Labour in the Era of Digital Revolution: Insights from Indian Auto Industry

Publication Type:

Conference Paper


Gerpisa colloquium, Puebla (2016)


Technological innovations have always caused anxieties among labour. The current wave of information and communication based technological progress is also not an exception in this regard as it has also ignited the fear of jobless future. It has been argued that if digital innovations continuous at current pace, machines, in near future, will be able to substitute labour in most of the economic activities, leading to a workless word (Rifkin 1995). Though, researchers have tried to dispel these concerns, there is a growing consensus that recent wave of technological revolution has indeed made labour more vulnerable if not irrelevant. There are evidences which suggest that recent technological change, at least in advanced countries, has not only destroyed more jobs than it has created but has also polarized the labour market which has resulted in stagnant median wage and consequent increase in wage disparity (Brynjolfsson and McAfee 2011, Goos et al 2009, Autor and Dron 2013) .
India is also not isolated from the current wave of digitization. The use of ICT (Information and Communication Technology) is quite visible in all sectors of Indian economy. However, the digitization has been specifically high Indian auto industry. Over the last two decades, Indian auto sector has witnessed vertical increase in the share of ICT related capital in total fixed capital. Against this backdrop, this paper examines the qualitative and quantitative impact of digitization on labour demand in Indian auto sector. We find that investment in ICT has reduced the aggregate demand for labour in Indian auto sector. However, the impact of ICT capital has not been uniform across different types of labour. Technology seems to have increased the demand for high skilled workers at the cost of intermediary skills; which has polarized the job opportunities in Indian auto sector. It suggests that technology has, perhaps, reduced the routine task content of manufacturing jobs in India, which is quite surprising for a developing country like India.

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