Why we must invest more in human capital

India’s major employment generator IT-services has witnessed tremendous pressure through automation, digitisation, cloud computing and restrictions to outsourcing among developed countries. There are hopes that more jobs might get created by new technologies. However, nobody can second guess the changes which might happen over the next decade.

Currently, there is a growing gap between job creation and the needs of our machine-powered future. We therefore have to embark upon a journey of continuous adjustments to develop, utilise, and maintain human capital and social cohesion.

In a recent interaction at the World Economic Forum, only about one in five of top corporate leaders believed that they are confident about their current skills taking them through to the end of their careers. Globalisation and technology are accelerating both job creation and destruction. Some estimates have put the risk of automation as high as half of current jobs, while others forecast a considerably lower number of 9 per cent. Still, all occupations will go through change: and it has been found that on average one-third of the skill sets required to perform today’s jobs will be wholly new by 2020.

In essence, developing and empowering human capital to be able to shift to the new technology world seamlessly, should be the top priority of governments especially in countries like India which are predicted to experience a demographic bulge.

India was late in adapting to the changes catalysed during the first and second industrial revolution leading to a century of lost growth and decline in living standards. Pre-emptive and timely measures shall enable us to be part of the next shakeup facilitated by a combination of artificial intelligence, robotics and automation.

As the future grows more uncertain, the only way forward is to strengthen the core of the country — and predictably India’s core opportunity is its human capital. There needs to be a cohesive plan to fundamentally strengthen this workforce so that India does not miss the bus on the fourth industrial revolution. Health and education will be the first basic inputs to develop and sustain a healthy, highly skilled workforce.

In India, the development assistance for health for a population of 1.3 billion is a total of $650 million out of which the majority is provided for child and newborn care ($230 million) and maternal health ($110 million). India spends less than 3 per cent per capita compared to the US and only about one-third that of China. More worryingly, after being on a similar spend level in 1990, China has taken an insurmountable lead over India during the last ~25 year period.

Similar is the case with education, China is installing 3D printers in all its 400,000 elementary schools when Indian public education system is struggling with basic infrastructure. Again, India lags not only China but its more proactive neighbours such as Sri Lanka on education spending

The need of the hour is to overcome institutional inertia and outdated socio-cultural norms so that the gap between widening skills gaps and skilling systems can be bridged.

Integration of higher education with skills and vocational education; attracting the most credible talent to the teaching profession; building global recognition to the education system; and streamlining regulation to attract credible private sector entities to education are some structural changes which are needed for transforming education. A well nourished and healthy population is necessary for building a futuristic workforce. Here, a four pronged approach is required:

Raise public healthcare spend to 3 per cent of GDP;

Increase commitment to Non-communicable diseases at par with infectious diseases;

Develop a sustainable mechanism to fund universal healthcare;

Build a robust referral and preventive healthcare mechanism to reduce burden on tertiary-care.

Access to high speed internet, multidisciplinary learning, design thinking, data science and information filtration capabilities are quintessential for making a future ready workforce. It is virtually impossible to learn future skills for future jobs. Even the best crystal gazing is unlikely to predict the changes across industries.

The best foot forward is to develop a human capital that is physically and emotionally vibrant, flexible and possesses multiple skill sets to be able to seamlessly move around the blurring dividing lines among various industries.

The writer is the founder and CEO of YES Bank