Could India’s demographic dividend be deteriorating into a demographic disaster? Insufficient opportunities for youth to earn incomes commensurate with their aspirations is the root cause of social atrophy, degenerating into violence in many parts of the country, including Jammu and Kashmir, Punjab, Gujarat, and in Indian cities everywhere. More jobs must be created. The problem for policymakers is the world is not what it was. Technology is rapidly upending industries. New forms of enterprises are emerging. The most exciting companies in the automobile industry now are Uber, Tesla and Google, companies that did not even exist a few years ago. Wal-Mart, which had dominated the retail industry with its big-box stores only a decade ago, is struggling to compete with Amazon, which does not have any retail store. With these large upheavals, it is not possible to predict what will be the content and numbers of jobs that youth must be prepared for. Old-fashioned policy solutions to create jobs and generate skills will not work any longer.
Policymakers’ mindsets must change in four ways. First, the architecture of large programmes for skill development can no longer follow the assembly line model. In this traditional model, one begins with estimates of what must be produced at the end of the line, i.e. numbers and descriptions of the skills required some years in the future. Then the training processes and institutions dedicated to produce the skilled persons are designed accordingly. The assembly line goes backwards further to vocational training in schools to prepare young persons for further training thereafter in specialized programmes. Thus, a long process, stretching over several years, is laid out to prepare people for jobs they will be expected to do in the future. The problem is that those jobs may not be available then in the shapes and numbers estimated. Therefore, there will be more frustrated youths who have invested years of their lives to be trained for jobs they cannot find.
In an unpredictably changing environment, the architecture of the skill development enterprise must be very flexible. Its thrust must be to produce good learners, and to provide them many opportunities to learn in a ‘just-in-time’ and ‘task aligned’ manner so that they can adjust and learn what emerging jobs will require.
India wants to catch up with the opportunity it has missed to grow jobs in its manufacturing sector. The second mindset change must be in concepts of manufacturing and factories. Technology has changed the shape of manufacturing enterprises. Software has become a large part of most manufacturing processes and products. Factories are becoming ‘deconstructed’. Many operations integral to the manufacturing process, such as design and management of the process, which used to be done within the factory, are now done outside it, even in other countries. At the same time, very small and inexpensive machines such as 3D printers and smartphones are providing powerful capabilities to tiny enterprises that previously only large companies had. Thus, large factories are being replaced by networked enterprises with capabilities distributed in many independent units in them.
Thirdly, for success in an unpredictably changing industrial environment, enterprise owners’ mindsets towards their employees must change. Henry Ford, the pioneer of the mass production factory, complained that, when he wanted only a pair of hands, he would get a whole human being with feelings, hopes, and complaints. He missed the point that human beings, because they have aspirations for better futures, which machines cannot have, can learn to improve themselves. If motivated and enabled to learn, they will also improve the capability of the enterprises’ machines and systems, thus increasing the enterprises’ productivity. Indeed, the only assets in enterprises with the ability to learn and improve their own capabilities and the capabilities of the system around them are human beings.
Improvement of an enterprise’s capabilities and the re-skilling of employees must happen simultaneously within the enterprise. The supply of human beings seeking work in enterprises in India is huge. They will also cost less than in most other countries. They can be a source of sustainable competitive advantage to “Make in India”, provided they are treated as human beings with aspirations, feelings and abilities to learn, rather than mere low-cost labour.
The fourth change is to engender more collaboration among stakeholders. The problem of unemployed youth will not be solved only by developing skills, or only by attracting investments. At the policy level, skill development, enterprise formation and job creation must co-evolve, especially when the types of skills required will keep changing with new technologies and new forms of enterprises. The skills ministry, the labour ministry and several industry ministries must break out of their silos and work together as Team India.
Within enterprises, employers, managers, employees and employee unions (whether politically affiliated or not) must grow together. Employers must respect their workers as the only “appreciating assets” in their enterprises with the ability to improve their own capabilities as well as the competitiveness of their enterprises.
Arun Maira is a former member of the Planning Commission.
