The Future Of Work: The Middle Class May Shrink And The Neo Middle Will Rise

The Future Of Work: The Middle Class May Shrink And The Neo Middle Will Rise

by R Jagannathan - Nov 30, 2020 12:39 PM +05:30 IST
The Future Of Work:  The Middle Class May Shrink And The Neo Middle Will RiseWork from home ... the new normal
  • The bottom three layers in terms of skills will recover jobs as India reopens for business fully, creating the beginnings of a new lower middle class in India.

For the most part, the future of work will be contractual, temporary, lumpy and services-led, especially technology-mediated services. Regular jobs – the nine-to-five, middle-skills-driven ones with weekly and annual paid holidays – will start becoming scarcer, as companies automate, using more artificial intelligence and databases to customise products and services built around customers.

They will substitute labour with capital, especially as customers turn more fickle, making demand estimation more difficult in many products. If the norm for both manufacturing and services is flexibility, job workload and compensation too will have to be flexible.

These trends were visible in the jobs market even before Covid-19 hit us in the solar-plexus. But post-Covid, as work-from-home (WFH), home delivery of essentials and discretionary items, and contactless and mobile-based financial transactions gather traction, the world of work cannot revert to what it was before.

The net effect of this transition will be an evisceration of regular, good quality, middle-skill, middle-class jobs (in banks, telecom, etc) while dramatically expanding the base of the new consuming classes. The latter can broadly be classified as the emerging lower middle classes, who will work in logistics, delivery services, warehousing, retailing, et al), earning anywhere from Rs 15,000-25,000 monthly – but not necessarily all through the year.

At the peak of the Covid restrictions on movement and economic activity, when all classes of employees – from those with no education to graduates – lost jobs, the one category that saw marginally lower unemployment than before was the group that had studied upto Class X-Class XII.

According to the Centre for Monitoring Indian Economy’s (CMIE’s) four-monthly unemployment surveys (you can access the detailed reports here), the unemployment rate soared from practically zero in September-December 2019 (0.41 per cent) to 16.22 per cent in May-August 2020, for workers with no education.

For workers with education levels upto Class IX, the figure rose from 5.34 per cent to 15.62 per cent. These two categories represent migrant and low-skilled workers, and most of them may return to work as cities unlock. For graduates and above, the unemployment rate rose from 14.56 per cent in September-December 2019 to 21.18 per cent in May-August 2020. If we leave out super-skilled engineers or workers with specialised skills, the big blow in terms of unemployment will hit this segment of graduates.

But those with middle levels of education, ie Class 10-Class XII, unemployment rates fell marginally from 12.63 per cent to 11.90 per cent during May-August 2020, which marked the unlock phases in India. The bottom three layers in terms of skills will recover jobs as India reopens for business fully, creating the beginnings of a new lower middle class in India.

The explosive growth in lower-skilled, but largely seasonal, employment is already visible, with all the logistics, retail, delivery and other such services expanding gig work. Before the festival buying boom, Amazon announced that it would employ 100,000 additional people and Flipkart another 70,000. Grocery delivery chains Big Basket and Grofers announced 12,000 more jobs, and Delhivery 15,000 jobs. With the pandemic now coming under control, retail chains have also begun hiring.

Looking beyond the pandemic, this is exactly where jobs will continue to boom. Amazon has plans to create one million jobs by 2025, and Swiggy, the food delivery service, hopes to become the third largest employer in India with 300,000 employees. Even though Swiggy made this claim before the pandemic, post-pandemic it should be looking at a similar trajectory as the logic of its business model has gained even greater currency.

Even in finance, banks and financial services companies will recruit more people seasonally for specific kinds of jobs (like KYC, or sales lead generation). Paytm, for example, is said to have recruited 10,000 temporary workers in 2017 in order to become a payments bank, which needed validation of customers by gathering KYC information (know your customer data).

Work-from-home (WFH), which has become the norm during the pandemic, may continue to expand in future, as companies look to cut costs, reduce usage of office spaces, and employ more part-time workers. During the peak period of the lockdown, nearly 97 per cent of software services employees worked from home. But even after Covid blows over, upto 75 per cent may continue to do so, Ajay Prakash Sawhney, Secretary to the Ministry of Electronics and Information Technology, said earlier last month. Since many professionals, for reasons of saving on long commutes, also prefer to work from home, as one Cisco research survey suggests, employers will adopt WFH wherever it makes sense.

But there is a huge caveat to WFH enthusiasts. It works in some fields, but not all. A McKinsey research study of 2,000 tasks and 800 jobs across nine countries suggests that the potential for remote work “is highly concentrated among highly skilled, highly educated workers in a handful of industries, occupations, and geographies. More than 20 percent of the workforce could work remotely three to five days a week as effectively as they could if working from an office. If remote work took hold at that level, that would mean three to four times as many people working from home than before the pandemic and would have a profound impact on urban economies, transportation, and consumer spending, among other things.”

But the study found that more than half the workforce will not be able to work from home, since many jobs require collaborating with others, or must be done on location, or need a physical person to get the job done. And many of these jobs may also be low-wage, and temporary in nature.

Skill and income polarisation is the biggest reality of our times, both pre-Covid and post-Covid. This implies that high-skill, high-income jobs will be in high demand, and so will low-skill, lower-wage and seasonal jobs, including self-employment through app-based taxi and other home services (Ola, Uber, home services, etc). The jobs that will go are the middle ones in office administration, bank branches, and such-like skills. Of which more later.

(This is the first in Swarajya’s series on the Future of Work. In forthcoming articles and interviews, we will examine in greater detail which parts of the economy will create jobs, and which ones will shrink, and what work itself will come to mean in future for various types of “workers”.)

Jagannathan is Editorial Director, Swarajya. He tweets at @TheJaggi.
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