Manufacturing, services: India's low-skill, middle-skill labour remains underemployed

By Francis Kuriakose*
The Indian economy was in a state of deceleration well before Covid-19 made its impact in early 2020. This can be inferred from the declining trends of four important macroeconomic variables that indicate the health of the economy in the last quarter of 2019.
According to the data released by the Ministry of Statistics and Programme Implementation (MoSPI), quarterly GDP growth rate, industrial output in eight core sectors, gross tax revenue, and demand for electricity had plummeted by the end of 2019 significantly from its previous trends to be noted as remarkable. Therefore, as far as the Indian economy was concerned, the Covid-19 pandemic and its long containment exacerbated an already dire situation.
The International Labour Organisation (ILO) and the Asian Development Bank (ADB), in their report no tackling the youth employment crisis in Asia and the Pacific’ released in 2020, estimate India’s youth unemployment at 32.5 percent with the loss of 6.1 million full time jobs mainly in agriculture, construction, and retail sectors as a result of the Covid-19 pandemic.
Although the lifting of the lockdown and the beginning of economic activity is important, revival of the health of the economy would require concerted policy action across many sectors with a long-term vision that anticipates economic opportunities and risks.

Impact of automation

The fourth industrial revolution is the broader context in which the problem is situated and policy solutions sought. There are three main waves that fourth industrial revolution brings for lower middle-income countries such as India. The first is automation and its associated job polarization that impacts both wage levels and the structure of employment.
In particular, automation in India has resulted in the change in labour composition as well as decline in labour productivity and labour share in income in medium-high technology manufacturing. Job polarisation is one of the impacts by which middle-skill jobs that require routine cognitive and manual applications are automated while high and low-skill occupations are preserved.
As job polarization co-exists with the excessive supply of secondary and tertiary educated labour force in India, educated middle-skill workers from middle-skill jobs have been pushed into relatively low-skill manufacturing and service occupations.

Technology-related automation also makes traditional manufacturing vulnerable to shocks. In India, the transition of agricultural labourers often from rural and peri-urban areas to low-skill manufacturing sectors such as construction and textiles in urban areas signals distress in traditional manufacturing sector to provide employment to these groups.
Therefore, the Indian unemployment problem in manufacturing and service sector from the skill-set perspective reveals that low-skill and middle-skill workers remain precarious and underemployed.

Impact of big data

The second wave of technology is that of big data and the opening of new middle-market segments of consumer driven service sectors such as banking, finance, insurance, retail, healthcare and data analytics. Export-led industrialization as a strategy of economic development for middle-income countries is increasingly being questioned because of the decreasing levels of value added and employment growth in the manufacturing sector.

Youth job losses and unemployment rate, estimates, 2020

The shift of manufacturing to relatively a small number of countries have also led to the concentration of manufacturing activities globally. The sluggish growth of manufacturing in middle-income countries has been partly as a result of declining demand due to low growth rates in high-income countries.
The rise of automation has also led to reshoring of parts of production back to high-income countries, depriving the middle-income countries of productivity and employment. Therefore, middle-income countries have increasingly examined development strategies through other means, that include turning to service sector, encouraging entrepreneurship in small and medium sectors and bundling services with manufacturing.
Demand management has been identified as an important factor in conceiving industrial policy. In this context, the advent of big data analytics opens up new market segments and introduces domestic market expansion as a strategy of economic development for middle-income countries poised with suitable human resources such as India.
The arrival of big data and the progressive digitalization of technology through internet-of-things (IoT), artificial intelligence (AI), and machine learning (ML) has resulted in two types of demand-led impacts in middle-income countries.
First, big data opens up new market segments in various sectors by creating heterogenous demand for differential varieties of existing product and services. Second, big data also opens up a new market for data analytics that permits the information technology industry to upgrade technology capability and diversify its product portfolio.
In the Indian data analytics industry, the presence of multi-product firms, an expanding domestic market, and presence of mature technology encourages demand-led product differentiation and competitive market.

Innovation capabilities

The third and the final wave is machine learning and internet-of-things capabilities. The beginning of this wave is already altering innovation spaces, research and development in medium to high-technology manufacturing in India, making them more competitive and export-oriented.
Another promising trajectory due to improved design capabilities is the upgrading of low-cost innovation projects. Frugal innovation is a type of design innovation approach in which low and middle-income economies provide a market to develop appropriate, adaptable, affordable, and accessible services and products. The focus on core functionality, performance optimization, and cost minimization differentiates frugality from a traditional mindset of innovation.
Compared to traditional innovation, frugal innovations have low technical intensity (relative volume of research and development expenditure) as well as technological complexity (number of internal components), but an inclusive impact on low-income or cost-conscious communities.

An increment in usability, quality, or price-differentiation of an original frugal innovation results in second-degree frugal innovation called reverse innovation. Reverse innovations are disruptive as new entrants into established markets. With an additional investment in technology and managerial competency, frugal innovations could be introduced among cost-conscious customers even in high-income economies.

New industrial policy agenda

It is clear from the detailed understanding of the context that India needs to invest in three broad areas if the objective is to use the fourth industrial revolution to encourage human-centered economic growth.
The first step is digital and research skilling of the tertiary educated workforce through expansive public and private investment in training. This approach involves large-scale investment by the public sector and the private firms. India has so far demonstrated a poor record in the investment on skill training provided by the private sector compared to competitors such as Vietnam or the Philippines.
The second step is to establish institutional linkages across universities, public and private research centers to encourage marginal innovation by developing new products, processes, and business models. This approach involves re-imagining the role of the state as innovation facilitator creating institutional channels that connect formal and informal sector as well as domestic and international players.
The third step is to focus on data governance issues such as localization as part of industrial and innovation policy. The inclusion of data in industrial policy involves serious and sustained conversation between various stakeholders to ensure equity and parity in participation and distribution of resources. In the era of digital platforms and algorithmic management, data governance has to be trodden with transparency and due consultation to make industrial policy work for small entrepreneurs, workers, and consumers as much as the big capital holders.
---
*Teaches at Kumaraguru College of Liberal Arts and Science, Bharathiar University, Coimbatore, Tamil Nadu; is advisor at Cambridge Development Initiative, United Kingdom. This article is based on Prof Kuriakose’s intervention at a webinar jointly organized by Impact and Policy Research Institute (IMRPI) and Counterview on Industrial Policy for Innovation and Employment Creation: Challenges and Way Forward towards Make in India & #AtmaNirbharBharat

Comments

'Halt Covid-19 vaccination drive': Indian doctors join campaign across 36 nations

By Rosamma Thomas* A group of Spanish doctors first got together to call for a halt to the Covid-19 vaccinations, and doctors from other countries too later joined them – there are now over 12,000 doctors from India, Portugal, Canada, Hungary, South Africa, Israel and a host of other nations who have issued a call to halt vaccinations. On September 10, a group of Indian doctors came together to address the press over a webinar to explain why they thought the vaccination drive should end forthwith. Dr Amitav Banerjee, who after a career as an epidemiologist in the Indian Army now teaches at a private medical college in Pune, said there was no longer a medical emergency. Children are at low risk of infection, and there is good reason to halt vaccination and conduct proper research, given the high number of adverse events. There is a sudden and poorly explained spike in the number of young and healthy people dying. While it may be impossible to attribute deaths entirely to the vaccinatio

Did Mother Teresa trivialise poverty? 'You are suffering, that means Jesus is kissing you'

By Harsh Thakor* The world commemorated the 25th death anniversary of Mother Teresa on September 5. Whatever her flaws, she rendered service to humanity in regions almost untranscended, resembling the relentless spirit of the waves of an ocean. Irrespective of community or religion, she offered her service. Even those not drawn by sainthood revere the role of Mother Teresa. For 68 years, she had worked selflessly and tirelessly in India and elsewhere in the world, taught the destitute, healed the sick, fed and clothed the poor, cared for abandoned children, housed lepers and those afflicted with HIV/AIDS and offered dignity in death to desolate persons abandoned by family and society. Mother Teresa was born in Skopje in 1910 to an Albanian family as Anjezë Gonxhe Bojaxhiu. She became wedded to religious vows at an early age and moved to India to join the missionary work of the Catholic Church. Heartshaken by the misery faced by the Indian masses, in 1950 she set up her own

Tracing roots of Hindutva Zionism: cannon fodder for 'warped' nationalist pretensions

By Shamsul Islam* Those who believe in a world free of hegemonic ethno-nationalism, racism, religious bigotry and hatred have rightly taken note of Zionism and its ally Christian Zionism, major perpetrators of ethnic cleansing of ‘Others’. However, the civilized world with its core belief in multi-culturalism and peaceful co-existence is oblivious to a no less dangerous threat to the present human civilization: the Hindutva Zionism. As the term reads it is part of the Hindutva world-view which stands for an exclusive Hindu India minus Muslims and Christians. The other religions like Sikhism, Buddhism, and Jainism will have no independent status but treated as part of Hinduism. The Rashtriya Swayamsevak Sangh (RSS; National Volunteer Organization) is the most prominent flag-bearer of the Hindutva politics whose cadres presently rule India, the largest democracy in the world. RSS was founded by Keshav Baliram Hedgewar (1889-1940) in 1925 who was disillusioned with the Indian freedom st

Regional parties, anti-Congress progressives, civil society groups 'joining' Bharat Jodo

By Harshavardhan Purandare, Sandeep Pandey* The Congress party declared Bharat Chhodo (Quit India) movement against the British regime in 1942. The Congress party has now launched a movement Bharat Jodo (Connecting and Uniting India) against the Modi regime in 2022. Indian people have had a journey of 80 years since Mahatma Gandhi gave that Quit India call to the British and we have to agree that we stand most divided in our modern history when Rahul Gandhi is giving this Bharat Jodo call to the nation. And back then, Congress was a thriving idealistic political movement against the British rulers and now it is an ever weakening political organization electorally defeated several times. However, it is India at stake, not just the Congress party. That is why so many regional political parties, civil society organizations, traditional anti-Congress progressive forces like socialists and communists, intellectuals and civil servants have declared their support and are proactively partici

Shocking? No Covid vaccine trials conducted on pregnant, lactating women: RTI reply

By Rosamma Thomas* A Right to Information applicant who sought details of safety trials conducted in India on pregnant and lactating women for three Covid vaccines in use in India – Covishield, Covaxin and ZyCov-D -- was shocked to learn from the Central Drugs Standard Control Organization (CDSCO) that Serum Institute, manufacturer of Covishield, and Cadila Healthcare, manufacturer of the ZyCov-D vaccine, had not sought permission for such trials. Bharat Biotech, manufacturer of Covaxin, had sought permission for trial on pregnant women and later withdrawn its application. This response , provided after the applicant was initially unsatisfied with the response and went in appeal, is from the joint drugs controller, CDSCO. It was dated September 13, 2022. One researcher closely following the vaccine rollout, however, is of the opinion that the lack of a trial on pregnant and lactating women is a blessing; potential trial participants and their unborn babies thus escaped harm. Aruna Ro

Grave error? Scholar blames ex-Gujarat babu for anti-Christian riots 'citing fake report'

By Rajiv Shah A few days back, I received a message from one of the finest former Gujarat government bureaucrats, PG Ramrakhiani, a 1964 batch IAS official, who retired in November 2000. I would often interact with him in 1997-99, even later, after I was sent to Gandhinagar as a Times of India man to cover Sachivalaya. Those were turbulent times. Shankarsinh Vaghela was the Gujarat chief minister, under attack from two sides – from the BJP, which he had left to form a separate breakaway party, Rashtriya Janata Party (RJP), one one hand, and the Congress, which was supporting him from outside, on the other. Ramrakhiani, in his message, referred to the book authored by Ghanshyam Shah and Jan Breman, both top-notch scholars who have known Gujarat in and out. Called “Gujarat, Cradle and Harbinger of Identity Politics: India’s Injurious Frame of Communalism”, I reviewed the book in January 2022. It claims that Muslims in Gujarat have been turned into “new untouchables”, thanks to the Hin

Excess to cheetah in Kuno to increase 'woes' of local people, 'disturb' wildlife balance

Bharat Dogra* The release of eight cheetahs into the Kuno National Park ( Madhya Pradesh) by Prime Minister Narendra Modi on September 17, although accompanied by a media blitz, has raised several questions. The animals were flown from Namibia to Gwalior and from there they were taken to the release site in a helicopter. Official sources have stated that this is the first time a large carnivorous species has been moved across continents for establishing a new population. This first release will be followed by others under this project. However, precisely for this reason, it is important to be cautious because if such translocations have been generally avoided in the past, there may have been reasons for this and at the same time we do not have much learning experiences from the past. The Cheetah became extinct in India in 1952, although this very fast moving animal is still remembered in the folklore of many areas. Hence the first impulse is to say that trying to introduce and revive

Introducing non-native cheetahs is 'not equivalent' to restoring pride in the nation

By Bappaditya Mukhopadhyay* The Cheetahs from the African continent has finally been introduced to India by the Indian Prime Minister on his 72nd birthday. The process had started with the previous Government in 2009. However, the Supreme Court clearance was pending owing to the objection by the National Tiger Conservation Authority (NTCA) plea to reintroduce cheetahs. Finally the clearance was obtained in January 2020 and thereafter Kuno National Park (KNP) was chosen for the reintroduction of first set of Southeast African Cheetahs. In the near future, depending upon the success story of the current reintroduction, more cheetahs from South Africa may also be introduced. This exercise has generated a lot of interest among various stakeholders with opinions on both sides galore. It is important to pose some questions that surround the whole exercise. Let us evaluate some of these arguments. The first set of arguments are quite detached from the issues of conservation as they most

'Military diplomacy': US praises Bangladesh Army for leadership role in UN operations

By Kamal Uddin Mazumder* As the Indo-Pacific region represents the world’s economic and strategic center of gravity, the Indian Ocean today is becoming the centerpiece of all geo-strategic play. Cooperation in the region is crucial to implementing the international community’s global agenda, including achieving the UN’s Sustainable Development Goals. Major powers like the US have enhanced and deepened their strategic engagement and leadership roles with countries in the region. The Indo-Pacific Army Management Seminar, or IPAMS, is a U.S. Army Pacific (USARPAC) initiated conference that is aimed at facilitating and enhancing interactions among the armies of the Indo-Pacific region. This year's 46th Indo-Pacific Armies Management Seminar (IPAMS)-2022, co-hosted by the Bangladesh Army and US Army Pacific (USARPAC), concluded in Dhaka. The objective of IPAMS is to promote peace and stability in the region through mutual understanding, dialogue, and friendship. It is the largest confer

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Counterview

Search This Blog