This week, the Government of India launched the Skill India campaign. Training youth to develop job-ready skills and inspiring citizens to entrepreneurship were identified as primary goals of the campaign. The emphasis is overdue: re-skilling ourselves regularly and developing job makers rather than job seekers were never more critical goals.
This article explores how both the traditional job and the traditional firm may transform, requiring us to develop new skills, and adapt to a new way of working. Preparing ourselves for this adequately would require changes in many aspects of our lives.
People feel the economy through their jobs. The primary source of livelihood is from an employment that runs through most of one’s adult life. Other than providing income, a job comes with communal advantages. Losing one’s job mid-career is not only an economic hardship, but sometimes a social stigma. Over time, organizations that employ people, whether government or a firm, have expanded their role in the lives of employees. Some companies provide housing for the employees. Cities like Durgapur, Jamshedpur and indeed Calcutta, were originally company towns. Companies may also support with children’s education, insure against illness, and provide for retirement. It is due to this importance of a lifelong job that students hope for an interview call from a prestigious firm upon their graduation, and every politician campaigns to bring jobs that are well paying and stable if elected. However, the evolution of the firm is finally changing the nature of work.
Because of the ubiquity of today’s full-time job, we may assume that it is permanent and unalterable. But the structure of the modern company has constantly evolved and the nature of work that is done within a firm has shifted. The first joint stock company, Dutch East Indian Company was founded to set up factories in Batavia. The British East Indian Company and the Virginia Company in the United States were formed soon after. The projects these companies undertook were by nature audacious and long term, and needed capable, trustworthy people to manage ventures in unknown places. Communication was absent, save a few letters exchanged at great expense. By 1850s, with the railroads, the modern multi-department organization structure was established. It was in such an environment that the job profile of the cadre of employees, whether government servants or company executives, were formed. Lifelong jobs were offered to people to prudently manage the vast territories captured, or new monopolies established, by brilliant, fearless and sometimes unscrupulous company nabobs – like Robert Clive – or robber barons – like John D Rockefeller. The firm, an organization of people led by a board of directors with an object of carrying trade in a specific good at a defined location, was adopted as the standard model of business.
Having such a firm reduced transaction costs of doing business. For instance, when East India Company resolved to trade in tea from India, it needed to steal the appropriate plant from China, clear suitable forests in Darjeeling and Assam, relocate workers from Nepal and Chotanagpur, hire managers from Scotland, and finally make tea and ship it in its own Clipper boats to London. None of these resources were pre-existing and all the transactions were onerous to do for anyone other than a large company with monopoly privileges.
Over time, market participants emerged for each of these activities: developing seeds and clones of plants, growing the crop, carrying freight, packaging and marketing the produce – were all undertaken by different agencies. In the new scenario, a firm finds doing everything itself is unnecessary and expensive. More nimble competitors participate in only one segment of the value chain and excel. Eventually, the market matures, and the advantages that a large firm used to enjoy may diminish. Smaller firms with appropriate capabilities go it alone, depending on the ecosystem to supply the rest of the resources.
Industry after industry have matured and created a marketplace for their ancillary functions and chipped off different aspects of the twentieth century model of the company. Indeed, the larger the economy and the more enabling the ecosystem, the lesser the need for firms to do everything. This presents an opportunity for new firms and for entrepreneurs but creates fewer corporate jobs. Many of the opportunities are of a temporary nature, so the scale and scope of business keeps changing. Moreover, a smaller firm may not be inclined to underwrite the housing, healthcare or training needs of their workers. Thus these benefits will have to be self funded by individuals or undertaken by the state.
This is perhaps a context of the government’s promotion of entrepreneurship, and it will hopefully include creating the appropriate financial, legal and infrastructural ecosystem.
Skills that constitute one’s work adapts with prevailing technology. Such change isn’t always welcome. In 1811, Luddites – a group of British textile workers, protested against use of power looms. It was imminent that such machines would take over leaving all but loom owners without livelihood. Fortunately, their fear was unfounded. The world in 1800 had a billion people, with lives that were mostly “nasty, brutish and short”. Many series of labour saving innovations ensued, yet a world of seven billion people are living much longer and consuming far in excess of the luddites. Technology enhanced productivity, and the initial affect was distressing. But time after time, consumption generated by the increased productivity created more demand, requiring more jobs. To illustrate, while fewer people are needed to make a car today than Ford’s Model T did in 1908, there are many more cars that need to be made, so more people are employed in the automative sector.
An interesting feature of today’s development, however, is the pace of change. As McKinsey research identified, “five hundred years passed between Gutenberg’s printing press and the first computer printer. It then took only another thirty years for the 3-D printer to be invented.” When changes occur slowly, society has time to adjust. When the Gutenberg printer was upgraded, the change was generational. So, new skills would be learned at school, and new jobs could be sought. But that serenity has been upended. Structural changes have become more frequent and far reaching, making adjustments painful. Publishers who used Gutenberg printers welcomed the steam press printing in 1818 that reduced costs and made double side printing viable, and daily broadsheets affordable. Many newspapers, like “The Friend of India”, forerunner of The Statesman, were first published during this period. But the pace of technological changes has since hastened – from lithographic, to digital offset to color printer to computer printing, and then finally to reading newspapers on a tablet. With this breathtaking pace, publishers find that even before their investment in printers are recouped, another disruption resets the cycle. Not only is planning capital expenditures complex, for workers constantly re-skilling themselves to keep up to speed is daunting. Experienced workers, usually drawing higher compensation, often find that they are at no significant advantage to younger entrants. Our education system, designed to keep students in school for fifteen years and then releasing them to the workforce for a lifetime, has struggled to adapt to a need for continuing skill development.
So clearly, technology has made work more fitful and less predictable. Whether each new wave of innovation will continue creating more employment is uncertain, but being employed isn’t going to look and feel the way it does today.
In these circumstances, appropriately skilled people may be richly rewarded. Successful professionals who served their local economies, sharing their skills in designing, accounting or law, now have wider reach and are sometimes joining the ranks of the wealthy. But, even that success may feel transient due to the fickle needs for different skills. Learning to learn itself could become our real skill.
The Statesman | 22-Jul-2015