Where are the jobs going to come from?
…Was reading the latest issue of Business World yesterday night. It featured a rather interesting article by Stephen Roach, the Chief Economist at Morgan Stanley.
Roach had visited India recently, and the article, in short, was his observation on the Indian economy, as it stands today. He has grave misgivings that India is still looking at manufacturing led employment (are we?), whereas, in his opinion, that is simply not going to happen. To illustrate, Bajaj manufactured over twice as many two wheelers in 2004 when compared to 1999. In the same period, the number of employees had actually fallen by at least 25%. Similarly, with TELCO.
Manufacturing is a highly mechanized and automated game today, it is all about productivity, and is unlikely to provide the jobs the 10 million plus Indians who enter the work force every year need.
Automation and productivity apart, Roach identifies three other reasons why manufacturing in India will always be at a disadvantage when compared to, say, China.
* Lousy Infrastructure
* Low Savings Rate (and i thought indians saved a lot?)
* Not enough FDI
And none of this is going to change anytime soon.
Roach says, bet on services. Call centres, bpos, lawyers, contract research, health services, blah, blah, only services are going to get the jobs.
Sure, services will do better than manufacturing. But most services still need a graduate level education. And of the 10 million entering the workforce, at least 4 million will be under-educated, if not uneducated.
The last five years have played out in our favour. There is no reason to believe the next 5-10 won’t either. But beyond that, it is difficult to say. If we need to lift the under-educated, the uneducated, and the poor, we need huge investments in social and physical infrastructure, we need to boldly use our reserves, IMF and World Bank be damned. Most of all, we need stronger and abler political vision. Genuine political vision. Democracy, the way it is playing out today, will ensure that we won’t get them. And all it will take for the better-off to get screwed are a couple of unprincipled and misguided rabble rousers. That is certainly more likely.
Where are the jobs going to come from? More importantly, where are the leaders going to come from?