Moneycontrol PRO
Upcoming Event:Attend Quants League - 5 Days Live Algorithmic Options Trading Virtual Conference @ just Rs. 600/- brought to you by Moneycontrol Pro. Register Now!

COVID-19 has exposed India’s financial, industrial comorbidities and skill inadequacies: Manish Sabharwal

Raising per capita income through higher productivity will increase inclusivity in our economy and society. To fix societal inequality in India, we need a massive formal, non-farm job creation that will come from more structural reforms, Manish Sabharwal tells Moneycontrol

August 03, 2021 / 12:23 PM IST
Manish Sabharwal

Manish Sabharwal


COVID-19 has forced us to do a rethink on the way we work, plan and live. New questions have emerged and they are challenging the existing patterns. What is the modern concept of working? Is domain knowledge more important than reskilling? Will work-from-home survive as a concept? Why is regulatory cholesterol holding back higher education reforms?

Publicly-listed human resource firm TeamLease’s executive vice-chairman, Manish Sabharwal, has answers to these queries and more as he seeks to find solutions to some of India’s pressing work-related economic issues.

In an in-depth interview with Moneycontrol, Sabharwal says COVID-19 pandemic is a passing shower, not climate change. Edited excerpts from the exclusive interview:

Q. What do you think should be our biggest takeaways from this pandemic and resultant lockdown? Our understanding and perception of education, health, jobs and the economy seem to have undergone a shift.

A. The biggest lesson for India is that total GDP (in which we rank 5th in the world) is not as important as per-capita GDP (in which we rank 138th in the world). COVID is like an x-ray that has exposed pre-existing conditions or co-morbidities; we are inadequately formalised, financialised, industrialised, urbanised and skilled. We have watched with jealousy as 10 countries cornered 90 percent of the vaccine or America ran a fiscal deficit this year that is larger than our GDP. The only solution to this is to make ourselves stronger; as poet Ramdhari Singh Dinkar says 'Kshma Shobti us bhujang ko jis ke paas garal ho (essentially translated as only the strong can be benevolent, kind, or generous).'

Close

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

Q. How do you think the modern workforce should approach their work and career now that the pandemic is a global reality? Or is it about workplaces and management adapting to the new needs of the workforce?

A. COVID-19 [pandemic] has accelerated the new world of work, organizations and education that has been in the making for decades. The notion of modern work being something done by gathering together in the same physical place under a simple full-time contract is changing. The new world of organizations is being driven by lower life expectancy of large companies (it has declined from 64 years in 1955 to 15 now). And in a world where google knows everything, knowing is useless and the key skill is learning how to learn. All these three changes mean that employers and employees will have to adapt.

Q. You have spoken about the debate about lives and livelihood. Can you elaborate on the same? Also, this one size fits all theory doesn’t seem to be working any longer with regard to lockdowns.

A. COVID-19 forces policy to deal with many terrible binaries; us vs them, good vs bad, borrowers vs lenders but the most tragic one is lives vs. livelihoods.

All policy can do in the short run with something like COVID is ensure that disease doesn’t lead to death, unemployment doesn’t lead to hunger and liquidity problems don’t lead to bankruptcy. But a poor country like India with a high level of self-employment (50 percent of the labour force) and informality (75 percent of the labour force) needs to recognize that fiscal and monetary policy are temporary and often poor substitutes for productive jobs. If fiscal deficits could make countries rich then no country would be poor. This makes the trade-off between lives and livelihoods that arises from extended and one-size fits all lockdowns, more difficult for India.

But we seem to have learnt; the second wave of COVID was not economically as damaging and did not have the migrant exodus because it was nuanced for hotspots, professions, and much else.

Q. There seems to be a clear hiring intent in certain sectors – logistics, IT and e-commerce come to mind. Several other sectors like hospitality, aviation and tourism haven’t seen any such intent. Do you see a societal imbalance arising out of this reality and if so, how do we tackle it?

A. Economies are rivers not ponds; the hotspots for job creation keep changing with trade, technology, tastes, and much else. In fact, our stagnation for decades after independence arose because the creative destruction (continuous innovation which makes old practices redundant) that makes an economy productive was blunted if not amputated. This meant our capital was handicapped without labour and our labour was handicapped without capital. This began changing in 1991 and our explosion of new age entrepreneurship means we are the only country with an almost 50% ratio of unlisted to listed unicorns (companies valued at over billion dollars). COVID is a passing shower not climate change and let’s be mindful of the disease historians call presentism (today's circumstances are special and unique).

Q. Do you see the coronavirus crisis deepening the divide between haves and have-nots in India? Do you see new knots emerging even as we try to unknot many other issues around the economy and work?

A. COVID has not created new divides; it has amplified existing ones. Raising our per capita income is the only solution to increase the inclusivity of our economy and society. And that is only possible by raising the productivity of our regions (Karnataka has the same GDP as UP with a fourth of the people), sectors (IT is only 0.8 percent of our labour force but generates 8 percent of GDP), companies (there is a 24x difference in productivity between our big and small manufacturing companies), and individuals (we offer a four times difference in salary between youth of the same age based on skills).

Q. How do you see the Work from Home (WFH) phenomenon? Do you see this as a permanent reality in certain sectors? Do you see it affecting or aiding productivity?

A. I think the hype about Work from Home will settle down to be about flexibility rather than permanence. Of course, the number of cognitive elite (only about 10 percent of the labour force) that work from home may rise from 5 percent pre-pandemic to somewhere between 15-20 percent. But employees are pushing back; most realize that working from home means living at work with no partitions or pauses. And employers are pushing back; they realize that most of the cognitive elite are making more withdrawals than deposits into our social capital in an online world. Offices will never be the same again but they will not be as different or as absent as most people currently think.

Q. How do you see the benefits of coming together and working from one place? Or is it going to be a work practice that’ll be increasingly shunned in the coming decades?

A. Talented Kenyan Kipchoge reminds us the first half of a marathon is run on your legs and the second half is run on your mind. This is true for our careers; we spend the first half of our careers on technical problems (goals are simple, rules stay constant and players are known) and the second half of our careers on wicked problems (goals, rules and players keep changing). So far technology has been inadequate for creative problem solving and consideration of alternatives that seems best accomplished when we come together. It is important to remind ourselves that an argument against offices is almost like an argument against cities; the upsides of coming together are the reason that New York City has the same GDP as Russia (with a small fraction of the population and land).

Q. India’s buoyant startup economy has started creating unicorns by the dozen. India’s innovative spirit seems to be alive and kicking. This is something that the pandemic couldn’t stop. Why are our young tech entrepreneurs succeeding now more than ever before?

A. Our Unicorn explosion arises from three factors; entrepreneurial role models, investment ecosystem, and global capital glut. The first factor is obvious. Poet Maya Angelou once said that the universe is not made of atoms but stories; she clearly understood the importance of role models to performance. The traditional Indian entrepreneur role model who built their business on regulatory connections was slowly being replaced after 1991 by first generation entrepreneurs in IT and Pharma (Nandan Nilekani, Kiran Mazumdar-Shaw, Azim Premji, Sanjeev Bikhchandani, DB Gupta, Yusuf Hamied, Anji Reddy). But role modelling accelerated when people like Sachin Bansal of Flipkart and Bhavish Aggarwal of Ola became entrepreneurs within a few years of college and raised institutional money without obsessing about dilution.

The second factor of the investment ecosystem is powerful; India is now a top three global market for private funding and venture capital talent because of vibrant public equity markets, our 20 million overseas diaspora, and regulatory support.

The third reason is external; in a world where fixed income has become no income (about 35 percent of the world's bonds trade at interest rates of less than 1 percent), investors will overvalue growth. India is the only large country in the world with twenty years of high growth ahead of it (because of our past sins of course). So, the global capital glut has made India attractive.

Q. India has 3.74 crore students enrolled in over 51,000 higher education institutions, as per estimates. The Gross Enrolment Ratio (GER) has been stagnant at 26 percent for the last three years. China’s GER is now double that of India. How do we get a grip on this situation?

A. We need to bring down the 15-year glide path for implementation of National Education Policy (NEP) 2020 to five years. We need innovation in higher education and this will only come from a number of genetically diverse and statistically independent models.

Q. India has never been big on apprenticeships. Do you see that change post-pandemic?

A. The last 10 years of focussing on skills has taught us that success needs five design principles; learning while earning, learning by doing, learning with qualification modularity, learning with delivery flexibility, and learning with signalling value. I estimate India has 80 million missing university students and 20 million missing apprentices. Degree apprentices (combination of working and studying part-time at a university) that acknowledge these five design principles would help us overcome this deficit. Today, degree apprentices are held back by regulatory cholesterol at the intersection of education and employability and hopefully the pandemic raises the urgency of change.

Q. Can you expand further on the view that India’s problem is not jobs but wages and therefore unemployment is not as important as productivity?

A. India’s unemployment has bounced between 4 percent and 9 percent since 1947, which means our problem is employed poverty. Our labour market shock absorbers of 50 percent self-employment (mostly self-exploitation) and farm employment (42 percent of the labour force producing only 15 percent of GDP) mean that unemployment is a poor indicator of labour market strength or weakness. And trying to solve this problem by mandating higher minimum wages is like trying to fix obesity by mandating small sizes; it’s just impractical. Cultural explanations for India’s poverty are at best the soft bigotry of low expectations and at worse racism.

Professor Lant Pritchett of Harvard reminds us that there’s no such thing as poor people; only people in poor places because an electrician who moves from informal employment in Patna to formal employment in Bangalore raises his salary by two or three times and a plumber who moves from Nigeria to the US raises his salary by 25 times.

Q. Do you see work spreading itself across the country, with more tier II and III cities sharing the work-load? India doesn’t have that many urban centres for its size. How do you see that changing over time?

A. Policy makers understandably want to take jobs to people but history suggests we will have to take people to jobs. The fast and furious obituaries of cities are flying around after COVID, but I think the argument is more relevant against mega cities (populations of more than 10 million) rather than cities (more than a million people).

There are 33 mega cities in the world of which 26 are in poor countries; this reflects an infrastructure and planning deficit more than a proclivity of poor people to hang out together. India should set a target of raising our 52 cities with more than a million people to 200 over the next few decades.

Today, the divergence between real and nominal wages is killing migration; a job seeker in Gwalior at one of our job fairs equated a salary of Rs 5,000 per month with Rs 20,000 in Mumbai. This is important because employers care about nominal wages and employees care about real wages.
Darlington Jose Hector is a Senior Journalist
first published: Aug 3, 2021 11:58 am

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark