AIMA organized its 14th HRM National Summit on 1st December 2016 at New Delhi. The Summit featured some of the top HR professionals and delegates from Industry, Government, Media, and Academia. Over 250 professionals from across India participated in the Summit.
Below is an excerpt from a very informative speech by Mr. TV Mohandas Pai, Sr. Vice President, AIMA and Chairperson, Manipal Global Education Services at 14th National HRM Summit on the topic ‘Jobs in the Era of Automation’.
” For the last many years AIMA has been holding the HR summit and every time we chose a cutting edge topic, primarily because we believe in the power of ideas. Ideas have moved civilizations, ideas have moved societies, and we believe at AIMA that we must be at the cutting edge with new ideas looking at what is happening in the world and that’s why we’ve chosen this very important topic – Jobs in Era of Automation.
Automation has been there for a pretty long period of time starting with the invention of the steam engine. Imagine the world before the machine was invented. The world was based upon labor, human muscle, and animal power. And the wealth of a nation depended upon the size of the population. So China and India, were the richest countries and the greatest countries in the world because they had very large population. And in the mid 18th century China-India made up to 45% of the world GDP and there was trade from Europe with the rest of the world. But then a very singular event happened in the Great Britain when the steam engine was invented and suddenly you could use kinetic energy for motive power and create the machine which could do the work of many human beings, particularly where there was heavy use of human or animal power. And it meant that the heavy work and heavy lifting suddenly could be done very differently, it could be repeated, it could be standardized, and that set off a chain of events which changed the face of civilization on the planet.
It is important for us to understand what happened. This innovation, the idea that machines can do work that people can’t do started in Europe and that led to the domination of Europe over the rest of the world. It also had many repercussions. At that point of time 200 years ago, the world was very feudal. That means the feudal lords who owned land could have great resources and ruled the planet. Then because of the trade a new class, the merchant class, came up trading between Asia and Europe and creating surpluses. They were also rapacious taking away gold and silver from South America, destroying old civilizations, coming to Asia and also trying to conquer territory to further trade to the formation of joint-stock companies like the Dutch East Indian Company and East India Company in Great Britain. And this wealth accumulated over a period of time because the European domination made sure that industrial revolution stayed put in Europe. And staying put in Europe created surpluses. Surpluses led to more and more machines, more venture capitalists, factories, exploitation of labor because labor moved from agriculture to factory and also the death rate came down. So population grew because death rate came down and health improved. If you read Charles Dickens, You’ll Find the kind of exploitation that is happening at that point in time.
Throughout the history, life has been a battle between capital and labor. The feudal class and the labor class and when the industrial revolution happened it accentuated somewhat with the creation of a new class of people. Now the machine age led to great wars because in the earlier era wars were based upon hand to hand fighting and the use of certain weapons. which are not weapons of mass destruction. And this was felt in 1914 to 1918 when the first great war, the First World War happened.
The First World War started with cavalry and foot soldiers and ended with tanks, mechanized movement, and air crafts. This remarkable change happened in just 4 years’ time. The First World War was fought with the old political system, and social structures of large empires. You had the Chinese empire in the east, the Japanese empire, Ottoman Empire in Middle East, The Habsburg Empire, the Russian empires of the Czars, then you had the British empire, The French were a republic and you had a small emergent country called the United States. And it is what happened in Europe. United States came into the fray because of the links with Great Britain and they started sending the arms and building up a great industrial empire. At the end of 1919 the world changed. The Chinese empire collapsed, and we had Puly, The nationalist empire was taken by Sun Yat-Sen. Then later Chiang Kai-shek came and there were battles for many-many years till Mao took over in 1949. The Japanese became the predominant Asian power defeating Russia in the battle. In Russia, because of the war and the bolshevik revolution Lenin coming back and rise of the Soviet Union communism coming up. This clash between capital and labor led to the formation of communism and Karl Marx theory, which spoke about what happens when the working classes come together. Social theories of liberty, governance, democracy, socialism also came up in the industrial era. We need to remember that it has been a short period of time in human history. So we had the Soviet Union coming back, the Habsburg Empire which ruled six hundred years in Austria collapsed. The Germans who’d built up an empire by then by unification by Bismarck. They too fought the war and collapsed. The Ottoman Empire ruled that part of the world, for six hundred years broke up. And Sultan in Istanbul was the Caliph of the Muslim world because he had control of Mecca and Medina, the two holy cities of the Islamic world. And the Great Britain was enfeebled because they lost a lot of their industrial power in fighting a battle to defeat Germany. So they were the great powers that were there around the time. And then you had the United States coming up singularly because the United States being across the pond didn’t feel any destruction. The war was fought in Europe. The Americans went there, put the men and everybody else. And suddenly they discovered they could be a great power. So 1919 was the defining point. It all went back to the invention of the steam engine. Just see how the implication spread in society and in political theory and how things changed.
The treaty of Versailles in 1920 led to the creation of a different kind of structure because it made Germany pay heavy reparations for the war and the treaty was signed in a railway compartment somewhere near Paris. At the same time in the Middle East, we saw the rise of Kemal Ataturk who was a general in the Turkish army and when the great power said they are going to divide and destroy Turkey because they wanted Ottoman Empire to go. They set up a small committee called the Sykes-Picot committee. It was one diplomat from France, one diplomat from England. They sat together over tea and drew up the map of Middle East. They created Lebanon, Syria, Jordan, Saudi Arabia, Emirates and everything else. All writing on a map between two people sitting down and created the world and that led to the creation of neo-colonialism. Neo-colonialism means that you have a local ruler to rule but foreign affairs and everything else was done by the great powers like Great Britain. Those were the days where colonization was at its peak, imperialism was at its peak. The faults of the First World War led to the rise of Hitler. The second world war led to the destruction of Europe and the entire world. The world changed forever in 1945 when the Second World War ended.
When the Second World War ended it brought great technology change. When the war started in 1939, the Polish army had cavalry. They came in horses against Hitler’s tank. Hitler had a mechanized division and the panzer tanks and he had what was called the blitzkrieg. That means army could move fifty-sixty kilometers a day because of the automation. The French had built a defense fortified line called a Maginot line to prevent the Germans from coming in. They sidestepped and came through Belgium and conquered France in forty-five days and came to Paris. A very famous chapter in the history of the Second World War. The mistake Hitler made was going to soviet Russia and Russian winters finally destroyed his armies. In the same time, we saw the United States come into the fray, sending armaments, doing land lease, boasting up Great Britain and Great Britain came to its knees. In the First World War, sixteen million young people died. And in the Second World War, sixty million people died. And this all was the result of the innovations led by machines. So when the Second World War ended, you had rockets, V1 and v2 rocket by Warner Von Braun flown by Hitler to hit London and you had great tanks, You had flight, You had the battle in the air with air crafts etc and a lot of technological innovation. So 1945 saw a different world. The Japanese were destroyed because they came from the east. They fought the battle and you will be very happy to know the biggest battle of Second World War was fought in Kohima in India where 1500 Indian and British troops stood up against 15000 Japanese and defeated them. The Russians became very powerful. In Europe, Germany was down, France was down and Great Britain was enfeebled, Churchill was thrown out of power. The United States rose and that was a very different world. So you have seen how it all evolved over a period of time. Understanding all this is very important. So we had peace from 1945
Understanding all this is very important. So we had peace from 1945 till now with some intermittent battles. But the problems of First World War 1919, the division of Middle East still has a problem. The Shia-Sunni conflict, the conflict in Iran, the conflict in Iraq, and the conflict with the Wahabis are all the results of the First World War and the Sykes-Picot movement to divide up the Middle East. Israel was formed by the Balfour declaration in 1918 when Lord Balfour stood up in the British parliament and said that the Jews are going to their homeland and between 1918 and 1940 a lot of Jewish immigration going up to create the own land that still simmers. And the division of India and Kashmir, the problem of the Second World War still simmers. So if you look at the world in 1914 and 1919, 1919 was the defining point. After the war, we had the rise of Germany, Japan, and South East Asia and now China. So all this is one period of history, which saw a very rapid change. So imagine in your mind what the world was before the machines and what the world is today.
But in the last 10 years, another phenomenon has taken place which is going to have a deeper impact on the human society for the next fifteen years than what happened over the last two hundred years. And that is the rise of the internet. Earlier there was a model, before machines, where people could trade and life was very slow and things didn’t happen, nobody grew fast. Then came the age of machines whereby you could increase the human productivity, labor productivity, capital productivity, Increase intensity of trade, income went up, health went up, and longevity went up and that was a different world. The earlier business model was to centralize production and producers could reach consumers through the creation of supply chain.So ford had its assembly plant to make cars and sold them to the supply chain to dealers, warehouses, shipping, banking services etc. to consumers who are all around the world and that led to the rise of Globalization. But there was a supply chain, the producer and consumer supply chain. China is a producer in the world, it sells in America, Europe. There is a supply chain. but the producers were not connected directly to the consumer who could be anywhere in the world but if you have the internet. the technology platform where seven billion people on this planet are connected to each other asynchronously at a time of their choosing provided that they have a smart device with a cheap data plan. So the accumulated knowledge of humankind for the last five thousand years is available on the internet today.
The power in the earlier era and the industrial era was in knowledge. Knowledge earlier was an oral transmission, education 1.0. Then you had education 2.0 where you had factory model of educating people in large classes but knowledge was in the books and in the minds of the professors. So you required professors, you required teachers, you had classes, You wrote down notes and then pass the examination and that was the society that was created because knowledge was limited. So with the internet, the accumulated knowledge of humankind is available to everybody. All you need to do is to Google your query. The best lectures, professors, and classrooms are available online. There are thousands of people who answer queries on Quora. Then you have Coursera where learning material is freely available. And this means finally we’ve created a huge virtual world where people can connect with each other. And this connection means e-commerce can come. Somebody sitting far away can connect directly with the consumer , eliminating the middle man and the supply chain. Globally the supply chain takes away more value addition and the consumer pays a heavy price. Now with e-commerce coming in the buyers and the sellers can connect to each other. So a small handloom weaver in Varanasi can sell to me in Bangalore, and I could sell it to you in Delhi, and you could sell it to New York and get the price you want. So the internet has created a free flow of information and knowledge and e-commerce. It has connected people to empower them. So nobody can suppress news, you cannot have Tiananmen Square again. Any news that happens is immediately out. Prime Minister Modi said that the political class is judged every minute today on twitter. And if you are on twitter, news can spread, rumors can spread, false news can spread, and everything can spread. So free flow information and that is another exciting phenomenon for human empowerment.
And then you have medical science, entertainment, tourism, everything available on the web and this has led to something called industry 4.0. The industry 1.0 came because of the industrial era, and the industry 2.0 came because of Ford motor’s assembly line. And then the industry 3.0 where you had CNC machines programmable and logical controllers, So you could program the machine to repeat the task automatically without resetting. Now we have industry 4.0 where you build sensors, artificial intelligence, and machine learning etc. to make the machine understand various situations and change the product runs. Earlier you need to have large product runs and now you could have bespoke product runs so that led to the rise of industry 4.0.
Now all the while from the dawn of industrial area until today, we had a lot of jobs. Our society became richer. Human productivity went up. we had machines. We created surpluses. People had better jobs, better compensation, and better salaries. But in the last fifteen years in the United States the middle class has not seen the increase in the income and the income of middle class right now is less than the income they had in the last fifteen years and many jobs have disappeared due to outsourcing of manufacture services and those jobs are not going to come back. China has become the factory of the world and it can supply to anybody because of its huge labour. So we have seen a compression of middle class jobs. After the war, the baby boomers rose because of the GI bill, high education, America boomed for 25-30 years and everybody had good jobs. Europe also boomed after the Second World War with American aid and they had good jobs. But the last fifteen years there has been less middle class jobs. Jobs have shrunk in America and Europe, the population is shrinking in Japan and China is at peak. What is this change that has come and why we are scared about jobs today? The answer is very clear: We have automation and digitization of the economy and we have artificial intelligence and machine learning. In the earlier era there were no machines and when you’d machines they could be programmed to do task. Now machines are getting intelligent and this intelligence is coming into machine, the advancement of technology is creating great disruptions in all facets of human activity.
The HR function needs to understand this. You have to prepare your enterprise and your team for this. You have to develop a kind of skill required. You could see the kind of jobs that could happen. You got to re-imagine the enterprise along with CEO and COO, re-strategise what could happen and focus on this because the force of globalization, the demographic change and technology disruption are going to reshape the world. And that is the message I just wanted to share with you.”
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