Charting a Course for Entry-Level Jobs in the Age of AI

The Union Budget 2024-25, unveiled this week, introduces a series of incentives aimed at boosting entry-level employment in India. The government has allocated Rs 1.48 lakh crore towards education, employment, and skilling initiatives to address the challenges faced by young job seekers.

Among the key measures introduced are three Employment Linked Incentive (ELI) schemes aimed at providing incentives for new EPFO registrations, i.e., entry-level employment. Additionally, a comprehensive internship scheme, with an allocation of ?19,000 crore, aims to place 1 crore youth in 500 top companies over five years.

These measures come at a crucial time when the emergence of AI-driven automation threatens to replace basic human labor.

The budget also introduces a centrally sponsored skilling program with an outlay of ?2 lakh crore to skill 4.1 crore youth over five years. This initiative includes upgrading 1,000 Industrial Training Institutes (ITIs) using a hub-and-spoke model to align course content with industry needs.

These measures come at a crucial time when the emergence of AI-driven automation threatens to replace basic human labor. India's unemployment rate, which stood at 9.2% in June 2024 (recent CMIE data), underscores the urgency of addressing job creation, especially for new entrants to the workforce.

In the face of advancing AI capabilities, we stand at a crossroads that will define the future of work, with two distinct paths ahead of us. If we do not respond proactively to the emergence of AI, we would be taking the first path leading to widespread job displacement and economic contraction. The other path leads to a future where AI complements human productivity, driving innovation and inclusive growth. The choice between these paths will shape the future of work and economic prosperity in India.

While these budget initiatives may temporarily boost employment for new graduates, they don't address the genuine need to enhance the value addition offered by our entry-level workforce to their employers.

While these budget initiatives may temporarily boost employment for new graduates, they don't address the genuine need to enhance the value addition offered by our entry-level workforce to their employers. The government has, to some extent, left this challenge to the corporate sector, even allowing companies to utilize their CSR budgets – typically reserved for environmental and social impact initiatives – for training interns and new graduates to ensure their employability.

However, this approach highlights the need for a long-term solution, which can only be achieved through comprehensive reforms in the education sector. The lack of industry orientation in our current educational system results in graduates not generating sufficient ROI for their employers in their initial years of service. As per the Economic Survey 2023-24, 65% of India's population is under the age of 35, and many lack the skills needed by a modern economy. The survey also stated that only about 51.25% of the country's youth is deemed employable.

With the advent of AI, this problem has become even more pronounced, calling for urgent reforms in education. There's a pressing need to review the teaching mechanism and curricula of major undergraduate and postgraduate programs across the country. The focus should be on ensuring immediate employability of students, minimizing the need for substantial investments by companies in further training and upskilling of new graduates.

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*Also see https://x.com/swaminathankp/status/1816055740735578140