This Is Where The Jobs Are!
By Vijaya Kumar Marla
14 May, 2016
Diminshing Employment opportunities
There is a popular story about a journalist being taken around a modern process industry that is fully automated. The factory owner proudly announces that whole process is ‘untouched by human hands’. In the control center, the journalist finds an operator and a dog. The journo enquires, “I understand why the man is there? But what is the need for a dog?” The factory owner promptly replies, “the dog ensures that the man does not touch any button!”
In the early stages of India’s industrialization, in the 50-60 decades, the setting up of a heavy industry could transform a whole region into an industrial hub. Steel plants such as Bhilai and Bokaro employed 50-60 thousand workers each and also created income opportunities to lakhs of others through indirect sources of income. But today, a modern steel plant, set up in private sector, with more output capacity than Bhilai or Bokaro hardly employs 1000 people. As per the international norms, to produce 1 million tons of steel, only 300 skilled workers are sufficient in an automated plant. Similar is the case with Thermal Power Plants, whose employment potential for say, a 1000 MW capacity plant, had come down from 2000 workers to just 30 in the last 40 years. The situation is no different in modern process plants such as petrochemicals and fertilizers. In today’s auto manufacturing plants, where the whole manufacturing and assembly process is automated to a high degree with a scattering of a few humans. Reputed consulting firms such as Mc Kinsey and top research institutes such as MIT have announced that automation will take away 47% of all jobs in the coming 2 decades and the jobs will never comeback. It is predicted that even the software jobs which had placed India in the world league as a software superpower, has already seen its best days. Many of the routine software jobs such as code-writing and bug hunting are predicted to go the way of the dodo. With the increasing prospect of each softbot taking over the jobs of thousands of humans, our much hyped software industry has to search for innovative methods to stay in business. As it is, the employment in software sector is a mere 0.02% of the total workforce in the country. Outsourcing to third world countries (both manufacturing and services) are likely to taper off in the coming days. IT outsourcing will also meet a similar fate. KPMG, a global consulting firm, even announced “The Death of Outsourcing” in a research paper last year.
The use of computerized technology and networks brings about automatic systems that can replace not only physical labour, but even expert employees. Studies of contemporary office automation find a similar process of replacing middle level managers and professionals. Foxconn, the Taiwanese multinational that manufactures most of the mobile phones sold worldwide, has removed 10 lakh workers in China and replaced them with 5 lakh robots. Many American companies sourcing their components from China are now shifting manufacture back to US with completely automated plants.
The changing nature of work
As we know, high GDP growth has not been producing jobs. This is bound to happen under capitalist production in the long run since capitalists are motivated by profitability and are prepared to dispense with hiring labour completely if a machine can do the job and give them higher profits. The very fact of technological change and higher labour productivity means higher joblessness and this is compounded when the state misguidedly cuts back on development spending in the name of fiscal discipline. This swelling of the labour reserves manifests itself among other things as an increase in the informal sector employment.
Unfortunately there is not much capacity to absorb them. The already limited employment possibilities in the industrial sector have been further reduced by the neo-liberal regime. Many small and labour intensive manufacturing units have rapidly closed down and the traditional big industrial units have resorted to retrenchment and out-sourcing.
The modern units are capital and import intensive with space only for a few highly skilled workers. This leaves the service sector, which, like agriculture, has the sponge capacity to absorb excess labour at low-productivity low-income level. The corporate profitability in India hinges substantially on the lowering of a wide range of fixed costs through outsourcing. Those that manage to get contract jobs in the service sectors, have to work for more than 12 hours a day, often without paid leaves, medical benefits and no worker rights. The pay is marginal, often below Rs. 5,000 a month. For example, in the last 15 years, real wages paid to workers (in relation to their purchasing capacity) had halved, where as the profits to the employers have multiplied many fold. In our country, about 93% of the 47 crore work force is engaged in the informal sector, with demeaning working conditions and pathetically low and uncertain wages.
10 crore jobs – a pie in the sky?
Economic reforms have brought in foreign investment in capital intensive areas, but have not created jobs proportionally. And now the present BJP government at the center is talking about making India a manufacturing hub and creating 10 crore jobs through their proposed “Make-In-India” program, with a supposed FDI component running into crores of crores of rupees.
The present FDI inflow into our country does not exceed Rs. 2.0 lakh crores. To create one job in the hi-tech sector, not less than 15 crores of capital investment is required. And moreover, according to OECD report 2011, only 15% of FDI that enters a country goes in to job creating industrial investment. Even assuming that one manufacturing job can create another nine jobs in all other sectors (which is a highly optimistic), to create 10 crore jobs, as touted by the government in their “Make-In-India” project, Rs. 13 crore crores of FDI is required per year for the next seven years for the “Make-In-India” program, the common man has to shell out 2.5 times that amount as tax concessions and subsidies in various forms to be doled out by the government to the investors. No one knows, from where the government is going to bring in that kind of FDI money (which is more than 750 times our annual share of FDI inflows) and also pay the investors subsidies and tax concessions. The fact is that ultimately, the common man has to bear this burden. But why should we hanker after the actual annual inflow of Rs. 1.68 lakh crores of FDI, when the black money generation in our country itself is Rs. 35 lakh crores and the government showers about Rs. 6.2 lakh crores as tax concessions and subsidies in the annual budgets on the rich.
The type of industrialisation India is experiencing with its high growth rate has three characteristics that are unmistakably neo-liberal. First, it is led by private corporations. Second, the role that the government plays at the central and at the state level is that of a promoter, an agent of private corporations, not one of a regulator and protector of human rights. And ‘crony capitalism’, that is the collusion between the rich and those in power with the bureaucracy serving as their servants in the process of looting the people is the third defining feature.
Why ‘Make in India’ is kapüt
The world is just not ready for the major manufacturing boom that India needs to create enough jobs for its burgeoning population. There is already excess manufacturing capacity in the world and many industries worldwide are working below their capacity levels. Both manufacturing and services now span enormous global networks, with pockets of strong expertise (like India, in software services) supplying to the world. Tech manufacturing is no longer dependent on abundant cheap labour as much as other factors, especially capital.
Manufacturing (like services) is a globally-collaborative exercise today involving product design, software, hardware, and testing. The value lies in design, Intellectual Property (IP) and software, and not in manufacturing. Apple manufactures almost all of its products outside the US, mostly in China. But its Taiwanese contract manufacturer Foxconn makes a measly 3 percent margin while Apple, in California, makes 30 percent margin. Today, value is where IP, design and software are - not where manufacturing happens.
Moreover, we should not forget that a nation’s wealth is created by human labour in agriculture and in extracting and processing of raw materials into usable commodities in factories. Ultimately all wealth comes from mother earth only. It is a faulty conception to say that wealth is created in services. Hence there is logical limit to how much the service industry can expand and provide employment relative to industry and agriculture.
The challenging task of creating skilled manpower
The BJP government time and again advertise that their government is going to impart technical skills to 30 crores of young people in the coming 5 years. Will it go the same way as Modi’s overambitious ‘Make-in-India’ program, which is a non-starter? The Modi sarkar has a lot of expertise in floating political hot air balloons, that look attractive but pop out of existence soon enough.
According to the government, only 3% of the workforce in the country is skilled and that it recognizes the urgent need to improve the technical skills in the country. Which literally means that out of the 45 crores or thereabout working population, 97% have to be imparted technical skills. The minister and his government should do well to be reminded of the fact that over 70 per cent of the labour force in all sectors combined (organised and unorganised) is either illiterate or educated below the primary level. Making them technically skilled cannot happen overnight, or even in the time frame envisaged by the planners of ‘Make-In-India”, of which the first 2 years were totally uneventful. As Nobel Laureate Economist Amartya Sen said, “I know of no example of an undernourished and uneducated labour force producing memorable growth rates!” As the experience of China, South Korea and other countries had shown, an effort of such massive proportions has to start at the level of primary education and also accompanied simultaneously by adult literacy campaigns on a war footing, with commitment and necessary budgetary expenditure.
Moreover, the ongoing privatization of education at all levels has brought down educational standards and the quality of our graduates and more so professional graduates is pathetically low. Many HR and placement agencies complain that the lack of skills on the part of fresh job seekers is the main cause of unemployment. But the fact is that, with ever changing technologies, no amount of education is going to equip the job seekers with the rapidly changing skill requirements in a modern economy. It should be made mandatory for the employers to train fresh recruits and upgrade them on a continuous basis to make them fit to work in an ever changing environment. But sadly the government ignores this fact and employers escape their responsibility to increase profits. The victims are the workers.
Modern economies now produce a huge array of goods and services, involving such a wide range of different inputs in such complex configurations that for many tasks (though not all) simple muscle power is no longer enough. The evolution of an ever-more complex technical division of labor has created a constantly changing demand for an extremely diverse range of skills, many of which are specific to particular stages of industrial development.
To impart technical skills to 30 crore young people requires at least 1.5 crore trainers on a 1:20 basis, equipped with the necessary knowledge to impart the necessary technical skills in various area of modern technology. Even if we assume that the 30 crore young people are trained in 3 batches of 2 years each, we require at least 50 lakh highly skilled trainers and a huge infrastructure to impart the skills. Practical training on modern machines is another big problem. That in itself is a big question. First, we have to start training the trainers, if required, by bringing in experts from within and outside the country. Even if we succeed in creating 30 crores of skilled workers, where are the opportunities to employ them?
This is where the jobs are!
The fact is that the Indian labour force is more skilled in traditional occupations, such as handicrafts, textile and agro-based activities. During the formulation of the 12th Five Year Plan this issue came into focus and experts agreed that manufacturing as we understand in modern times would not fetch Indians jobs. Rather, refocusing on India’s traditional occupations could potentially create 10 million jobs a year.
The significance of the rise in rural unemployment and the lack of concern with it have to be understood in the context of the fallacious official view that it does not really matter if people are unable to find work within the primary sector (agriculture) because in any case they should be moving out into more productive occupations outside agriculture. The argument is logically unsound since countries with large labour reserves like India and China can never solve their unemployment problem without active measures to support peasant production and follow labour-intensive growth strategies, which are anathema to capitalists.
The Third Census had shown that the employment generated by the SSI sector per Rs. one lakh of investment was 1.62, as against only 0.20 in the manufacturing sector covered by the Annual survey of Industries. This means that a medium size enterprise in the organized sector requires an investment of Rs.5 lakhs to generate employment to one person whereas the SSI sector generates employment for 8 persons with the same investment. And heavy industry, which is heavily automated requires Rs. 15 crores and above to generate one job.
The only solution lies in creating jobs in the rural areas and increasing investments in agro-based industries and renewable energy applications. This only can ease the acute unemployment situation. To increase employment, the Planning Commission asserts that we must pay special attention to labour intensive manufacturing sectors such as food processing industry, textiles, small and medium enterprises, tourism and construction. Modern technological developments make it possible to create small scale manufacturing centers in rural areas, that will be capable of producing a wide range of hitech products, without necessitating large scale shift of population in search of livelihoods.
Development of rural areas will stop the migration of the rural people to the cities and this will not put more pressure on the urban jobs. If India as a nation has to progress, there is little doubt that India’s villages too have to progress. India needs creative solutions to start a revolution which can take its villages fast forward in time, such as the creation of a knowledge and information economy that can create opportunities and thereby prosperity to impoverished areas:
a) To create a self-reliant, self-sustainable village economy.
b) To provide resources for locally-made products to be value added to the highest possible degree within the village so that wealth generated stays with the villagers.
IT and modern technology can be used for improving agricultural productivity and this creates more opportunities for the educated jobless in rural areas. IT and modern technology should be used to make handicrafts sector more productive and thereby create better income opportunities for youth. Investments in dispersed utilization of renewable energy can generate crores of rural livelihoods. Thereby we can create Hi-Tech jobs in rural areas, which can in turn create a vibrant rural economy. But it requires a determined shift away from neo-liberal economics.
Vijaya Kumar marla (email@example.com)
(A retired engineer and a student of Philosophy of Science)