In February, we were watching a Chinese virus beginning to impact Iran and Italy. March is not over, but already the world seems to have teetered to the brink of a health, economic and social disaster. With Europe now the epicentre of the coronavirus crisis, likely to be in deep recession this year and Japan following suit, zero growth in Singapore and other parts of the ASEAN and a further halving of current reported growth numbers in China and India, where will the shoe really begin to pinch?
In job losses and decline in new job creation of course! In 2008 in the US, while stocks declined by over 50%, the number of jobless workers had more than doubled. At the early stages of the current crisis, airlines are already reducing flights by upwards of 40% and have indicated job cuts. MGM Resorts will begin job cuts and furloughs this week, and with college campuses closing down and workers in many cities telecommuting, the occupancy in theatres, restaurants and all leisure spots will dip alarmingly in the weeks to come.
Economists have suggested that over 18 million Americans who work in leisure, food and travel industries could see threats to their job continuity this year as businesses scale down or even close to avoid huge losses that continuity would entail.
Michael Spence, professor at the New York University's Stern School of Business and 2001 Nobel Laureate in Economics, in a video conference interaction from Milan with some of us at the Pune International Centre, suggested that the twin forces of digital transformation and the current economic slowdown could disrupt employment prospects at a hitherto unimaginable rate this year. Automation, Artificial Intelligence and Robotics have already seen routine jobs coming under threat and even hitherto "safe" jobs involving logic and decision-making interventions will be swallowed up by autonomous AI. With companies focused on just keeping the lights on in the current period, the optimistic projections of new job roles may have to be postponed till there is some light at the end of the economic tunnel we are currently navigating.
A few years ago, one could have argued that India is not the US with its hiring and firing policies and local loyalty to employees would keep their jobs intact. But the parameters are changing. In the technology industry every direct job we created meant at least three indirect jobs in security, transportation, food services and housekeeping. But with "work from home" what happens to that? Another trend we must note is that the biggest employers today are food delivery and gig jobs. Quess has taken over from TCS as the biggest employer in the country. If a major consumption decline happens and people under-employed at home rediscover the joys of self-help and cooking meals instead of eating or buying out, what are the consequences?
India does have a number of opportunities-to invest in assistive and augmentative rather than autonomous robotic process automation and AI, to train youth through e-learning and career management platforms for new home-based job creation and entrepreneurship possibilities and pursue innovation on products, services and business models for the world. This inflection point while, destroying many traditional businesses may still create multiple new ones. We must rise to the challenge!
The writer is chairman of 5F World & Kalzoom Advisors