Why job prospects are grim today

The inability of the economy to create new jobs faster than jobs are lost to automation leads to unemployment, says Shyamal Majumdar.

At an informal meeting of some wise men of Mumbai's financial world, the conversation focused on the rapid automation of more and more work once done by humans and whether it will lead to "technological unemployment" - a phrase coined by John Maynard Keynes, who in 1930 had talked about a "new disease", which is the inability of the economy to create new jobs faster than jobs are lost to automation. 

One of the participants in the informal meeting gave some food for thought for the new government - after jobless growth and jobless mini-recession, will it be a case of jobless recovery? Going by the drift of the conversation, it was apparent no one knew the answer to that question. 

In a strange way, I was reminded of what economist Gregory Clark had said in his book A Farewell to Alms: "There was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early 20th century. This was the horse". 

The population of working horses actually peaked in England long after the Industrial Revolution. In 1901, 3.25 million were at work.

Though they had been replaced by rail for long-distance haulage and by steam engines for driving machinery, they still had a lot of work such as toiling in the pits, hauling wagons and carriages for short distances and carrying armies into battles.

But, Clark said, "the arrival of the internal combustion engine in the late 19th century rapidly displaced these workers, so that by 1924 there were fewer than two million. There was always a wage at which all these horses could have remained employed. But that wage was so low that it did not pay for their feed". 

Are humans, except for the superstar types, far behind? Technological change over the last generation has wiped out many low- and middle-skill jobs.

Just think about the big army of secretaries, typists, telephone and computer operators and payroll clerks who occupied vast office space in earlier years?

There are examples galore. I remember how in the early nineties, just one machine imported from Germany took away 300 jobs of people who were engaged in folding newspapers in a media organisation.

The machine could do the same job in one-fourth of the time. Most of the staff who lost their jobs silently walked into the sunset. That's a classic example of how those who are left unemployed or underemployed are struggling to retrain and catch up with the new economy's needs. 

If this was the past, consider the future, and here the news isn't too good for even some of the most skilled jobs.

Though spoken in a different context, McKinsey Inc CEO Dominic Barton told The Economic Times last week, "If you are a heart surgeon in the US today, you better be worried about driverless cars because most of the heart transplants come from car accidents and car accidents are going to drop dramatically with driverless cars". 

If heart surgeons have reasons to feel worried about driverless cars, imagine the plight of truck and taxi drivers when computers start driving more safely than humans.

And it's not a remote possibility. In April 2014, the Google team working on the project announced that their driverless vehicles have now logged nearly 1.1 million km. 

If you find all this talk about machines taking away jobs a little outdated, you could do what one of the participants in the informal meeting suggested - read a 75-page e-book, Race Against the Machine, by Massachusetts Institute of Technology's Erik Brynjolfsson and Andrew McAfee.

The authors have brought together a range of statistics and examples to show how technological progress has deep consequences for skills, wages and jobs.

Faster, cheaper computers and increasingly clever software are giving machines capabilities that were once thought to be distinctively human - like understanding speech, translating from one language to another and recognising patterns.

So automation is rapidly moving beyond factories to areas that provide most jobs in the economy. 

The e-book makes the case that employment prospects are grim for many today, as humans and our organisations aren't keeping up with the pace of technology. Is it time to re-imagine the Skill India mission?