The Financial Express

Relevance of industry and academia to jobs and income

| Updated: December 24, 2020 21:45:02

Relevance of industry and academia to jobs and income

Establishing a strong correlation between education, skills, jobs, and per capita income for creating a sustained growth path has been a daunting development challenge. Upon exploiting natural resources and low skilled labour, developing countries are compelled to acquire knowledge and skills and turn them into economic outputs. Hence, they have been investing in education and skill development programs. However, turning educated and skilled graduates into a productive workforce has been a staggering challenge. For example, Bangladesh has been investing in educating 50 million students. Of course, it has been a mammoth task to educate this huge pool of students and develop practical skills among them. But deploying them in productive tasks for creating increasing economic value for meeting development aspiration is far more challenging. For example, Bangladesh needs to deploy 50 million students upon their graduation to create substantial economic value over the next 20 years so that by 2041 Bangladesh's per capita income jumps from $2000 to $10000. What is the correlation between education, skills, jobs, and per capita income? What kind of education and skill development programmes should Bangladesh pursue to empower these 50 million students to make Bangladesh a high-income country?

In seeling answers to these questions, let's look into some realities. So far, like many other developing countries, Bangladesh has been pursuing the strategy of importing technology and adding value through labour and natural resources. Due to the very low per capita natural resources, Bangladesh mostly adds value through labour. Due to continued technology progression, both the demand and market value of labour in the global value chains have been eroding. Therefore, the scope of increasing per capita income by trading labour to the global value chain out of export-oriented manufacturing strategy has been shrinking.

The next opportunity could be exporting knowledge-intensive services. India has created a large such service industry-- IT service export. However, the revenue model is linear, which is not sufficient to scale up the per capita income to make a developing country into an advanced economy. On the other hand, codified knowledge-based service is highly amenable to automation. Due to it, labour market data of the USA and Europe have been showing net white-collar job loss hollowing out the middle. On the other hand, India has been reporting significant job loss in its export-oriented service industry.

In addition to creating jobs and driving economic growth, the next challenge is to make progress towards sustainability. As a human race, we are under the pressure of creating increasing wealth from depleting resources to meet our growing consumption. To meet this challenge, scaling up existing productive activities by increasing the supply of labour and natural resources is not sufficient. Instead, we should increase the supply of ideas and integrate them into products and processes for producing more from less. There appears to be a number of challenging issues to be faced in conflicting situations.

TECHNOLOGY AND LABOUR: In the absence of technology, labour has very limited or no role in producing economic value. On the other hand, technology has labour-saving effect. Furthermore, technologies are gaining a comparative advantage in performing tasks with increasing precision leading to wastage reduction and quality improvement. For example, furniture export appears to be a labour-intensive productive activity for developing countries. However, a slight variation in precision in the making cut or hole leads to assembling error at the customer end. Hence, advanced automation and robotics technology is a must for creating the demand for labour in furniture making. It has reduced the labour requirement substantially, reaching less than 10 per cent of production cost. On the other hand, flying robots, known as drones or unmanned aerial vehicles, offer the opportunity in farming for increasing the yield and reducing wastage. However, adoption of this technology reduces labour demand. Furthermore, should developing countries keep importing those technologies? Or, should they deploy their growing graduates to adapt, advance, and innovate for leveraging technology? It seems that there is an urgency to having an integrated strategy for adding value both through labour and technology advancement.  

CREATING WEALTH CREATION CAPACITY OUT INNOVATION FOR DRIVING ECONOMIC GROWTH:  Of course, innovation offers scalable wealth creation capacity. To leverage it, where should be the focus in education and skill development? Should the focus be on increasing science and engineering graduates, scientific publication and patents, technology transfer, ranking in global innovation indices (GII), and R&D grants? There appears to be no natural correlation. For example, India's achievements in academic publications, space missions, Nuclear weapons, GII ranking, and graduates, and many more are remarkable, but India has been failing to turn them into large-scale economic successes. It appears that the weakness in empathy, passion for perfection, and winning trait through the relentless journey of incremental progression is failing to scale up India's capabilities into large-scale economic successes. Hence, education and skill development should take into such issues for leveraging innovation to create jobs and scale-up per capita income.

INDUSTRY AND ACADEMIA COLLABORATION OR REDUCING SKILL GAP: There has been an unresolved issue about the industry and academia collaboration for addressing the skill gap. Suppose developing countries keep listening to the industry and adapting their academic community to produce prescribed human resources. In that case, developing countries will not be able to graduate from low-cost labour supplying role. As said, such a role will not open a scalable growth path. On the other hand, if academia is left alone, they will be racing to produce graduates and publication without having strong positive implication on the economy. Hence, there is a need to bring a change in the strategy of economic value creation and leveraging the role of academia of knowledge sharing and creation. Instead of replicating existing products out of labour, the focus should be on redesigning out of ideas for making them better and cheaper. For creating the supply of ideas, academia should be engaged in producing knowledge.

  For driving the per capita income up, developing countries are facing conflicting situations. They need technology to create the demand for labour. But technology has labour-saving effects. On the other hand, education and skill development focus on codified capability development, which is highly amenable to automation. Of course, innovation offers the opportunity of opening a scalable path of increasing per capita income. But there has been no natural correlation between conventional innovation competence measuring indicators, job creation, and per capita income growth. Such reality demands a smarter strategy for integrating education, skills, and jobs creation agenda for driving per capita income.

M Rokonuzzaman, PhD, is an academic and researcher on technology, innovation and policy. 

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