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DATA STORY: India will be one of the least affected by automation job losses among major economies

WT24 Desk

Despite that automation is expected to eat the jobs of millions of Indian workers by 2030, the impact is going to be the least in India among major economies of the world, according to report.

In comparison, advanced economies like the US and Japan – which rely heavily on manufacturing – are going to be the most affected. A McKinsey Global Institute report says that robots will be doing about 9 percent of current works being done by humans by 2030.

However, if the speed of adoption is rapid, this could climb to as much as 19 percent. This will certainly result in loss of jobs but the overall picture is not that gloomy.

The McKinsey report uses the term ‘full-time equivalents’ or FTEs to denote the work hours lost to automation. Full-Time Equivalents (FTEs) are the hours worked by one employee on a full-time basis. The concept is used to convert the hours worked by several part-time employees into the hours worked by full-time employees. So basically, one FTE means work of a full-time employee.

The impact of displacement of the work in India will be compensated by the expansion of the economy. India is set to see one of the biggest rises in employment in the world across sectors.

By 2030, India will see a growth in demand for technology professionals, teachers, architects, engineers, doctors, nurses among others. According to the estimation, over 6 million tech jobs will be created in India.

In comparison, the demand for creative artists, teachers, builders, care providers will see a decline in Japan. In other countries like Germany, China, and the US – the demand for repetitive workers like assistants, dishwashers, cleaning- equipment operators, food-preparation workers will see a negative growth.

The impact is lower despite India is expected to continue industrialising as its economy shifts away from agriculture. The report suggests that India is home to the second largest pool of labour associated with technically automatable activities. The number 235 million FTEs is lower only to China’s 395 million FTEs.

The major reason for this is the rapidly expanding workforce which India enjoys. “India’s labour force is expected to grow by 138 million people by 2030, or about 30 percent. India could create enough new jobs to offset automation and employ these new entrants by undertaking the investments in our step-up scenario,” says the McKinsey report.

The report argues that automation will come into play more where there is a manufacturing-based economy or higher wages. China and Mexico which have comparatively higher wages than India are likely to see more automation.

Young India to lead the charge

The fact that only 5 percent of India’s population is over 65 which will grow to just 8 percent by 2030 – compared to China for which the share stands at 9 percent and 17 percent respectively – is going to boost the growth in GDP as well as help spur the demand of jobs.

A young India means a large number of educators is needed too hence the report projects a 208 percent growth for teaching professionals. Similarly, under-developed infrastructure is going to drive investments from government as well as private players leading to job creation.

The sector which will see the highest demand for skilled labour is healthcare. Given the shoddy condition of health services and India’s low ranking in various social indicators, the projection does justice with the reality.

Job Switch

The impact of the automation would be mitigated but that does not mean that in future there is no need to be wary of it. The report expects that 3 to 38 million workers may need to switch occupational categories depending on the speed of adoption of automation. Considering, the midpoint adoption scenario, the number will be at the lower end and in case of rapid adoption, at the higher end.

Comparatively, however, in China, this range will be between 12 million and 102 million. Globally, up to 375 million workers may need to switch occupational categories.

So, notwithstanding the adoption rate, India needs to be ready to deal with the impact of automation.

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