Disruption is an opportunity for change - and the rapid technological advancement taking place now is one such opportunity for India.

The transformations in business models, production processes and global value chains tat are enabled by technological adoption and digitization have the potential to reshape work in India for the better. The possibilities include creating more productive and higher-wage jobs; better matching job seekers with suitable opportunities; making livelihood opportunities more accessible; making jobs safer; and improving access to social security and protections.

The Observer Research Foundation and the World Economic Forum together investigated the dynamics shaping the future of work in India and the likely labour market outcomes in 2022. For this, two unique surveys were conducted: an enterprise survey of 774 companies in India, from micro-sized firms to companies employing more than 25,000 people, and a youth aspirations survey of more than 5,000 young people. Our findings reveal five distinct opportunities for using emerging technologies and digitization to create an inclusive future of work in India.

The creation of sufficient new employment opportunities for the existing - and growing - labour force

Despite widespread concern that machines and emerging technologies will displace human workers, companies in India are anticipating job creation, not job losses. Among surveyed companies, nearly twice as many report hiring additional workers owing to the introduction of new technologies in the last five years, compared to those that reduced their staff. Companies expect this trend to continue in the medium term.

While some jobs will become redundant in the wake of automation, this is welcome, particularly if automation can replace unsafe and undesirable jobs. As some jobs disappear, new kinds jobs of are emerging; 21% of the companies surveyed, for example, have created new job roles owing to the introduction of new digital tools and services over the last five years.

Technology can improve the quality and increase the quantity of jobs in India

One of the most prominent features of the Indian economy is that 92% of employment is informal. There is already a high incidence of non-standard forms of employment including contract labour, part-time and temporary work - a trend that is picking up pace in advanced economies. In India, the vast majority of workers are not employed in firms that are legally obliged to provide them with social security and protections. Combined with companies’ increasing preference for independent workers and a rising interest in independent and digitally enabled work among India’s youth, this points to the need for new models of social security and entitlements that are linked directly to individuals rather than employers.

The survey findings indicate that there is a growing interest in alternate working arrangements: 19% of surveyed firms report hiring freelance workers in the past year. New types of employment may allow companies the flexibility needed to innovate, accelerate and adapt to technological adoption. This flexibility, however, cannot come at the cost of the welfare and wellbeing of workers. India’s youth are cautiously optimistic about independent work; 59% report being very or moderately interested in participating in the gig-economy as a main source of income. This receptiveness to non-standard forms of employment will be an advantage for India.

To realize this advantage, India must leverage its growing digital infrastructure and the rise in internet access to create better, higher-paying jobs; to bring more workers into the paid economy; and to ensure that independent workers have access to larger markets and social security and protections, while enabling the flexibility needed for firms to adjust to technological change.

Equal economic opportunities for women, youth and other marginalized communities

It is noteworthy that women in India contribute 17% of GDP, compared to 35-40% in most other countries. India’s female labour force participation rate - 27% - is well below the global average of 50%. It is often assumed that since the latest round of employment data in 2011, female labour force participation has been increasing. Our survey results point to a different reality. At present, 30% of surveyed companies have no female employees, while for 71% of surveyed companies, fewer than one-in-10 of their employees is female. Women account for just 26% of new hires in the fastest-growing jobs over the past five years. The workplace gender bias is further evident in that 37% of companies reported a disinclination to bring more women into their companies due to a preference for male employees. Augmenting the female labour force participation in India to bring it at par with their male counterparts would enhance India’s GDP by 27%.

More than one-third of Indian companies are disinclined to hire women
More than one-third of Indian companies are disinclined to hire women
Image: Observer Research Foundation / World Economic Forum

Our research also reveals that 64% of young people between the ages of 15 and 30 are not currently in education or employment. They face various barriers to finding desirable jobs including information asymmetries, a lack of guidance in identifying suitable job opportunities that match their skillsets, and a lack of relevant and quality skill-development programmes. Online tools and platforms present an opportunity for improving access to information for job seekers, enhancing awareness about the changing skill requirements and job roles, providing mentoring and counselling services and access to work experience through project-based work.

The under-utilization of human resources constrains productivity and economic growth. Emerging technologies can provide India with a unique opportunity to level the playing field. As work shifts from the farm and factory to the cloud, and from offices to digital spaces, it will be possible to rearticulate social norms around work, renegotiate the terms of economic participation and instate a new normative framework enabling greater participation for women and other marginalized communities.

The creation of an ecosystem equipped to educate and reskill the workforce

Technological disruption is not only leading to changes in job types but also job roles and tasks. This wil require adapting the skillsets of the existing workforce as well as introducing skilling initiatives for new entrants to the labour force. For 35% of the surveyed companies, a lack of requisite skills among their employees is the key barrier to adopting new technology, while 33% report a need for new skills amongst their workforce as a result of introducing new industrial technologies or machinery.

Interestingly, most companies plan to address these skill gaps internally through retraining existing workers. Young people, who are entering the labour market at a rapid pace, are also demonstrating an interest in upgrading their skillsets; 76% of those surveyed report being very interested in pursuing a skill development programme, and view this key to enhancing their employment opportunities and wages.

A significant investment in human capital development is imperative to ensure that businesses have access to a skilled workforce in order to accelerate technological adoption and increase productivity. For workers, access to appropriate education and skilling opportunities will allow them to seamlessly transition into new workplaces throughout their careers. In this context, accessible, affordable and relevant skill development programmes will be crucial for enhancing the employability and knowhow of the workforce.

The responsibility for reskilling and upskilling will have to be shared by the private sector through the provision of training programmes as well as mentoring and counselling opportunities for workers. There is also an immense opportunity for making the problem part of the solution by leveraging innovative technological platforms for delivering skill and employability enhancing capabilities as alternates or supplements to traditional educational institutes.

The creation of an inclusive policy environment which balances the need for job creation with the interests of workers

The companies surveyed identified technology adoption as the factor most likely to have a positive impact on their business over the next five years - yet 64% say the are facing barriers to adoption, including a lack of skills among their employees and a lack of investment capital. India will have to find ways of reducing these constraints in order to realize the full potential of technology-driven job creation.

With the anticipated changes in the labour market, it will be critical for India to create an inclusive policy environment which is able to balance the need for sustaining economic growth, creating productive employment opportunities and promoting the interests of workers and society. Similarly, employer-provided and premise-based entitlements and protections will need to be rethought for a vastly different workspace in India. New types of protections will be needed as well as new mechanisms for provisions that link services and entitlements directly to individuals rather than to employers.

Alongside the rapid disruptions triggered by technological advancement, there is a window of opportunity for India to adapt to the changing requirements imposed by transformative technologies on jobs, work and skills. If successful, India will be able to create new employment opportunities for its large labour force, improve working conditions, enhance its productivity and accelerate growth and social inclusion. In this regard, active collaboration between the government, the private sector and civil society to understand the likely impact of technological changes and to respond with corresponding adjustments to the business, policy and educational landscape will be crucial. The opportunities presented by technological disruption are immense. Now is the time for India to harness them.