As the world stands on the brink of the Fourth Industrial Revolution, powered by a wide range of new technology breakthroughs such as Artificial Intelligence (AI), Machine Learning (ML), advanced robotics, Internet of Things IoT), Cloud computing and 3D printing, major changes are expected in the labour market globally.
There will be reduced demand for middle-skilled workers doing repetitive tasks and increased demand for more highly-skilled workers -- and also low-skilled workers doing non-routine work. While many developed countries, such as the US and Japan, as also several European economies, are already experiencing this polarisation, the labour market is also hollowing out in many developing countries, although at a rate slower than the developed world.
In the case of India, this polarisation can be seen in the organised manufacturing sector, where the share of high-skilled occupations in total manufacturing employment increased by more than three percentage points, while the share of middle-skilled jobs decreased by 6.3 percentage points from 1993-94 to 2011-12. Looking at the impact of technological progress on various manufacturing industries, the capital-intensive industries, such as automobile manufacturers, have a greater probability of adopting advanced automation and robotic technologies, compared to labour-intensive manufacturing industries such as textile, apparel, leather and footwear, and paper manufacturers.
Further, in the services sector, particularly in the IT sector, e-commerce, banking and financial services and health care services, there is a huge potential for automation technologies, which would increase the demand for skilled workers and reduce the demand for middle-skilled workers.
However, in India, over 80 per cent of the working population is engaged in low-skilled jobs in the unorganised sector. These low-skilled workers aspire to join the middle-skilled workforce in the organised sector to raise themselves from poverty. However, the changing nature of work due to technology advancements in the organised sector prevents their upward labour mobility and any improvement in their incomes.
Addressing these challenges requires reforms in India's higher education system. The institutes of higher learning should shun dated teaching methodologies and redesign the course curriculum by understanding key market transitions amidst the technological advancements. This would enable the country to create a workforce which could be placed in the positions demanded by the companies in the digital era and thus bridge the skill gap in the labour market.
However, looking at the current state of higher education in India, one can see that it is not just the quality of the system which needs to be improved. There is also much to be done in terms of the number of students enrolled in the institutes of higher learning.The Gross Enrollment Ratio (GER) in tertiary education in India is 26.9 per cent, which is lower than that of China (48.4 per cent), Indonesia (27.9 per cent) and the Philippines (35.3 per cent), among others.
Further, India's GER for the male population is 26.3 per cent and 25.4 per cent for females. The GER also varies across different social groups -- 21.8 per cent for the Scheduled Castes and 15.9 per cent for the Scheduled Tribes.
There are also wide variations in the number of colleges for higher education across different states in India, with the lowest number of seven colleges in Bihar for every 0.1 million of eligible population to 51 in Telangana and Karnataka. The top eight states in terms of highest number of colleges are Uttar Pradesh, Maharashtra, Karnataka, Rajasthan, Andhra Pradesh, Tamil Nadu, Gujarat, and Madhya Pradesh, which have 28 or more colleges per 0.1 million of the population. The disparity in the distribution of the colleges is also seen across different districts in these states, with the top 50 districts having about 32.6 per cent of the colleges.
In addition to the inequalities existing in the access to institutions for higher education, another issue is that a majority of the students are enrolled in undergraduate level programmes, compared to the Masters and the Doctoral programmes. Moreover, at the undergraduate level, there is a low pass-out rate -- out of 2,90,16,350 students enrolled at undergraduate level, only 6,419,639 passed-out in 2017.
It is imperative for the country to address these issues given that the Indian system of higher education faces multiple challenges of low gross enrolment in its colleges and universities, with predominance of students settling on undergraduate studies, along with various socio-economic inequalities existing in access to higher learning. Further, emphasis must be placed on increasing the number of students who pass out of the colleges/universities, along with increasing enrolment numbers.
The technology-induced skill gap which the Indian economy is facing across different sectors is bound to widen with the current higher education system. Change has to be brought from outside the existing constructs. Improvement in the teaching methodology from the traditional lecture courses, accreditation of online courses, along with redesigning the course curriculum to be more industry relevant are some of the ways the technology-led changes in the labour market can be dealt with.
(Amit Kapoor is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at firstname.lastname@example.org and tweets @kautiliya. Deepti Mathur, senior researcher at large, Institute for Competitiveness has contributed to the article)