Unemployment has always been a big issue in Bharat, and the fourth industrial revolution (Industry 4.0) is adding more to it. Industry 4.0 is defined by the (United Nations Economic and Social Council, 2022) as “the smart and connected production systems made possible by new technologies, particularly with the increased use of automation and data exchanges”.

This movement of Industry 4.0 towards automation and data exchange includes technologies such as the Internet of Things (IoT), Industrial Internet of Things (IIoT), Cyber-Physical Systems (CPs), Cloud Computing, and Artificial Intelligence (Javeed, 2023, 1). Countries that efficiently use these technologies in manufacturing are expected to see higher productivity and efficiency and thus experience a faster increase in the manufacturing value added.

Hence, countries with more manufacturing firms and a high contribution of manufacturing firms to the Gross Domestic Product (GDP) will benefit most from this. To fully reap the benefits of technological advancement, a country needs well-established manufacturing firms and human capital skilled in these modern technologies.

This will change the dynamics of future job requirements. Many jobs and ways of working will become redundant, while many others will be created anew (Emerging Technologies and the Future of Work in India, 2018). This article dwells on the issue of how the fourth industrial revolution will impact the job market in Bharat.

As per the (Dhawan & Sengupta, 2020) analysis, nearly 700 of the top 1,000 manufacturers produced returns that were less than their cost of capital in 2018, thereby destroying value. The reasons for the creation of limited value by Bharatiya manufacturers are poor logistics, high prices for power and credit-inflated operating expenses, and value chain-related conditions like small and fragmented companies that cannot operate productively and are less innovative.

As per McKinsey’s report, Bharat still lags behind others in terms of labour and capital productivity. Compared with Bharat, manufacturing productivity in Indonesia is twice as high; in China and South Korea, productivity is four times higher. (Vast disparities can be seen in certain sectors. For example, South Korea’s electronics manufacturing sector is 18 times more productive than Bharat’s, and its chemicals manufacturing sector is an astonishing 30 times more productive. While other developing economies, such as China, have managed to catch up with advanced economies in capital productivity, Bharat’s capital is only about two-thirds as productive as China’s.

The potential reasons for low productivity in the manufacturing sector are insufficient investment, skill mismatch, a lack of innovation and technology adoption, etc.

Bharat’s structural transformation shifted directly from agriculture to service-led growth. Without the expansion of the manufacturing sector (Emerging Technologies and the Future of Work in India, 2018). The contribution of the services sector to GDP has risen from 45% to 55%, while the manufacturing sector has largely remained stagnant at 15% in 2017 and 17% in 2022 (Jain & Yadav, 2023).

In contrast, Bharat’s manufacturing sector share of employment increased by just one percentage point, compared with a five-point increase for the services sector in the past 13 years (Dhawan & Sengupta, 2020). Table 1, below gives a glimpse of how the manufacturing sector has not been able to become a major employment provider until now.

In 2017–18, 12.1% of people were employed in the manufacturing sector, which declined a little by 2021–22 to 11.6%. Agriculture, even after its low productivity and low contribution to GDP, continues to engage around 45% of the workforce. Industries like trade, hotel restaurants, transport, storage, and communication are also not providing enough employment. Bharat’s services sector is also not able to provide adequate employment (Aggarwal & Aggarwal, 2022).

Table 1. Industry-wise percentage distribution of workers

Source: Ministry of Labour and Employment

Adoption of Industry 4.0 technologies requires a unique and specialised skill set. In Bharat, unemployment has always been a big issue. Growth has been capital-intensive rather than labour-intensive in Bharat (Ghose, 2016). Bharat’s economic growth generates insufficient employment. The annual demand for new jobs in Bharat is estimated at 12–15 million, leaving Bharat with a shortage of between 4 to 7 million jobs each year.

This is further compounded by the 300 million people of working age outside of the labour force (Chapman & Saran, 2018). The National Sample Survey Office (NSSO) data reveals that less than 20% of the population is engaged in high-skill occupations that typically require advanced analytical skills and are thus less vulnerable to the impacts of automation (Ilavarasan, 2017). Hence, the adoption of new technologies by businesses will pose a serious challenge to middle-skilled jobs.

According to the World Bank Group Foresight Report, the manufacturing sector has high automation potential, with a recent study estimating that 69% of tasks within organised manufacturing in Bharat have the potential to be automated. The adoption of advanced automation and robotics can be seen in capital-intensive manufacturing industries like the automobile sector, which is the biggest customer with a share of 44% of total robot installations in the country (Industrial Robots Drive Growth of Robotic Startups in India – IndBiz | Economic Diplomacy Division | IndBiz, 2020).

This is expected to grow and pose a serious challenge to the working population. It is expected (The Future of Jobs Report 2020 | Weforum.org, 2020) that “by 2025, 85 million jobs may be displaced by a shift in the division of labour between humans and machines, while 97 million new roles may emerge that are more adapted to the new division of labour between humans, machines, and algorithms”. Papers such as (Kumar, 2021; The Future of Jobs Report 2020 | Weforum.org, 2020) extensively throw light on the impact of the Industrial Revolution on employment, and it is clear that there might be a negative impact on the jobs and employment scenario. 

A rapidly changing technological landscape will make skilling and labour demand unpredictable and variable. This is likely to increase the preference for hiring contractual rather than permanent labour (Emerging Technologies and the Future of Work in India, 2018).

The major population of Bharat is already engaged in the unorganised sector, getting low wages and living in a bare minimum situation. As stated by (Emerging Technologies and the Future of Work in India, 2018), the majority of workers in Bharat have to work to survive, even though it may generate an income that is below the subsistence level. The industrial revolution can be a boon for Bharat if it can manage to secure jobs for the population. Otherwise, with jobless growth, the economy cannot sustain itself for long. However, it needs to be noted that automation often creates jobs, but it requires a highly educated and skilled workforce. The question is: can Bharat rapidly provide the required skills to its young population?

References

Aggarwal, A., & Aggarwal, A. (2022, February 11). India’s Service Sector Is Great for GDP, but It Does Little for the Job Crisis. The Quint. https://www.thequint.com/opinion/indias-service-sector-is-great-for-gdp-but-it-does-little-for-the-job-crisis#read-more

Chapman, T., & Saran, S. (2018, February 9). India: Inclusive Growth and the Employment Challenge. The OECD Forum Network. https://www.oecd-forum.org/posts/29977-india-inclusive-growth-and-the-employment-challenge

Dhawan, R., & Sengupta, S. (2020, October 30). A new growth formula for manufacturing in India. McKinsey. https://www.mckinsey.com/industries/industrials-and-electronics/our-insights/a-new-growth-formula-for-manufacturing-in-india

Emerging technologies and the future of work in India. (2018, June 2). ILO. https://www.ilo.org/newdelhi/whatwedo/publications/WCMS_631296/lang–en/index.htm

The Future of Jobs Report 2020 | weforum.org. (2020, October). weforum.org. https://www3.weforum.org/docs/WEF_Future_of_Jobs_2020.pdf

Ghose, A. K. (2016). India Employment Report 2016: Challenges and the Imperative of Manufacturing-Led Growth. Oxford University Press.

Ilavarasan, P. V. (2017, September). Automation and Workforce in India: Terrible consequences or impossible? Social Science Research Network.

Industrial robots drive growth of robotic startups in India – IndBiz | Economic Diplomacy Division | IndBiz. (2020, January). Economic Diplomacy Division. https://indbiz.gov.in/industrial-robots-drive-growth-of-robotic-startups-in-india/

Jain, S., & Yadav, A. (2023, February 27). The next 25 years: India’s golden opportunity to become a manufacturing powerhouse. The Economic Times. https://economictimes.indiatimes.com/small-biz/sme-sector/the-next-25-years-indias-golden-opportunity-to-become-a-manufacturing-powerhouse/articleshow/98263284.cms

Javeed, I. (2023). The Impact of Industry 4.0 on Employability and the Skills Required in India. Global Economics Science, 1-10.

Kumar, A. (2021, June). Artificial Intelligence and Its Impact on Jobs in India. Research and Information System for Developing Countries. https://ris.org.in/sites/default/files/Publication/Policy%20brief-104_Amit%20Kumar.pdf

Ministry of Labour and Employment. (n.d.). Employment and Unemployment Scenario of India. Directorate General of Employment (DGE). https://dge.gov.in/dge/sites/default/files/2023-08/Employment_Situation_in_India_July_2023_updated.pdf

Ministry of Labour & Employment. (2022, December 31). Annual Report 2022-23. Ministry of Labour & Employment. https://labour.gov.in/sites/default/files/ar_2022_23_english.pdf

United Nations Economic and Social Council. (2022, January 17). Industry 4.0 for inclusive development. unctad. https://unctad.org/system/files/official-document/ecn162022d2_en.pdf

World Bank Group Foresight Report. (2016). World Development Report 2016: Digital Dividends. World Bank. https://www.worldbank.org/en/publication/wdr2016