could be affected by technology. Employment in the sector is likely to increase rapidly as GDP grows since the amount of goods transferred between states and between countries will increase. As e-commerce services become more popular, greater levels of shipping will demand greater employment. In the long run, automated vehicles could pose a threat to employment levels. Self-driving trucks have the potential to depress the number of workers required as they may take over the role of driving between highways and other stable road environments. This has been a sector that has received much attention in the media regarding the perceived scale of change. Tesla, Uber, and Alphabet have been investing heavily in the sector in recent years, leading to speculation that the technology is set to be ready to deploy in the next decade. Transportation of goods is a sector which has not fundamentally changed in decades: despite improvements in technology, drivers are still required to transport goods from destination A to destination B. By replacing the role with a computer, capitalists can reap more profits.
It’s important to note that there are practical problems regarding the implementation of a technology developed in the West in India. Unlike the West, India’s road system is largely poor, with limited reach in rural areas. Compliance with traffic rules is poor and combined with a large number of vehicles on a road in a major city, driving is a difficult experience. Self-driving trucks, which have struggled to meet expectations even in the relatively calm driving environment in the west, are unlikely to perform much better in India. In addition, there are further legal and regulatory barriers that may exist which are covered in the following section.
Factors affecting pace of adoption of technology
This essay has thus far explored the various technological advancements that can affect industries. Specific factors may reduce the pace at which technology is adopted, even if it is technologically and economically viable. Historically, the Luddites have been noted in destroying machines which replaced jobs. Although it is hard to imagine such action today, there exist potential legal and social barriers which could have a similar impact on adoption.
Orlowski (2017) views legal barriers as a key impediment to revolutionary technologies. He writes ‘A successfully functioning AI – one that did what it said on the tin – would pose serious challenges to criminal liability frameworks. “When something goes wrong, such as a car crash or a bank failure, who do you put in jail?” Indeed, there seems to be no consideration given to the legal problems of implementing a new, untested technology in the real world. The legal system would effectively decide the scope of these technologies in the real world, and there is no indication that the system would be inclined to act for the benefit of companies. The government would inevitably face petitions from affected groups when the technology is proposed, which they will be inclined to consider if the group is politically important.
In addition, there is the topic of whether consumers prefer new technologies to old. The reason for the adoption of new technology is either to reduce cost or increase revenue. In certain sectors, both may not necessarily be true. It is assumed in discussions about technology that consumers wouldn’t have a preference for humans over robots in the service sector, meaning that there exists an incentive for firms to replace expensive labour with cheaper machines. However, the converse is true; research has indicated that consumers overwhelmingly prefer human communication compared to speaking with a computer. (Netimperative 2016) This may reflect the poor state of computers in interaction today, but could also be indicative of a deeper aversion to technology amongst the public. Thus it would suggest that even if computers became proficient at interaction, consumers wouldn’t opt for services which relied on it since they prefer human communication. It may be possible for humans to be friendlier to technology, but if it does not occur, firms may be unwilling to use technology, even if it is cheaper and more efficient at providing the service.
In India, another factor impeding the adoption of technology is the lack of development. For technology to be adopted, there has to exist the infrastructure to support that technology, along with a culture conducive to it. For example, it has been noted that India lacks a good road network which would inevitably impede attempts to introduce self-driving vehicles. Also, in healthcare, there is the issue of datasets. So the pace of development of infrastructure and the accompanying change in culture will certainly affect the adoption of the technologies. If India fails to grow in the conventional development path, then it may not be able to capitalise on the benefits of the technology.
One aspect to consider with relation to employment is the standard of employment. The nature of work has changed drastically in a technological society, and it has affected the standard of employment for a large section of workers. The essay has thus far considered employment standards in particular industries, but it’s important to expound upon this more clearly.
For manual workers, the change has been largely positive. Development of new equipment that eases the drudgery of workers helps the worker tremendously and also increases output. Technology has resulted in significant advances in industrial jobs; by relieving the duties involving heavy goods to machines, humans have had to expend much less effort. Documents, which once were hand written or typed at great cost, are now typed by workers on their computers. But it is an altogether different question whether workers have been able to secure more leisure time or succumb to renewed demands of the workplace.
Though increased productivity has manifested as increased corporate profits, the real wage of the average worker has not shown any commensurate increase. The group which will be affected the most by upcoming advances is supposed to be middle-skilled workers and those who perform repetitive jobs. Ideally, obsolescing repetitive jobs can open up avenues for exploring human creativity. However, with the slow pace of job creation and dwindling state support, there is little scope for optimistic imagination. The hollowing out of the middle segment of the labour pool is likely to push these workers to lower paying jobs, provided there is a scope for absorption. This would further depress the wages in the lower segment leading to increased inequality.
It is important that technologies be adopted in a way that results in decent working conditions. Even though working conditions have improved on an average, workplaces are far from being humanistic. Today’s employees work longer hours than their counterparts in the 1960s. Along with this, the change in consumer culture has led to a host of health issues. In the developed nations, stress, obesity, depression and other illnesses have been increasing in the past few decades. The same trend is present amongst the middle class in India. As more of the labour force move into sedentary jobs, health problems look set to grow.
The essay has explained the impact of technological advancements such as AI on employment in India. Agriculture looks to be the sector with the most potential for change due to the lack of penetration of technology in the predominantly family-run, small scale farms. However, with the rural peasantry in distress, it is pertinent that the state subsidises such advancements. The trends in manufacturing will continue regardless of government policy, and it is questionable if India can emulate what China did, especially with the low levels of private investment. The service sector looks to be the most affected by developments in AI since a large portion of it is cognitive, exactly the area where AI seeks to gain an advantage over humans. In sectors dependent on human interaction like tourism, AI may never displace large amounts of labour, but in cognitively demanding tasks, there is likely to be a slow attrition of labour. More creative fields which demand a high level of expertise are likely to be the fields where unemployment is likely to be lowest, but such jobs are currently minimal in India. Depending on government legislation, many of the effects of technological advancements may be delayed. In spite of that, the demographic dividend ensures that the government will have a difficult time in reducing unemployment to low levels.
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