The Future of Salaried Jobs in India: Navigating Automation and AI
Saurabh Mukherjea, founder of Marcellus Investment Managers, shares his insights on the evolving Indian labor market in light of increasing automation and artificial intelligence. He argues that while India has several positive drivers for economic growth, the rise of AI presents significant challenges to middle-class job creation and the traditional "salaryman" construct.
Factors Contributing to Labor Market Dynamics
Mukherjea acknowledges positive influences on India's labor market, including:
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The Rise of Indian Women: Female-centric employment continues to grow, with women outperforming men in academic achievements.
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Dominance of Peninsula States: These states account for two-thirds of India's economic growth, and their dominance is increasing.
The Impact of Automation and AI
However, Mukherjea warns that automation and AI are reshaping the job landscape:
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Job Displacement: AI is impacting junior-level jobs disproportionately, especially in a young country like India.
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Repetitive Work: India's IT services sector, built on labor arbitrage, faces significant disruption due to the automation of repetitive tasks.
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Profit-Driven Decisions: Indian companies, driven by commercial interests, are increasingly adopting AI to reduce workforce size and maximize profits.
He believes these factors will lead to a more profound disruption in India compared to Western economies.
The Secular Impact and Complementarity Effects
Mukherjea emphasizes that AI's impact is not a cyclical phenomenon but a secular one, meaning it's a long-term trend affecting all industries. He draws a parallel to the industrial revolution, highlighting two key effects:
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Substitution Effect: The immediate displacement of human workers by technology (e.g., candle makers replaced by light bulbs). This is evident in current layoffs across IT and consulting firms.
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Complementarity Effect: The creation of new industries and opportunities enabled by the technology (e.g., the rise of cinema and Hollywood due to electricity).
While the substitution effect is immediately apparent and concerning, Mukherjea is confident that complementarity effects will emerge, such as the need for "bot trainers" to teach AI systems.
Reskilling and Reinvention: Adapting to the New Reality
Mukherjea emphasizes that those who are losing jobs now may not be the ones winning in the future. He mentions the painful side of free-market economics where individuals' jobs are disrupted, and they are not necessarily the ones to be rewarded down the road. He believes a new industry in mid-career professionals reskilling and reinventing themselves to re-enter the gig economy is inevitable. He believes that graduates and the labor market participants must adjust and adapt to new realities as a way to ensure survival and success in this changing era.
Implications for Graduates Entering the Workforce
For those entering the workforce, the traditional path of broad career streams is diminishing. Mukherjea suggests:
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Niche Professions: Entry-level jobs will be concentrated in more specialized areas.
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Supply-Demand Research: Undergraduates should research real-world skill shortages and align their skills accordingly.
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Early Specialization: Focus on specific skills needed in the job market through internships and online training, rather than blindly following popular trends.
The End of the "Salaryman" and the Rise of the Entrepreneur
Mukherjea advocates for a shift from the "salaryman" mindset to an entrepreneurial one. He proposes that:
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All Must Be Entrepreneurs: Everyone needs to think and act like an entrepreneur, whether running a company or providing their own services.
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Personal Branding: Individuals must create their own virtual persona, highlight unique skills, and market themselves effectively.
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Gig Economy Expansion: The gig economy will expand beyond traditional roles like Uber drivers to encompass professionals in finance, marketing, and IT.
While income predictability may decrease, overall earnings could potentially increase for talented individuals.
Cognitive Load and Mental Retuning
Mukherjea acknowledges that this transition places a significant cognitive load on individuals, requiring a fundamental rethinking of middle-class life. The shift involves:
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From Doer to Thinker and Doer: Moving from simply executing tasks to strategizing and executing independently.
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Entrepreneurial Mindset: Taking responsibility for one's career and proactively seeking opportunities.
Key Attributes for Success in the New Economy
Mukherjea highlights essential attributes for success:
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Thinker and Doer: Strategize and execute independently.
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Standing Out: Embracing being an anomaly and a positive deviant.
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Long-Term Vision: Developing skills and mindsets for long-term success over a decade or more.
These require a fundamental retuning from the traditional focus on credentials, status, and climbing the corporate ladder.
High Order Skills
He mentions that a few years of schooling can be done and the value can be had from that. The thing is to focus on having a high order of abstraction skills.
Sectors and Skills to Focus On
While a definitive sector answer is still being explored, Mukherjea suggests focusing on developing:
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Creative Skills: High-order creativity skills are increasingly valuable.
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Persuasion Skills: The ability to win trust and explain complex concepts.
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Abstract Thinking Skills: Understanding the world at higher levels of abstraction.
Subject matter knowledge becomes secondary to these core skills.
Investment Strategies
People will start taking intellectual risks on the creative side and will save more money because they know their job is not secure.
Policy Recommendations
Mukherjea proposes two key policy measures:
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Tax-Advantaged Savings Wrapper (401k): Creating a simple, cost-efficient vehicle for retirement and contingency savings, encompassing various financial products.
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University Education Reform: Deregulating education, allowing private and overseas universities to enter, and rethinking the root learning system.
Cultural and Social Factors
The key mindset shift parents must make is to focus on building abstract thinking, creativity, and articulation skills in their children, rather than prioritizing credentials and elite education. Mukherjea highlights India's historical entrepreneurial spirit and calls for a return to this vibrant culture.
Personal Advice
If he were 21 or 22 today, Mukherjea would focus on developing his creative talents, particularly writing or podcasting, recognizing the immense opportunities for creative individuals in contemporary India. He believes that in today’s India, if you have the creativity, the free market will find you.