Putting India to work

One of the most frustrating classifications of the last decade for India has been BRICS. We have little in common with commodity economies like Brazil, Russia, Indonesia and South Africa, which are commodity driven economies, with little economic complexity. India is economically complex; we make everything and do everything (not always well or at scale). The China question is even more pervasive; on our IPO roadshow earlier this year, an investor asked “Exactly 10 years ago, the Chinese economy was of the same size as India today; yet, they were growing at 13 per cent and you are growing at 7 per cent. How do you explain that?” My response was: the 6 per cent shortfall goes towards the fixed costs of democracy.

But there is more to thinking about our jobs and education situation in 2050 than democracy; we don’t have the same global growth, global trade or manufacturing opportunity that China had in 1978. The developed world faces secular stagnation, while the political backlash against free trade has just begun and manufacturing is much more labour-intensive than it was.

Predictions are always dangerous and difficult but we can say something for sure about 2050; Many more Indians will work in cities, with more than a million people (today, we only have 45 of these vs 385 in China. The gap between the college wage premium and skill wage premium will vanish, if not disappear. And 12 years of schooling with be mandatory, because the most important vocational skills are reading, writing, and arithmetic. The social signalling value of college will decline (already 31 per cent of retail salespeople in the US, 60 per cent of taxi drivers in Korea and 15 per cent of high-end security guards have a college degree).

Various forms of learning-by-doing and learning-while-earning like apprenticeships will substantially increase as a vehicle for accumulating skills (today India only has 300,000 apprentices, while Germany has 3 million, Japan 10 million and China 20 million). Employment will have changed from being a lifetime contract to a taxicab relationship, because employers will not be permanent institutions (the average life expectancy of a Fortune 500 company in the first list published in 1935 was 65; in the list published last month it was 15). Benefits will not be linked to employers but will be fully portable and linked to your Aadhar number (today 50 million of the goofy Provident Fund’s 100 million accounts are inactive accounts, with worker money orphaned or trapped).