Automation and Labour in India: Policy Implications of Job Polarisation pre and post COVID-19 crisis

Abstract

Advancements in ICTs have heightened the potential of such technology to automate jobs and render labour redundant en masse, uniting the concerns of sociologists, policy makers, and economists alike. Realistically, however, concern revolves not around redundancy of labour, but the polarising effect automation exerts on jobs. This polarisation stems from the claim that automation 'hollows out' mid-skill jobs, thereby increasing demand for high- and low- skill jobs. Job polarisation widens wage disparity, lowers the aggregate skill level of labour and exacerbates existing social inequalities. Proponents of laissez-faire automation argue that while automation may exert adverse effects on labour in the short run, it is bound to realise higher net benefits and employment in the long run. Such an understanding which is based on the Schumpterian notion of creative destruction is predicated on the fact that firms would adopt only such technology which bring about substantial strides in productivity. However, world over and in India firms have been merely substituting labour with capital, without any greater efficiency gains. This trend is only set to worsen with the ongoing health crisis due to varied reasons. In such a situation, it becomes imperative to design novel methods of social security.