Will digital economy kill jobs?

Oct 21 2013, 08:34 IST
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SummaryThe recent Gartner report about the top ten predictions for IT organisations and users indicates that by the year 2020

The recent Gartner report about the top ten predictions for IT organisations and users indicates that by the year 2020, the labour reduction effect of digitisation will lead to social unrest and that new models of economy is likely to emerge in the developed world. It will highlight the reduction of labour content in work due to digitisation leading to large part of the eligible workforce being unable to participate in the traditional income generation model and hence resorting to alternate models of bartering, protectionism or social movements like ‘occupy Wall Street’ at a significantly larger scale. While this prediction is for the matured economies, some of the signs of which are being already experienced, in a world which is more connected today than ever before in the past, there are some useful nuggets for Indian policy planners.

We have to remind ourselves that in the early days of computerisation in our country, employees of public sector companies, banks and other large establishments resisted automation due to fear of reduction of jobs but ultimately they turned around to accepting the transition due to the promise of better work environment, better customer service, growth in business and expansion of economy leading to more jobs. While we have come a long way in re-engineering several sectors and businesses on the strength of ICT and automation, the plan for transforming rural economy with ICT which is under way has huge expectations from all its stakeholders, the most important one being making labour markets more inclusive through job creation and better returns.

After registering an impressive GDP growth rate of over 9% between 2006 and 2008, 2012 ended with 5.2% raising questions about the prospects for employment opportunities and the social implications thereof. While manufacturing sector has to pick up momentum to be able to put a sizeable number of people into jobs, rural areas are aspiring to modernise and move away from being totally dependent on agriculture and tertiary sectors to becoming knowledge economies.

This trend would be even more real in the coming years with the number of students in the school and college system increasing substantially. There are 23 crore children in 13 lakh schools across the country today, thus registering a growth rate of around 14% as compared to the year 2002. Similarly the total number of enrolments in the higher education system has doubled from 8.4 million to around 17 million.

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