How the Indian employment landscape is undergoing a structural shift

By Satya Ranjan Acharya

Technological advancements and rapidly disrupting business models are structurally shifting the Indian employment landscape as the world’s largest democracy faces a critical issue of skill development amidst rising unemployment. The Indian government is focusing on building a skilling system that not only enables the youth of the country to adapt to changing skill requirements but also offers new opportunities for the next generation. It is a well-known fact that the employability of a country’s people is directly dependent on skills and availability of the same. Apart from the critical issue of employment, skill gap is also responsible for various other socio-economic issues that developing countries like India face, such as poverty, crime, and rising income inequality.

According to the latest India Skills Report 2018, India is the youngest nation with more than 54 percent of its total population below 25 years of age, and 62 percent in the working age group of 15-59 years. The Skills Report 2018 – brought out by the Confederation of Indian Industry (CII) in collaboration with its partners Wheebox, PeopleStrong, Pearson, Association of Indian Universities (AIU), United Nations Development Programme (UNDP), and All India Council for Technical Education (AICTE) – highlights the current trends, along with laying out what it will take for India to become the “Skill Capital” of the world.

The report mentions globalization, expanding the domestic Indian market, and adoption of exponential technologies like artificial intelligence, robotics, and Internet-of-Things (IoT) by Indian industries as major forces impacting these shifts. As per the report, India’s employability score has taken a big leap as compared to last year. It has reached a new level of 45.60 percent, which is a sharp hike of 5.16 percent over last year’s employability score.

Image: Shutterstock

This year’s theme of World Youth Skills Day 2018 – Skills Change Lives – is therefore relevant in the context of the exposure of youth to lower quality of jobs, greater labour market inequalities, and longer and unsecured school-to-work transitions. The India Skills Report 2018 mentions that the Indian workforce will increase to approximately 600 million by the year 2022 from the current 473 million. “As the workforce will increase by about 27 percent during this period, the overall composition of the unorganized sector and organized sector will slightly change from 92 percent and 8 percent today to 90 percent and 10 percent in 2022,” the report says.

In the wake of a structural shift in the employment scenario and skills requirement, it is essential that other stakeholders of the value chain – such as academic institutions, the private sector, and industry associations – participate in upskilling the nation’s youth so as to ensure they are able to survive the onslaught of the disruption wave. India’s education system stresses on theoretical knowledge, which gets corroded once they enter the job market.

As a solution to this problem, the Government of India has formulated the National Policy on Skill Development and set a target of providing vocational education and training to 500 million people by 2022. To reach this target, various stakeholders are involved. However, this alone will not solve the problem of out-dated skills. The educational institutions on their part will have to emphasize on learning that is skill-based.

One of the solutions is including entrepreneurship in school curriculum across all boards. This will inculcate creativity and innovation in the minds of youth, who can be potential entrepreneurs going forward. This is essential because various studies have indicated that most of the skill requirements in a decade will be for jobs which do not exist as of now. “By one popular estimate, 65 percent of children entering primary school today will ultimately end up working in completely new job types that don’t yet exist,” says a 2016 Future of Jobs report by the World Economic Forum.

The report estimates that 5 million jobs will be lost to automation by 2020 and that the number will keep growing in the following years.

Though most of the work is likely to be automated in the next couple of decades, the human involvement might not get entirely replaced by machines. However, there is going to be a gradual shift in this process, which will certainly impact the share of manufacturing in GDP, with the share of the services sector rising further. To address this issue of increased automation, the Government of India has undertaken various reforms and entrusted the task of skill development to the Ministry of Skill Development and Entrepreneurship to make broad policies with the objective of boosting soft skills, encouraging education in entrepreneurship, and providing computer education to bridge the demand-supply gap.

The rapid transition of skills requirement in jobs markets has taken many governments and companies off guard. In fact, most of the companies – both in private and government sectors – are now focused on re-skilling their employees to ensure they are able to adapt to the changing nature of work and keep their growth path intact.

In the coming days, the lack of skilled workers will be a major issue impacting the manufacturing sector. Given this situation, technological disruption will put the service sector in the forefront wherein it will emerge as a primary job-generating sector in India as well as across the world.

Dr Satya Ranjan Acharya is Associate Senior Faculty with the Entrepreneurship Development Institute of India (EDII).


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