By | Abhijit Bhaduri | Founder, Abhijit Bhaduri & Associate
Employment and employability are two urgent challenges for India. The Budget for 2018 must address these two opportunities.
On February 1, 2018 the government will present one of the most anticipated budgets of its tenure. However, most of the young Indians worry about the employment opportunities in the country. In a top-tier engineering college in the eastern part of India, more than 600 students are worried. They have not found jobs through the campus placement process. Everyone has sent out feelers to the family to explore options through the family network. Several of them do not have the luxury. They have loans to settle. Should they become entrepreneurs? Can Budget 2018 address these concerns adequately? According to the World Bank, over 30% of Indians between the ages of 15 and 29 are NEETs, “not in education, employment or training”. In 2016, National Skill Development Corporation trained more than 550,000 workers. Only 12% of these trainees found jobs. How will Budget 2018 address job creation?
India needs 10 mn – 12 mn jobs a year
The government has two big challenges ahead: India needs to create some 10m-12m jobs a year. The models of job creation that have worked in the past, will not work in future. Until the turn of the century, jobs were created in capital-intensive sectors. Investment in manufacturing, mining, power plants etc has created jobs before. The public sector banks have been large employers. Automation is making that opportunity disappear. Many of the jobs that have disappeared have been blue collared jobs.
A good case in point is the Hyundai plant in Chennai that churned out a car every 72 seconds last year. 500 workers are deployed along with the 8,500 workers. The robots do not take days off and the employers do not need to worry about robot unions.
For the past two decades, the new jobs have been created in IT, telecom, retail and pharmaceutical industries. E-Commerce has been the other major employer in India as more and more Indians are getting comfortable going online. The digital tsunami has started to eat away even at these options. Even the white collared jobs have been disappearing at a rapid pace.
All jobs will be tech jobs
The top five companies of the world (Apple, Alphabet, Microsoft, Amazon, Facebook) are tech companies. Their combined market value stands at $3.5 trillion. The entire stock market in India stands at $2.3 trillion. Elsewhere in the world, just two companies Tencent and Alibaba have a combined market cap of $1 trillion.
A job posting for Certification Program Senior Manager for a large company describes its job as:
XXX is seeking a Certification Program Senior Manager to act as a primary interface between our team and regulatory bodies around the world in support of airworthiness and operational certification efforts. He/she will help lead safety, regulatory and compliance initiatives to enable safe and efficient commercial drone delivery operations for our customers globally.
These jobs all need high- end engineering talent. That brings me to the next challenge – how to build employability.
Build a world-class academic network
Academic institutions are often accused of having a 3-4-year time lag before they create the course content needed by companies. We have tried to solve the problem by creating fast-food like franchises of our top educational brands. The result is that we have 20 IIMs in places ranging from Jammu to Sirmaur. We have 20 IITs that have been commissioned in places such as Mandi and Tirupati.
The good theory is based on good practice. The reputation of academic institutes is built on the quality of globally acclaimed faculty. They, in turn, build their stature by solving real-world problems which in turn shows up in their research papers. Higher education in India needs more world-class teachers who are at the cutting edge of their discipline. Till then don’t rush to label every institution as “world class”. Wait until it can attract a global classroom ie both students and professors.
As more and more machines join the workforce, the knowledge worker will need to be supplemented with relationship workers. People who are can make complex teams work at speed because of their ability to collaborate. Many of our engineers struggle as people managers. As several countries deal with the problem of greying populations, India has an opportunity to meet this demand. Proficiency in global languages helps people find jobs globally.
Budget 2018 can bring in measures as follows:
Invest in infrastructure for the digital economy. Build Infrastructure in tier 2 and 3 cities. The partnership of Google and RailTel to provide free wifi in stations should be extended to cover all tier 2 and tier 3 cities.
YouTube has created a market for many talented people to share their skills in singing, stand-up comedy, food, travel etc. Better bandwidth will create a market.
Voice will be the next big wave. It will need an army of trainers to train devices in all the Indian languages and dialects.
India ranks at the 100th when it comes to ease of doing business. The criteria for this ranking is a good list of areas for us to improve if we have to help entrepreneurs scale up. The areas are: starting a business, dealing with construction permits, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Budget 2018 can channelize funds for these IIT/ IIMs etc to collaborate and create startups. Pay them if they scale up over 2-3 years. Incentivize scale-up in areas such as artificial intelligence, robotics etc.
Encourage scale up – not just startup
98.6% of non-farm businesses have fewer than 10 workers. Entrepreneurs create jobs for themselves and for others. We have to encourage them to scale up. Here are some ideas for Budget 2018:
- Expand the definition of MSME to be Rs 50 crores.
- Tax agricultural income beyond Rs 20 lakhs per annum. This can form the fund that can be given to entrepreneurs.
21% Indian companies with over $1billion in value have given more than 15% returns on capital. When companies have scaled up they have provided good returns. Getting our entrepreneurs to not just start-up but scale up may be the answer to employment and employability.