69 per cent of Indian jobs are theoretically under the threat of automation by 2040 according to a recent report by a market analytics firm, Forester, on the ‘Future of Jobs Forecast‘ between 2020 and 2040. While India will be one of the few economies in the Asia Pacific region to see massive workforce expansion in the future, the country will face challenges in incorporating automation as well as job creation of additional entrants into the work force.

India is the sole major economy besides Australia, which will see an expansion in its workforce in the Asia Pacific (APAC) region. India will add 160 million workers to its working population by 2040, reaching a veritable size of 1.1 billion. By 2025, India’s working population will overtake China, which will struggle with the contraction of its workforce as well as losing jobs to automation in the future.

Increasing working population

The report also noted that APAC is more at risk from physical robot automation than those in Europe and North America, where a high share of their economies comes from industry, construction, and agriculture, which are more susceptible to automation.

However, the number of jobs lost to automation in India is likely to be lesser in comparison to other APAC countries such as South Korea, Japan and Australia as per the report. The report explains, “India’s main priority will be job creation to accommodate the new worker growth. Workforce automation is challenging to implement when 80 per cent of the non-agricultural employment is in the informal sector. Agriculture captured 41 per cent of jobs in India, but contributed only 16 per cent the country’s gross value added (GVA) in 2021. The recent government back-down on agriculture reforms shows the challenge of reforming working practices to obtain economies of scale.” Thus, the implementation of automation in the workforce will be harder for the Indian economy in comparison to its other APAC contemporaries. This is because the additional value added through implementing automation is the lowest in India as per the report.

Challenges ahead

The report also noted that India has one of the youngest working populations in the world. The average age of an Indian worker is 38 years old, in comparison, China’s average working age is 47, in South Korea the average age of a worker is 46.

According to the report, the biggest workforce challenge faced by India is whether the country is able to facilitate and formalise adequate jobs for India’s massive working population. Forester notes, “in India, the pandemic has more than doubled the growth rate of IT service companies, with 6 to 7 per cent growth pre-pandemic and 15 to 20 per cent growth post-pandemic. By 2025, India’s IT industry will capture 10 per cent of the nation’s GDP, and India’s fintech finance market could reach more than $150 billion. Digital platform work in India creates new job opportunities for both highly skilled online freelancers and less skilled informal workers. It also balances employment opportunities across genders.”