Sanjay Shetty, head – strategic accounts management, Randstad India, on how industry can be more jobs friendly.
The Business Solution.
The dichotomy in Indian business today stands out as an enigma. On the one hand, India has significantly improved her ease of doing business, ranked the highest among the BRICS (Brazil, Russia, India, China and South Africa) group as the most improved economy, featured as one of the top five reformers, and outpacing China on trade growth. On the other, however, job creation in the country is on the decline. The World Bank Report and the 2016-17 Economic Survey data shows a real decline in employment growth over the last three years.
If India is looking to prevent her strong demographic dividend from spiraling into a ‘what might have been’ story, she needs to create more than 1.3 million jobs per month for the next 15 years. How can Indian industry play catch up with the widening gap on this target?
A business approach to scale and growth
India’s paradox with GDP and job growth is not an isolated instance. On a global level, while GDP increased by 2.7 per cent in the period 2010-16, employment grew by only 1.3 per cent in this period.
The message is clear. India will need to drive employment in newer ways – by promoting digitalisation, driving domestic demand and talent, enabling the small and midsize enterprises (SMEs) to be part of global value chains and empowering entrepreneurship. China is a good example. Its urban job growth beats the labor force growth despite its economic slowdown. From decades of reliance on exports of manufactured goods, it has moved to focus on domestic consumption (estimated to touch 50 per cent of its economy by 2020).
Clearly, Indian industry needs to relook its strategies for generating jobs.
Democratising productivity for purpose-driven job creation
If the imperative to create 1.3 million jobs a month is a hard reality, the harder fact is that it cannot come from just one sector. There needs to be a pragmatic democratisation of productivity. Here is where ‘Digital India’ plays a big role. Besides creating its own share of employment, digitalisation will give the much-needed productivity fillip to manufacturing, tourism (with 10 million tourists a year, this is a ripe industry) retail, healthcare, power and a host of other industries. An International Labour Organization (ILO) report estimates that India can add about three million new jobs if her renewables industry can aim to drive 40 per cent of electricity needs by 2030.
An interesting Australian research published in the Economic Analysis and Policy journal revealed that businesses that pay higher brackets of taxes show workforce growth at an annual rate of two per cent, while the lower-taxed companies shed jobs. Democratising productivity could be the step in the right direction to increase revenues and create more jobs.
Driving domestic demand
Across the globe, we are seeing evidence that digital technologies and automation are actually helping labour-intensive industries to thrive. For example, 3-D printing is reshaping the shoe industry to manufacture custom-made and higher-priced (and consequently higher margins) products. Can the Indian shoe industry reinvent itself, with technology, to cater to the increasing demand for high-income domestic customer segment in various industries?
Increasing domestic demand from a billion-plus population can provide large markets. Here is the catch though. Demand can increase only if jobs and incomes do so faster – in short, engage more Indians to supply Indians. Exports can provide a turbo-thrust – but domestic demand is no lightweight for sure. Hindustan Unilever and ITC are good examples of leveraging rural India’s demand to boost revenues and employment. They have successfully redefined production and distribution systems, business models, and the rural workforce.
A cluster approach to employment?
Industrial growth dependent on bigger and capital-intensive models may not always be viable. Clusters of labour-intensive industries spread around the country that supply to domestic demand and export requirements might be.
Can industry enable employment by growing competitive ecosystems? For example, in the US, Italy, Germany, China (among others), industry clusters support and compete against each other to form enabling ecosystems – for employment and the economy. The challenge lies in picking the right clusters in a disruptive and evolving landscape of new technologies, trade barriers and changing customer preferences. Indian business will do well to focus on sectors with potential and growing domestic demand, and develop innovative methods and models to create employment.
The leapfrogging success of digital services in India is a case in point. Our innovations in the telecom sector (we have created the lowest prices globally for mobile connectivity), online banking and payment gateways with personal identity systems, and digitisation of public services are game-changing instances of unifying clusters of job creating opportunities.
Creating high-paying knowledge job markets
Ten out of 25 Fortune 500 retailers have set up captive technology centres in India. Many others work with Indian IT companies to outsource services. India is sitting on a gold mine as the global talent hub. Workforce strengths at Tesco, Target, and Walmart Labs – to name a few – are strong indicators of the burgeoning employment potential in the niche knowledge market. It is not just about technology, but equally about the domain expertise.
Business, however, has to be ahead of the curve in identifying shifting skill needs and nuances, and speedily develop agile centres of expertise. We have a first-mover advantage to develop globally competitive knowledge ecosystems – be it R&D services, marketing services, data analytics, or cognitive intelligence. To sustain this head start, we must invest in continuous learning and upgrading of skills. Traditional curricula should give way to skills training, microlearning programs (from experience-based instances) and mentoring. Experienced workers will need access to retraining programs, geared to their needs. Business, academia and government must collaborate to enhance employability in a disruptive landscape.
New models of skilling can provide both jobs and entrepreneurship opportunities. The real call to action for industries and the workforce is to stay focused on continuous learning.
Government plays a role too
The need of the hour are policies that link GDP growth with job growth. ‘Startup India’ and ‘Skill India’ are steps in the right direction, but they need much greater velocity. This can be achieved by:
- Creating an extensive and integrated ecosystem for entrepreneurship education and support – mentors, innovation labs, funding, investors and procurement opportunities
- Strong support for SMEs – redefining the archaic classifications of micro, small and medium businesses, easier compliance to tax breaks, and better R&D avenues. It will not be out of place to mention here that between 2005 and 2012, 70 per cent of job growth came from this sector.
- Better technology and infrastructure to fuel the start-up and SME segments
- Continuously improving ease of doing business
- Purposeful agriculture reforms and cottage industries development
- Aligning urban growth to industry clusters that tangibly create jobs
- Drive skill development
Globalisation’s next phase will be rapid and even more disruptive. Businesses that understand the underlying forces of change and move decisively to adapt will build broad-based, inclusive economies into the future.