Fixing India’s Jobs Machine Analyzing Drivers

Shaping the Jobs Market 

11 – May – 2016

Most countries, developing and developed, are facing an acute problem of generating enough quality jobs for their youth, and are searching for new policy solutions. India’s problem is the largest.

At least five major drivers are shaping the Indian jobs’ market

1. Technology

Automation and artificial intelligence are making people increasingly redundant in production and services industries. What will human beings do in these “Industry 4.0” scenarios? This is the question that International Labour Organization’s Future of Work project is grappling with.

2. New Forms of Enterprises

Uber and Airbnb have changed the transportation and hospitality industries. Such disrupters are creating new opportunities for people to earn, learn and to be masters of their own businesses.

Whether these new forms of enterprises will create more or less employment overall has not been established. What is clear is that they are changing “employment” relationships.

3. Social Security

Flexible employment arrangements with the expectation that they will increase the numbers hired, are raising issues of fairness. • How will employees look after their families’ needs when their

incomes are uncertain? • Will the state provide the social security? If so, should it not tax

employers, who make profits from the flexible arrangements? When there is demand in India to provide for social security even for domestic workers, the society will not let off business owners easily from responsibility for providing social security for workers engaged in their businesses, whether they have formal employment contracts or not.

4. Skill Development

With rapidly changing industry patterns, should not India also prepare for Industry 4.0 like advanced industrial countries? Processes of skill development will have to be more dynamic, with much of the development of skills “on the job” and within evolving enterprises. The complication is that businesses which do not want to have long-term employment relationships may not want to invest in the development of the skills of their workers. This will require a paradigm shift in policies for skills development.

5. Enterprises

On the one hand, there is a cry that entrepreneurs must be made free of regulations, so that they can innovate and grow their enterprises. However, there is a need to compel enterprises to invest in skills and social security. Over-regulation or wrong regulations will cramp enterprises and will reduce employment. But too little regulation, or bad regulation, will lead to a damage to public goods—the environment, the availability of skills in the market, and trust in enterprises.

The interplay of these principal drivers will determine whether there will be enough good jobs for the hundreds of millions of young people who will be coming into the

Indian jobs market in the next few decades