The Future of Work in the Automotive Sector in India

Posted by Harsh Bajpai, Ambika Tandon, and Amber Sinha at Feb 08, 2019 02:40 PM |
Working draft of a case study studying the future of work in the automotive sector, authored by Harsh Bajpai, Ambika Tandon, and Amber Sinha. Edited by Rakhi Sehgal.

Introduction

The adoption of information and communication based technology (ICTs) for industrial use is not a new phenomenon. However, the advent of Industry 4.0 hasbeen described as a paradigm shift in production, involving widespread automation and irreversible shifts in the structure of jobs. Industry 4.0 is widely understood as the technical integration of cyber-physical systems into production and logistics, and the use of Internet of Things (IoTs) in processes and systems. This may pose major challenges for industries, workers, and policymakers as they grapple with shifts in the structure of employment and content of jobs, bring about significant changes in business models, downstream services and the organisation of work.

The adoption of information and communication based technology (ICTs) for industrial use is not a new phenomenon. However, the advent of Industry 4.0 hasbeen described as a paradigm shift in production, involving widespread automation and irreversible shifts in the structure of jobs. Industry 4.0 is widelyunderstood as the technical integration of cyber-physical systems into production and logistics, and the use of Internet of Things (IoTs) in processes and systems.This may pose major challenges for industries, workers, and policymakers as they grapple with shifts in the structure of employment and content of jobs, bringabout significant changes in business models, downstream services and the organisation of work.

Industry 4.0 is characterised by four elements. First, the use of intelligent machines could have significant impact on production through the introduction of automated processes in ‘smart factories.’ Second, real-time production would begin optimising utilisation capacity, with shorter lead times and avoidance of standstills. Third, the self-organisation of machines can lead to decentralisation of production. Finally, Industry 4.0 is commonly characterised by the individualisation of production, responding to customer requests. The advancement of digital technology and consequent increase in automation has raised concerns about unemployment and changes in the structure of work. Globally, automation in manufacturing and services has been posited as replacing jobs with routine task content, while generating jobs with non-routine cognitive and manual tasks.

Some scholars have argued that unemployment will increase globally as technology eliminates tens of million of jobs in the manufacturing sector. It could then result in the lowering of wages and employment opportunities for low skilled workers, and increased investment in capital-intensive technologies for employer.

However, this theory of technologically driven job loss and increasing inequality has been contested on numerous occasions, with the assertion that technology will be an enabler, will change task content rather than displace workers, and will also create new jobs . It has further been argued that other factors such as increasing globalisation, weakening trade unions and platforms for collective bargaining, and disaggregation of the supply chain through outsourcing has led to declined wages, income inequality, inadequate health and safety conditions, and displacement of workers.

In India, there is little evidence of unemployment caused by adoption of technology due to Industry 4.0, but there is a strong consensus that technology affects labour by changing the job mix and skill demand. It should be noted that technological adoption under Industry 4.0 in advanced industrial economies has been driven by cost-benefit analysis due to accessible technology, and a highly skilled labour force. However, these key factors are serious impediments in the Indian context, which brings the large scale adoption of cyber-physical systems into question.

The diffusion of low cost manual labour across a large majority of roles in manufacturing raises concerns about the cost-benefit analysis of investing capital inexpensive automative technology, while also accounting for the resultant displacement of labour. Further, the skill gap across the labour force implies that the adoption of cyber-physical systems would require significant up-skilling or re-skilling to meet the potential shortage in highly skilled professionals.

This is an in-depth case study on the future of work in the automotive sector in India. We chose to focus on the future of work in the automotive sector in India for two reasons: first, the Indian automotive sector is one of largest contributors to the GDP at 7.2 percent, and second, it is one of the largest employment generators among non-agricultural industries. The first section details the structure of the automotive industry in India, including the range of stakeholders, and the national policy framework, through an analysis of academic literature, government reports, and legal documents.

The second section explores different aspects of the future of work in the automotive sector, through a combination of in-depth semi-structured interviews and enterprise-based surveys in the North Indian belt of Gurgaon-Manesar-Dharuhera-Bawal. Challenges posed by shifts in the industrial relations framework, with increasing casualization and emergence of a typical forms of work, will also be explored, with specific reference to crises in collective bargaining and social security. We will then move onto looking at the state of female participation in the workforce in the automotive industry. The report concludes with policy recommendations addressing some of the challenges outlined above.

Click to download the full report here.

 

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