The basic nature of employment will change significantly

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The Economic Times | January 3, 2014

Interview with Priyanka Sangani

The coming decades will witness major changes in the nature of employment. Gradually, we've seen that there is lesser dependence on traditional employers in India. The public sector undertakings (PSUs) and the Indian Administrative Services (IAS) can't really get much larger and will not be generating too much additional employment. In the American context, the same argument applies to traditional areas ranging from manufacturing to financial services to publishing. The level at which they will be hiring can only go down from here and so stability will be an issue. Overall, the decline in labor market stability has resulted in an increase in the overall unemployment rate. Indeed, the rate of structural or long-term unemployment is higher than short-term unemployment. This means that this set of people have no jobs and no new skills. These are the biggest drivers of unemployment.

Over time, we'll see an increase in the number of people who want to work for themselves and these people will start getting into short-term associations or contracts with each other. A recent study shows that the rate of personal self-incorporations has gone up by 35-40% in the United States after the financial crisis of 2008. At the same time, broadband networks allow for far more people to work at home and in "virtual teams" than in offices. One study suggests that 40 percent more New Yorker could telecommute based on available technologies than presently do.

There will also be much more labour automation in the future, with algorithms and robots finding greater applicability. Call centers are getting digitised, Google is pioneering driverless cars and Foxconn is saying that it wants to make iPods using robots. It is estimated that one-third of American jobs today could face automation in just over a decade.

It's not all bleak and there is hope though. The rate of investment in infrastructure is rapidly increasing world over. Most countries, including India, have very poor quality infrastructure and are investing billions to fix this. McKinsey predicts over $30 trillion in infrastructure investment between now and 2030. The construction sector and tourism and hospitality industries are the world's largest employers, and will strongly benefit from this kind of investment and from globalization more broadly. Building roads, highways, ports, and airports is something that robots cannot do. If the government spends properly, it can create hundreds of millions of jobs in hospitality, services, infrastructure and construction. These sectors were the largest job creators in the 20th century and can be so even in the 21st century.

In advanced economies, we've seen that services and investment in technology have created a lot of jobs. For instance in the United States, the maximum jobs in the last five years have been created by the IT and technology sectors. People with tech skills will be far more employable in the future. Technology is being applied to almost every field of endeavour, so technological competence promotes versatility.

These transactions also increasingly take place outside of the traditional hierarchical channels of the economy. For example, the usage of virtual currencies, online bartering marketplaces, and time banking brokers that match skills to needs and allow prices to be set mutually and in non-monetary units. The same is true of 3D manufacturing devices that allow small-scale producers to get back in the game of producing everything from household goods to complex mechanical proto-types at ever-lower cost. Rather than a black market, this is a blossoming and efficient digital marketplace for millions of citizens.

Another strategy is not to avoid large corporations but to leverage them. As we spend more and more time online, we constantly give away information about our personal preferences and spending habits for free to vendors. Blogging pioneer Doc Searls has long argued that customers should shield their data and charge a price for it, turning the tables on marketing giants and their data-gathering web-crawlers. Even the two hours per day that most Americans claim they "waste" surfing the Internet should be profitable as websites offer rewards to visit and publicize them, or participate in virtual focus groups, amidst intense content competition. Our time should literally equal money.

The educational sector must also be reformed if it is to contribute to a relevant and active workforce. Rather than the lengthy time commitment of high-price tag liberal arts educations, many may opt for online certifications in specific areas such as computer science, enabling them to more rapidly enter the workforce. Already many corporations fund their own training programs to bridge the gap between the supply of skilled graduates and their workforce needs. We will see a significant shift towards reviving the traditions of apprenticeship based vocational education and work-study programs. It is due to such an educational policy that high-wage countries like Germany and Korea have retained such competitive positions in global exports.

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