There are multiple issues needling the world right now. Globalisation appears to be in retreat, the gap between the haves and the have-nots are widening in many parts of the world and countries are struggling to deal with the fourth industrial revolution or Industry 4.0. These themes resonated at the opening day of the 33rd India Economic Summit in Delhi on Thursday. The summit is hosted by the World Economic Forum in collaboration with the Confederation of Indian Industry.
Many business leaders and politicians appeared to be worried that the trade frictions between different countries show no sign of abating. Singapore's Deputy Prime Minister and Minister for Finance Heng Swee Keat was one of them.
The US-China trade war, he said, will disrupt the global supply chain and risks breaking the global technology chain as well. "All of us are suffering economic damage - it's quite unprecedented," he added. The Deputy Prime Minister also pointed to a broader competition of governance models, between one based on democracy, human rights and free speech, and another where you have "one dominant party with a very different way of working".
Heng Swee Keat was asked about the kind of leadership the world needs to find common solutions. "We need to be honest with the issues at hand," he said. Some parts of the world support globalisation. Others are in retreat. That's because some parts of the world haven't benefited from globalisation - there is growing inequality.
The second dominant theme at the seminar was around technological disruption brought about by Industry 4.0. While Industry 3.0 focussed on the automation of single machines and processes, Industry 4.0 is about end-to-end digitisation of all physical assets and their integration into digital ecosystems. Exponential technologies are enabling this wave. They include smart sensors, automation devices, new robots, Internet of Things (IoT), cloud computing, location detection technologies, human-machine interfaces, augmented realty, 3D printing, artificial intelligence (AI) big data analytics, and mobile devices, among others. Countries (and companies) are struggling to deal with the change.
One reason why companies are struggling with Industry 4.0 is because they are enamoured by the technology rather than thinking about the business, Rajat Gupta, Senior Partner at McKinsey & Company, contended. People are not really looking at business outcomes. "When the business case is clear, the mindset has to be solving for the problem. It has to be a business-forward strategy versus technology-first," he added.
Higher automation, nevertheless, implies displacement of labour. Most jobs in the Industry 4.0 scenario comes with a very high skills bias and all countries are now stretched in training and re-training their workforce - that's a bigger struggle - finding jobs for millions of youngsters entering the working age population. India, possibly, has the toughest challenge here.
The World Bank's South Asia Economic Focus Spring 2018 report stated that between 2015 and 2025, India's working age population or those above the age of 15, is expanding by 1.3 million a month. India, therefore, needs to create millions of jobs a year. How many millions depends on the estimates of the employment rate. Not everyone in the working age population works. The World Bank calculates the share of the working-age population that is at work at 50 per cent. India, the report stated, would need to create more than eight million jobs a year to maintain the same level of employment rate, going ahead. That's the sort of pressure the Indian government braces up to.
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