The Future of Workforces: A Detailed Insight

by October 27, 2018 0 comments

The Future of Workforces A Detailed Insight

Altering due to change in business models, the future composition of workforce will retain permanent employees that posses core skills. On the other hand, when it comes to specialised skills, companies will seek help from the gig market and outsource the work.

With exponential technologies evolving at breakneck speed, existing competencies in the area of education, skilling and workplace calibre are concurrently challenged. As with the advancements that took place with three earlier industrial revolutions, with the advent of Industry 4.0, lies huge opportunities for superior job creation, embedded with simultaneous risks of job displacement.

Why is there an increased urgency for a planning foresight on the future of jobs, educational qualifications and skills matched to new products and evolving employment models? Because India does not have the luxury of time. It has only a two to three-year window to play catch-up with the altered job and skills scenario. India’s labour productivity, gauged by economic output per hour of work, is below 15 per cent of US levels. Falling productivity will bring down the competitive edge of goods and services if we don’t rapidly adapt to tech innovations.

By 2022, out of the organised sector workforce mix, that accounts for 15 per cent of the total employment, nine per cent workers will be deployed in new jobs that never existed before; 37 per cent will be working in jobs requiring radically changed skill sets; and 54 per cent will fall under the unchanged status quo category, according to an analysis by Ernst & Young.

Herein, we are only considering risk mitigation and upgradation of the potential for the organised sector who are educated and skilled white-collar employees. Much more provisioning will be required on how to absorb and upskill the unorganised sector that comprises the remaining 85 per cent of India’s workforce, out of which 50 per cent are still dependent on agriculture, seeking migration to urban jobs so as to achieve higher earnability.

With corporates, scaling up efficiencies to match up to Industry 4.0, the Government has a crucial stabiliser role to play in calibrating the pace of change to industry’s level of preparedness because there are unvirtuous effects of reversal of globalisation, which have so far been the largest job enabler in the emerging markets. De-globalisation has impacted the overseas job market for Indians due to protectionist policies of the West. It has also affected export-driven employment, locally, needing a ‘buffer period’ for transition, which mostly only the Government and the old economy sectors can fill in.

By just assessing the ‘declining employment coefficient’ in the export sector, which provides 20 per cent of jobs so vital for a labour- abundant country, interim stop- gap measures and policy recalibration are required by the Government to find solutions for displacements. Protectionist policies of the West are affecting the flow of capital, labour and goods, all of which are depressing wages, impacting consumption and stagnating per capita income.

Policy thrusts towards Smart Cities and Make in India offer perfect solutions for transition because they provide continual support for labour-intensive industries that drive job creation by supporting infrastructure and construction driven investments. By boosting projects in highways, urban transportation, affordable housing, airports and industrial corridors, the Government has been pro-active in perpetuating gainful opportunities for labours in contract mode and focusing on sectors which have ‘higher employment elasticity’. This is vital in the period of employment flux, giving the job market the time to adjust to new realities.

India’s poor infrastructure restricts gross domestic product (GDP) growth. Therefore, increased outlays in infrastructure development and accelerating projects of 100 smart cities will buffer the employment market by at least partly retaining the older employment model of absorbing manual labour to create world-class highways, ports and airports.

To give an understanding of how this plays out, Smart City missions would use hybrid operational models by absorbing manual labour, parallel with superior employee skills needed to harness advanced leveraging of cloud computing, Robotic applications and Building Information Modelling (BIM) to improve on-site monitoring of labour and productivity.

Another interim window that exists for yet another five years for India exists in the vantage of labour arbitrage. Abundance of low cost labour in India would help maintain its edge in being a favoured manufacturing offshoring hub till industrial wages begin to rise on par with the developed economies.

India must seize the space China has ceded in contract manufacturing before national minimum wages begin to increase in due time, and factories relocate to least developed countries (LDC) where electricity and labour cost less, and which offer duty free access to top consuming markets, like the US and the European Union (EU).

To combat workplace obsolescence, the workforce has to be future-ready as the Indian education system is lagging behind Industry 4.0’s qualification needs. This fact is validated in the latest India Skill Report which indicates that only about 47 per cent of Indian graduates coming out of educational institutions are directly employable. More than 50,000 jobs in data science and machine learning are lying vacant due to a huge talent deficit, according to a study by online education company, Great Learning. Therefore, policy-makers need to factor in future-proofing careers with new competencies within this three-year window available.

Advisory firm, Gartner, projects that out of 10 lakh registered companies in India, 75 per cent have plans to invest in data science. With the Government’s prioritisation on Artificial Intelligence, Big Data and Robotics and their application in the digital economy, career opportunities are set to rise in these spheres within the next three years. Skill deficit is not just an India-centric problem but a global phenomenon, according to McKinsey, which leads to a demand-supply mismatch in the talent pool, if not scaled up by 2020.

All of this may sound futuristic, but the future has arrived faster than we have been prepared for. Indeed, the rate of obsolescence is so swift that earlier presumptions, that one finished learning by the age of 25 years, are no longer valid. Staying in the same job till retirement is another outdated concept, as this is the age of faster job portability and, consequently, higher attrition, as seen with the rise of the gig economy.

As the future composition of  workforce alters due to changing business models, permanent employees being retained will be those with core skills; while for specialised skills, companies would rather outsource talent from the online labour economy, known as the ‘gig-market’.

The new and evolving model of the gig economy is an environment in which freelance positions are common, as organisations contract with skilled workers for short duration engagements.

In the ‘gig marketplace’, businesses save resources by way of office space and training. While on- demand for employees lowers costs, it also creates more competition for top talent as more traditional careers are phased out and are replaced with temporary positions. As millennials turn to entrepreunaral self-employment, which offers flexi-work timing, the rise of ‘sharing economy’ with business models like Ola, Uber, OYO et al, and the gig economy will have far-reaching effects on corporate employment models.

The national challenge is not just taking a long-term and interim term view of upskilling of the organised sector to match up to exponential technologies and newer business models that accounts for 15 per cent of workforce. Policy-makers also need to provision for superior job opportunities for 85 per cent unorganised sector and how to upgrade them into the organised sector, which provides better job security and formal benefits.

To unlock the potential of cutting edge technologies that will transform society at a pace demanded for technological change, the Centre for the Fourth Industrial Revolution (CFIR), set up by the World Economic Forum, seems to be the ideal hub to handhold with local Governments through the period of transition. To make India Industry 4.0 compliant, NITI Aayog as the nodal agency coordinating with business, academia, start-ups and CFIR, is the perfect module to facilitate cross-sector cooperation to herald Fourth Industrial Revolution governance.

(The writer is author, columnist and Chairperson for National Committee on Financial Inclusion and Literacy for Women constituted at NITI Aayog)

Writer: Bindu Dalmia

Courtesy: The Pioneer

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