2/100: India's Coming Job Crisis & Education

India is set to face a jobs crisis. 

One needs to look at three things to understand that a crisis is imminent.

First, the numbers. On average, 69,000 people turn 25 every single day in India, or more than 2 million every month. Women's participation in the workforce remain small and a large number of people get absorbed in family enterprises. There are about 12 million new people enter the workforce every year. Against this, about 5.5 million new jobs are created every year, many of these being in the informal sector, and lowly paid. The key sectors, the Government identifies 8 of them, usually creates about 200,000 jobs a quarter on average, nowhere close to what may be required.

Second, the most spectacular job growth in the last two decades have come from Indian IT Services sector, which is going to face a crisis of its own. A large proportion of workforce in the sector is engaged in low-cost, process based work, the kind of work which is being automated fast. Many jobs in Indian IT are also focused on Legacy systems, which are being retired and replaced by new generation technologies which require a lot less people. But this shifting demand for IT workers has not dampened the costs of employing them, as the soaring real estate and other costs in Indian cities - and most large companies remained clustered in a few Indian cities due to uneven regional development and poor infrastructure - have kept the costs of employing people high. 

Third, the Government's big plan - with an aim of creating 400 million new jobs by 2020 - rests on plans like creating new manufacturing bases in India (as envisioned in the global campaign 'Make in India'). This, however, requires, as a pre-requisite, great infrastructure, abundant energy and healthy and educated workforce, all the elements India lacks at this time and all of which will take time to build up. The government policy has, so far, focused on building transport infrastructure by simplifying land acquision and grant of permits, and on 'liberalising' labour laws, but ignored the other important areas such as health, education and environment, all of which are crucially important for modern manufacturing. On the energy front, India is only doing a catch-up, and its plan to increase the reliance on fossil fuel, clearly emulating China, may be a couple of decades too late. Given the paucity of ideas, India is likely to miss its job creation target by a wide margin.

Looking at the numbers, it may be obvious that there would never be enough jobs for all the people. And, as some will say, the solution lies in creating Job Givers, Entrepreneurs. That conversation is alive and kicking in India - the Government has announced 'Start-Up India' programme with great fanfare - and many of the new 400 million jobs are supposed to come from this. However, one also knows that nothing will happen when it is so difficult to set up and run small businesses in India. The state remains intrusive - and indeed intrude all too often - and usually tilts the scale, through direct and indirect intervention, towards bigger businesses. And, besides, continued neglect of basic social infrastructure like Health and Education hurts the Entrepreneurial ecosystem even more than the climate for foreign investment for Manufacturing industries. In fact, if anything, the political interference in Indian universities have increased, rather than decreased, over the years, and the commitment to research and study has dwindled. While its neighbouring China has taken up a target of building 20 world leading universities by 2020, and mostly achieved it, the Indian government's response was to reject international rankings, for whatever they are worth, and try to rank its universities itself, with an India-only ranking.

I am not arguing that internationally ranked universities is the way to create an entrepreneurial ecosystem and I am indeed acutely aware of the perverse incentives ranking systems create. But, instilling a government defined ranking has the worst of both the worlds: It creates perverse incentives (more so if you consider how corrupt the Indian education regulatory bodies have been) but it does not create true benchmarks, only inward-looking ones. Add to this the fact that most State Governments in India have stepped back from Higher Education altogether, and have indiscriminately allowed mostly corrupt businesses to set up private universities (against a large contribution to the coffers of various ruling parties), the whole climate of education has declined precipitously with a host of officially sanctioned Diploma mills, which students are forced to turn to because there is not much alternative (the alternative is not going to college). In context, the idea that the Government policy can create an environment of Entrepreneurship, that would create a large number of well-paying jobs, without a dynamic, forward-looking, world class education system, seems absurd at best.

The other big thing that the Government has done to avert the job crisis is to set up an extensive programme for skills training. Though this has been, so far, many overlapping initiatives running in various directions, and poorly implemented. But, even its key premise - that young people in India needs technical skills - is flawed, because India already produces the largest number of technically qualified manpower and most of them remain unemployed. Besides, the attempt to create a separate 'skills training infrastructure' is a colossal waste of public money, and while India's colleges remain poorly funded, such parallel efforts make no sense other than another way of channelling money to politically connected (I did ask the question - why does the funding body, NSDC, fund new training providers to set up infrastructure, while the public colleges sit with idle capacity and poor infrastructure - to many well-placed individuals, but never got a satisfactory answer). While globally distinctions between Education and Skills are being questioned and eliminated, India has found a way to institutionalise it. In that sense, the Government's various efforts to intervene in skills has been entirely counterproductive.

From my vantage point, the impending jobs crisis - which will surely result in a political crisis some years down the line - needs fundamental and interconnected solutions, to build physical and social infrastructure, urgent action on regional developmental disparity (which always creates bottlenecks in distribution of opportunities and therefore, create unemployment) and a national action plan for education, side by side with the policy measures of the Government. The key may lie in reforming India's general education system, and the colleges that offer them. And, it is not just colleges: The schools and High Schools must be equipped to imbibe the skills part that the government is so keen on, and make efforts to erase the age-old dislike of practical work. It is an wonderful entrepreneurial opportunity for people like me, working to erase the distinction between education and skills, and professional education and 'liberal arts', as India needs more people who can think and act at the same time, at all levels. And, this has global significance: As India is set to supply a quarter of the global workforce in the coming years, the educational experiments of the next decades should happen in India. This I see as my own big thing to do in life.