Tue. Oct 4th, 2022
‘Automation may lead to slack in labour market’

Reserve Bank of India Governor Shaktikanta Das said a major challenge to inclusiveness in the post-pandemic world would come from the fillip to automation provided by the pandemic even as he underscored the need to guard against any emergence of digital divide as digitisation gains speed.

“Greater automation would lead to overall productivity gain, but it may also lead to slack in the labour market. Such a scenario calls for significant skilling/ training of our workforce.

“We also need to guard against any emergence of digital divide as digitisation gains speed after the pandemic,” said Das at the 48th National Management Convention of the All India Management Association (AIMA).

Hiring of professionals

Referring to the demand for professional human resources trained in science, technology, engineering and mathematics (STEM) rising briskly, the Governor noted that major technology-based firms have expressed their intention to hire many new professionals with skills in these areas.

In the short term, the supply of such a workforce cannot be increased by the traditional educational system and, thus, there is a need for close involvement of corporates in the design and implementation of courses suitable to the changing industrial landscape, he said.

Das observed that technology adoption, which was earlier limited to core sectors, has now permeated to several other areas — education, health, entertainment, retail trade and offices.

The pandemic has also caused disruptions and induced reallocation of labour and capital within and across sectors. “The firms that were quick to adopt technology and were flexible in working from off-site are attracting more capital and labour.

“On the other hand, firms that were not up for the challenge and competition will have to leave the space for the more dynamic ones,” said the Governor. He opined that these forces of ‘creative destruction’ are expected to boost productivity by encouraging greater competition, dynamism and innovation in several sectors of the economy.

Lasting damage

Das noted that the pandemic has affected the poor and vulnerable more, especially in emerging and developing economies.

“Daily wage earners, service and informal sector workers were badly hit. Their employment and income opportunities were curtailed.

“The lasting damage inflicted by the pandemic on these segments is of serious concern for inclusive growth,” said the Governor.

In the medium- to long-run, both efficiency and equity will greatly matter for sustainable growth and macroeconomic performance, he added.

Das mentioned that within countries, contact-intensive service sectors employing large number of informal, low-skilled and low-wage workers have been hit harder due to the pandemic.

“In several emerging and developing economies, lack of healthcare access has disproportionately affected the family budget of the poor.

“Even education, which was provided online during the pandemic, excluded the low-income households due to the lack of requisite skills and resources. Overall, there are evidences across countries that the pandemic may have severely dented inclusivity,” he said.


Das felt that income and job creation with digitalisation and innovation can bring about a new age of prosperity for a large number of people. “As we recover, we must deal with the legacies of the crisis and create conditions for strong, inclusive and sustainable growth.

“Limiting the damage that the crisis inflicted was just the first step; our endeavour should be to ensure durable and sustainable growth in the post-pandemic future,” he said.

The Governor emphasised that restoring durability of private consumption, which has remained historically the mainstay of aggregate demand, will be crucial going forward. More importantly, sustainable growth should entail building on macro fundamentals via medium-term investments, sound financial systems and structural reforms.

Towards this objective, Das underscored that a big push to investment in healthcare, education, innovation, physical and digital infrastructure will be required.

By admin