5 Understandings on Job Creation through Challenging Times..
Hi John, nice meeting you. What do you do?
We often identify ourselves by what we do. Some would say ‘ I am an accountant’ or “I am a florist” and yet some others like me would say, “ I help businesses achieve more through mergers & acquisitions and mentoring”…
The concept of a job is changing from being a noun to a verb. From being in ‘a paid position’ or a task to ‘doing regular, occasional or casual work’.And we are often engaged in regular, occasional and casual work simultaneously. I lead an advisory business, where we help with M&A, mentor start-ups and am an author…
While the rapidly evolving technology and geo-economics post-pandemic, continue accelerating changes in our lives, we seem to have arrived at people without jobs and jobs without people in several industry sectors.
Many of us have come across reports like one smartphone has impacted 50+ jobs like making the secretary; photocopy person, courier person, cameraman redundant..….… Experts tell us that ours is no longer a scarcity economy any more. The global economy has created enormous wealth and some became billionaires, whereas many others also lost their jobs.
Perhaps both assessments have their merits.
Many of us think that Technology is taking away jobs, however wage growth is leveling off in most sectors. An average person is not gainfully participating in the growth story of our society. The way things are evolving, everyone is not guaranteed to participate in the new growth either…
So, how on earth do you create jobs, when the world is full of robots, bar codes and smartphones….Based on my experience and interactions here are a few perspectives on job creation and preservation, to trigger discussions...
#1 Can stronger employer organisations and trade unions help?
Employers including campus recruiters lament that only about 30–40 % of college graduates are employable. For the rest, 60–70% of graduates to be able to contribute to their organisations, significant investment by way of orientation and training is required by their employers.
Some employers even reason that the gap between available jobs and the number of job seekers isn’t bad because it helps the latter stay sharp and bring out their best. Does that help?
On the other hand, universities bemoan that potential employers don’t help them enough to continuously update and Co-design the academic syllabus.
There are several models of mutually beneficial collaboration between corporate and academic institutions. Let us take this up in another discussion.…
Several trade unions continue to agitate against privatisation of public utilities and redundancies in large corporations. They take up the case of people who have jobs, what about those who do not?
Along with strong trade unions, we need strong employer organisations so that more stakeholders collaborate towards balancing the number of jobs and job seekers.
Digitalization and AI are making the world a better place. As we welcome technology to replace humans in repeatable jobs, would algorithms become better drivers, pilots, pathologists and financial advisors than humans? Would the resulting services become more affordable?.
When the world gets back from the Covid-19 break, would there be more jobs in the hospitality and leisure space, since people will have more time at their disposal and technology has made some more tasks redundant?
Consequently, could there be more jobs to assemble and integrate robots and fine-tune AI applications..?.
A 2015 study found that over 140 years, technology has created more jobs than it has taken away in the UK. Digitization and technology have given us more time and leisure, more income, more ability to connect.
So deeper collaborations between employer organizations and academic institutions for skilling and re-skilling and, between trade unions and the management for re-aligning job roles could help…
#2 Can increased international trade help?
While trade creates jobs in the export industries, we know that it creates a challenge for some of the import-related industries.
A 2019 study finds that international trade supports one out of five jobs in America. There are similar figures for Canada and other countries as well.
Setting up new industries and moving existing industries towards supply chain resilience can also boost the real estate industry globally.
As per pre-pandemic estimates, the real estate and construction industry in a large emerging market such as India would require 76 million workers in 2022. However, reforms on land and transaction processes would need to be more enabling.
The logistics industry thrives on derived demand from manufacturing and consumption sectors. From the logistics industry perspective, for every 100,000 square feet of a modern warehouse cum distribution center as a ballpark creates 100 jobs in a single shift.
As per the India Life Sciences report released by Bain, while 30% of doctors believed that their jobs would become more efficient, 79% found it challenging to keep pace with diseases and treatment protocols. Technology can assist doctors significantly thereby creating more jobs and efficiency.
Infrastructure investment creates jobs and stimulates the economy. However, to benefit from infrastructure investment, the development of soft infrastructure has to precede and match the development of hard infrastructure ….Soft infrastructure develops human capital to deliver services and utilize hard infrastructure hence, creates more jobs.
In the early 1900s, about 40% of the US population was engaged in agriculture ie. feeding the rest of the population. Now less than 5 % are engaged in agriculture. However, the pre-pandemic US unemployment rate is 8% which means that jobs got created in the fields of science, finance, infrastructure, services etc, which more than compensated the loss of jobs in agriculture.
Developments in technology and processes followed by enabling regulations have removed jobs from one sector and created in other sectors. So we need to welcome technology adaptation to create more jobs, albeit in different sectors…
Increased global and regional trade can help engage with and deliver to new markets. Trade coupled with technology can help us reach more customers and deliver products in new ways.
# 3 Can massive and continuous re-skilling help?
While technology moves jobs from one sector or discipline to another, vocational training can bridge the gap between the here and now industry requirements and our education system.
The highly skilled jobs in AI, ML, Big Data, Robotics, Bio-engineering are increasing, where talent is in short supply. The repetitive and low-end jobs are disappearing, some of the tasks that these workers perform are getting broken up and the rest will get paid very little.
With the 4th industrial revolution upon us, perhaps more jobs will be lost than gained in the short term. To gainfully participate in the evolving workforce, we will need to continuously reskill ourselves. While there appears to be cautious optimism around our ability to reskill ourselves, expect that the time lag between losing a job and finding another will extend. The pandemic’s impact on demand contraction hasn’t helped.
Our attitude towards permanent jobs is changing as well. Millennials want to learn new skills and experiment with different jobs, gain more experience, instead of getting stuck with one job for life.
Climate change is being worked upon and opposing camps came together to sign the Paris accord. So countries are transforming their economies in energy, transportation, consumption and other sectors, inducting sustainable technologies. This is creating a ripple effect in moving jobs from one sub-sector to another, requiring a different set of skills and continuous reinvention. So unless a 50- year-old truck driver, rendered redundant due to a more sustainable and autonomous transportation, can learn to be a drone technician or a yoga teacher etc. to contribute to the new economy, we may indeed be creating a global ‘useless class’, that Professor Yuval Harari speaks about…
People in general trust their employers more than they trust politicians. When upskilling for the new jobs have not been done sufficiently, there is a societal backlash…
So what kind of skills will jobs of the future need?
Creativity and specialization will certainly be more important in the jobs of the future. While many traditional jobs are becoming obsolete and new jobs are evolving, soft skills are becoming more important. Given the pace of evolution, future jobs would be using technologies some of which are not yet invented. So, we do not know what to teach.
How do we future proof our education system and our training programs?
One insight is to then teach learning skills, emotional intelligence etc.
Young entrepreneurs, who would launch their start-up businesses while still in school or college, need physical and digital infrastructure, connections with the entrepreneurial ecosystem and perhaps academic institutions to defer campus-placements for those who want to try to create jobs by founding a business. We need to institutionalize support for failure of start-up businesses.
For an entry-level job seeker, a college degree would often not guarantee a job. Vocational training can help job seekers get into entry-level jobs, build experience and check out their interest in the sector.
On the other hand, most students do not want to become teachers. The academic community is also short of quality talent. Most young students prefer to become bankers, corporate executives etc instead of teachers and professors… Job seekers in many economies prefer fixed government jobs to private vocations and can benefit from awareness of the long term prospects in their careers paths of interest….
Jobs versus skills related issues are applicable across economies and require a multi-stakeholder approach to resolve. The government, academia, NGOs and the private sector need to collaborate to find and implement sector-specific solutions.
# 4 How can policymakers help?
Television channels have usually portrayed ‘unemployment’, with images of people sitting at home, now with the lock-down due to the pandemic, it is hard to tell…
Governments need to rethink the balance between economic development, technology interventions and job creation.
At lower levels, Government jobs pay relatively better, hence there is a lure for Government jobs at a lower skill and pay grade, whereas there is usually a shortage of talent at senior levels of government organisations.
By digitising, we can make copies of plans, drawings, recipes, images …..as a replica of the original, and can be transferred to any part of the world mostly without any incremental cost. This creates identification of place of business-related challenges for governments and requires modification in the goods and services laws.
From the tax-policy perspective, governments need to subsidize businesses that create jobs. Hence instead of taxing the income of businesses and people, governments must perhaps tax consumption, perhaps the difference between income and expenditure..
While AI and Robots continue taking way jobs from factories and farms, construction sites and warehouses, governments will need to deliberate on whether we tax the robots and their owners and pay the laid-off workers?
From the development perspective, governments can build rural agglomerations with the help of migrants, focusing on labor-intensive industries and build urban agglomerations with more technology focus. This could create sustainable jobs, where the requirement is acute.
With experience from countries suffering from terrorism, we now know that it cannot be defeated by violence alone. It has to be a combination of good governance, poverty alleviation, education, improvement of the economy and opportunity of jobs.
The policy intent must not be to protect jobs but to protect the people, who will then find jobs. Like the moon mission we need to make the sustainable development goals (SDGs) that includes reduction of inequalities, as a mission, so we succeed together, as humanity.
# 5 Engage more with emerging markets?
The situation in emerging and developed markets are similar. Country GDPs have grown but ordinary people do not see the benefits. The impact of technology taking away jobs appears lower in emerging economies, which have lower labor costs and require better return on technology investment.
Developed economies need to manage their demographic challenges to benefit from their investments in technology-driven productivity. On the other hand, emerging economies need to invest in education and training to benefit from their demographic dividend and tech-driven productivity gains
Interestingly, developed economies can create a lot of hi-tech jobs by exporting productivity improvement related goods, services and capital to emerging markets, which have a large market for such products.
To return to trade growth as a multiple of GDP growth, trading partner countries need to ensure that trade remains free and fair. That means not resorting to non-tariff barriers like regulations, inspections, quotas etc as also not subsidizing exports, currency manipulation and forced technology transfer.
Among emerging markets, India and China need to find a way to balance their trade with each other. Both countries have a large number of job seekers and an aspiring population. No wonder the number of students in western countries are the highest from one of the 2 countries. The Chinese Government have supported the state-owned enterprises (SOEs) to prosper and create jobs for the people. One good thing to learn from the Chinese development and job creation model is the role played by the special economic zones. (SEZs) China ensured that no part of China messes up with the development and trade of special economic zones like Suzhou, Shenzhen etc.
India has nearly 17% of the world population and is fortunate to be a supply-constrained market not, a demand saturated market. Therefore faster technology interventions at a larger scale, will increase productivity, instead of simply taking away jobs overall. India’s New Education Policy announced in July 2020 is targeted to help leverage the demographic dividend.
Among other initiatives, India needs to create perhaps 100 special economic zones. Out of the hundreds of laws that restrain the Indian industry, none other than environmental laws must apply in these zones. To secure investments, make SEZs successful and create millions of jobs in these, India needs to guarantee that all policy in such zones remain unchanged for 20 years.
What is changing with the Covid-19?
From the unfolding impact of the Covid-19 pandemic, we see a shift in demand, supply constraints, re-prioritization of capital allocation and the growing importance of trust before physical transactions.
Driven by accelerated technology adoption to mitigate the impact, everything is moving faster. After the honeymoon period of a restful lock-down got over, people are now getting stressful about — jobs, health, family etc. Stress levels are increasing…
We can see that even job losses and job creation are happening faster than before. For those who lose their jobs while residing in foreign countries, they have a whole different level of challenges
Besides the health and economy-related conversations, there needs to be continued conversation on how can we as a society, protect lives and livelihoods from this and from future pandemics.
..In conclusion..
From the job creators perspective, more collaboration among stakeholders including between academic institutions, trade unions, government, other participants in the value chain can help create jobs as well as acquire and retain talent better.
For job-seekers to become more valuable to the marketplace, one needs to continuously upgrade ones knowledge and skills. Job seekers, who leveraged the lock-down time to re-educate and re-skill themselves for the changing world, have a head start.
There is no concept of a permanent fire, in our businesses, jobs, careers or our relationships. To succeed, we have to keep igniting a new fire every day …
