Many economists of the world are projecting India, along with Brazil, Russia and China (BRIC), as the future super economic powers. It is estimated that India has a distinct comparative advantage as it possesses a vast reservoir of skilled manpower. The emerging demographic differentials reveal that over the population profile which is concentrated in the younger age group, whereas many matured economies will be supporting more of ageing populaces and show workforce shortages. This will be the source of many new opportunities, which can be fully optimized, if India takes the initiative now.
To these new emerging opportunities and the concerted actions that are required to harness these emerging opportunities, level strategic group comprising the leaders from industry, academia and the Government. The results of the deliberation of the Group, involving in-depth interaction with different the form of their report. Many countries in the world are projected to face workforce shortages. By 2020, a net workforce shortfall of 32mn –39mn is expected in the developed countries of today.
a) Lower Birth Rates:
More and more people in the developed countries are not going in for traditional
system of marriage and are reluctant to establish and rear a family. Modern means of birth control have further reduced the birth rates as compared to developing countries like India, China, Pakistan, Sri-Lanka.
Increase in the proportion of the elderly in their population. This decrease in birth
rate is likely to result in an unhealthy and unbalanced mix of population. The elderly
people, who will not be forming a part of the workforce, are likely to form a greater
share of the population than the younger working population.
c) Increased Life Expectancy :
With modern advancements in medicine and the general improvement in the quality
of life, we are likely to have enhanced longevity. Their contribution to the growth of
domestic production in their respective countries is likely to be much lower owing to
their physical inability/disinclination to contribute to GDP due to ageing.
d) Fewer People Entering The Workforce :
It is observed that lesser and lesser people in most of these developed countries are opting for higher studies in technical and highly skill-oriented areas of knowledge like Information Technology and Medicine. Even today, many of these European countries are relying on people from developing countries from Asia and South America for manning their hospitals, Technical Centres for learning, Laboratories etc.
e) Pressure on Wages to Rise:
Increase in wage rates for workers due to demand supply imbalance. Since there is
likely to be a shortage of workforce, the wages demanded by the workers are likely
to rise many fold. No wonder, more and more countries in the west are outsourcing
their jobs like call centers etc to other countries where the salaries are lower. This
trend is expected to become more sharply visible. Older workforce could affect productivity, which could lower competitiveness. This is obvious and requires no elaboration. Age is bound to take a toll on the productivity.
g) Pressure on Social Security Net:
There will be pressure on the existing social security and pension systems as a
significantly larger ratio of retired population has to be supported by a smaller will be supported by social security systems of their countries in the form of pensions etc. This outgo on account of social security has to be earned by relatively smaller working population as most
pension schemes are today inadequately funded.
h) Increase in Demand for Specialised Services:
There will be an increase in the demand for jobs, which provide services to the older
population. The elder population is likely to create many new jobs catering to the
service requirements of the older generation like car drivers, nurses, house-keepers
and for other direct service providers.
Coping Mechanism For Matured Economies :
The matured economies, which are going to face these workforce shortages may
initiate corrective actions. Possible actions/alternatives by developed but can only reduce them. However, these following possible actions may be taken by these developed countries to reduce the shortages of work force, but each of these actions is fraught with certain inherent risky outcomes attached with it. The actions can be:
a) Encourage People To Retire Later:
But this step is likely to be unrealistic and unpopular and likely to be met with stiff
resistance. There is an increasing tendency of people these days to work for a short
span, earn enough and then enjoy the fruits of their labour. An often heard slogan is
“you have worked for money, now let your money work for you”. It is not too
uncommon for a CEO in USA to retire at the age of 40-45 and then relax and lead a
b) More Incentives To Women To Join The Workforce:
But due to increasing affluence levels, rate of growth of women in the workforce is
declining. In the USA, the growth in the last 3 years was only 0.13% p.a. Moreover
there is general observation that, unlike in the decades of fifties onwards, when there was a great movement name of women’s liberation, many modern women want to shift to the mold of home makers and are also advising their girl children accordingly, leaving only men folk to work in the factories and offices.
c) Increase The Rate Of Immigration Into The Country:
Many economists suggest that the countries with deficit population may opt for
immigration of healthy people from countries with surplus population to work for
them. But such dramatic shifts in policies regarding immigration is likely to result in
social tensions and are therefore unlikely to be resorted to on a major scale. Moreover, events like 9/11/2001, which resulted in the destruction of world trade centre in USA, is likely to result in even tighter immigration policies. Now due to increase in terrorist attacks, all over the world, countries are becoming wary of granting easy immigration to people from other countries particularly, Muslim countries. Events like the Iraq war have further one country to another.
d) Increase Productivity Through Increasing Use Of Automation:
It is easier said than done. Production can be increased only upto a certain level,
beyond which the law of diminishing marginal returns starts applying. It is estimated
that only 13.5% of all service jobs are amenable to automation. Moreover, automation also tends for growth.
IF TOMORROW COMES 15 AUGUST 2020.
The developed countries have witnessed slow to mediocre growth in the past 15 years. The market for outsourcing of services has projected and developing world has not been able to create mode of managing shortages. Hence only non- essential activities are being outsourced to developing countries. India is not no longer reputed as a ‘value for money’ provider of remote services vis-à-vis other developing countries.
The above scenarios clearly indicate that the nation has to work with determination,
imagination and commitment to achieve the best case scenario and not allow any impediment to stand in the way of its achievement. For this, we may require strong support from influential leaders who will be able to drive this agenda and resolve roadblocks. These realities and the dangers associated with ignoring the opportunities must be kept in constant view and the progress made by India should be monitored while keeping a tab on the activities of other labour surplus countries.
The Academia, the industry association and the media has to lend support to the process. What may hamper achievement of the goal, notes the study, are
i) Lack of alignment within the government on core guiding principles for action.
ii) Lack of involvement of all concerned ministries at the planning stage.
iii) Lack of continuity and accountability of key politicians and bureaucrats.
iv) Lack of systematic involvement / push from corporates and industry associations.
v) Mismatch between the requisite skills for the job and responsibility
vi ) Significant funding requirements from the Government. However to achieve the full potential of our manpower, we need to take the following initiatives and to enhance India’s’ competitive edge.
Opportunities for Financial institutions:
The envisioned scenario clearly brings to mind tremendous opportunities for the
banking industry. Some of the areas where the banks can make strong thrusts are:
World-wide International Banking: Just as at present the customer is changing from
the old mould of customer of the branch to the customer of the bank, in future, the
banks may start serving customers of different nations spread all over the world.
With globalization, the restriction on opening accounts in other countries and
currencies may go. The banks may have to open brick and mortar branches spread all over the globe, while offering web-based service at the same time.
If tourism is going to increase many folds, there is going to be tremendous opportunities for the banks to serve the industry in all its dimensions, viz. financing tourist agencies, financing tourist vehicles, hotels/motels and tourists directly and indirectly. This will have a ripple effect in the form that the manufacturing
sectors like automobile industry, infrastructure development etc. are likely to get a
big boost. With this, the demand for finance from them is going to shoot up considerably.
Since the coming age is going to be the age of knowledge, the banks can go for financing educational institutions giving training in various areas of professional skills like information technology, medicine, business administration,
bio-technology, engineering, nursing, foreign trade, cooking, languages etc. Education loans to individual customers are likely to form a sizable proportion of their credit portfolio. The possibilities are endless also.
FINANCING MEDICAL INDUSTRY:
Because medical tourism is going to be a great mover of economy, the banks will also have to go aggressively to provide finance for establishing state of the art medical institutions with all the modern gadgets. Furnishing these medical hospitals and diagnostic centres with the latest equipments is going to require a huge investment, which will offer tremendous opportunities for the banks. Even for establishing a small nursing home or a dental clinic, the customer is likely to require sizable amount of funding.
CONSULTING SERVICES FOR THE DOMESTIC CUSTOMERS:
With the increase in business opportunities, the national income is likely to grow. With less and less reliance on government sector to provide jobs and dwindling job security, the employees will have to invest their money judiciously in their youth itself so that the fear of old age does not haunt them. Banks can offer them expert consultation services so far as investment of their finances are concerned to enable them earn sufficient pension in the later years of life. Private banking is also around the corner, and it can be international in nature but cannot be fully automated.
While the researchers at AIMA must be complimented on the painstaking and path
breaking study of the emerging demographic trends in different countries, highlighting, thereby, the hidden opportunities expected to come out into the open in the twenties of the current century, enough effort, apparently, has not been made to assess the scope for enhanced earnings economies.Once the workforce shortages start impacting the supply of physical durables/consumables in these developed economies, either through quantitative shortage or through cost implications, more benefits will accrue to the developing economies.
The list of activities suggested to optimise these opportunities, too, does not appear to be very imaginative. The entrepreneurs are bound to find many more innovative ways to tap the opportunities likely to be thrown up by these projected manpower shortages. The process of globalisation is expected to receive a major boost from the autonomous process of demographic changes which are expected to occur in the next decade or two. We must , however, realise that the process will not become visible only in 2020.