We need Industrial Revolution 4.0

The warning bells sounded early this year when the economic report of the President in the US highlighted the threat from automation to lesser skilled occupations in manufacturing and services. The bugle has now been sounded by the latest World Development Report published by the World Bank. The report warns that up to 69 per cent of existing jobs in India are under threat of automation.

It’s not just about displacement of existing occupations. It puts to test the very developmental model that Asian countries used to claw back into the core of the global economy, from the peripheral position imposed on them through a combination of technological change and colonisation.

This model rested on state-supported industrialisation and a focus on export orientation using lower production costs as a competitive edge. Lower production costs were largely on account of lower labour costs in the early stages, and later increases in labour productivity. Variations of this model were successful across East Asia.

But with increasing automation, the terms of trade would again shift in favour of owners of intellectual capital and technology, and diminish the returns to labour. This would be a great disadvantage to countries in Asia with large, young working populations, such as India.

India obviously needs an updated policy, Industrial Policy 4.0, to deal with this new paradigm of industrialisation. Business as usual would be a disastrous path to pursue, relegating India to a peripheral position in the global economy with a large segment of its population unemployable or under-employed in the new economic context. The political and socio-economic implications of this situation are scary to say the least.

The coming transformation is inevitable. But its negative impact can be minimised, and industry can create competitive opportunities for employment. But this would require massive resource mobilisation focused on developing the ability of the working population to absorb new skills.

Capturing a larger share of the ‘industrial revolution 4.0’ would require investment in high-quality skills related to applied science and technology, engineering, quantitative and social analysis, design and product development. Since shopfloor activities that would still be done by humans would require high familiarity with technology and analytical abilities, workers would need to have educational levels currently available to college graduates and advanced industrial training institutes. The next generation industrial policy is intrinsically linked to education policy.

The state of skilling in India in India is abysmal. Our higher education infrastructure is in a shambles and the industrial training apparatus inadequate. Consider the following facts.

** Industrial training, much of it basic and outdated, creates only 1.7 million graduates annually. With over 300 million new workers to absorb in the next three decades, this number is abysmally low.

India graduates around 7 million graduates in social and natural sciences, most of them from poorly run State universities. Most lack applied skills.

Going by the published balance sheets of a national university based in Delhi and an affiliated college of Delhi University, institutional expenditure is largely dominated by staff salaries and maintenance (about 85 per cent) leaving precious little for investment in research and advanced learning modules (about 5 per cent). This ensures a culture of mediocrity and low adaptation to change.

Major tech firms retrain over 80 per cent of their fresh engineering recruits. And even this re-training is largely for ‘low-skill’ jobs that are likely to be eliminated by automation! The quality of teaching required for inculcating Industrialisation 4.0 can, therefore, be safely assumed to be absent.

Most colleges are woefully short of teachers even for the existing curriculum; they lack the resources to teach new skills and courses. In one engineering college in West Bengal, fourth-year students act as teachers for first-years.

An action plan to tackle these and other weaknesses needs to be put in place and then implemented urgently. But this would require political will that will radically alter the existing apparatus of skilling and higher education.

The process would be long and painful, and calls for huge resource mobilisation. Since higher education is a state subject, creating political consensus would be critical. It would also be needed to overcome the vested interests within the teaching and academic community.

Four critical interventions would be: involving the private sector, finding innovative ways to finance the development of advanced curriculum, integration with industrial and applied training, and developing a sustainable pool of next-gen teachers and trainers. Each would require individual mission-mode initiatives.

Another major initiative would be the combination of ICT-based training with regular classroom teaching and on-the-job training, and finding the right balance of these methodologies. This would need global best practices; its implementation would require industry to be fully on-board.

This government has made a good start with the Skill India programme, but given the enormity and complexity of the problem facing India, this is just Band-Aid. Besides, Skill India and education reforms are two separate initiatives with little actual overlap.

The first urgent step is to recognise the enormity of the challenge. The second is to integrate the industrial development and financing options already available, and re-design them with a skilling and higher education focus. Action plans on the various aspects discussed would follow from that.

The Government should bring together the economic ministries and the ministry of human resources and development to start a dialogue on developing the roadmap for an Industrial Policy 4.0 that is essentially centred on making Indian human resources ready for the next level of industrialisation.

The road is long, but if not taken we risk consigning ourselves to the peripheries of the global economy, with some islands of excellence competing globally, while the rest of the country languishes in relative under-development and under-employment.

The writer is senior director, Corporate Public Policy (South Asia), Deutsche Post DHL. The views are personal