Capital no longer creates jobs, and AI is compounding the issue: Yatish Rajawat of Hundred Million Jobs

Saying capital is no longer creating jobs at scale means investment is no longer reliably producing large numbers of new jobs. Modern factories can use capital to buy increasingly capable machines instead of hiring more people. This weakens the older link between economic investment and employment.

The article gives plants making mobile phones and electric vehicles as examples. They are heavily automated, while production-linked incentives are tied to capital rather than the number of workers hired. Even companies with turnover of Rs 10 crore or Rs 50 crore may now use robots. These machines can respond to surroundings and handle materials such as cloth and paper.

The shift matters because MSMEs are India's largest job engine, yet they too face automation. Technology may eventually add jobs, but with a lag. The new roles may also require different skills, leaving displaced workers without an easy path into them.

The traditional relationship was simple: roughly Rs 100 crore of investment generated around 10,000 jobs. That figure represented an economy in which new factories and businesses needed many workers as they expanded. It made investment a visible route to employment.

That relationship is weakening because capital is increasingly used for automation. Plants manufacturing mobile phones and electric vehicles are heavily automated. Robots can perform tasks that once needed people, including work involving welding and forging. They can also respond to their surroundings and handle several materials. Production-linked incentive schemes reinforce the focus on capital because they are tied to investment rather than employment.

The result is a gap between growth and hiring. A company can invest, produce more, and become more competitive without adding workers at the old rate. This is especially important for India because MSMEs are described as the country's largest job engine, yet automation is reaching them too.

Robots and AI are changing work by taking over more varied and complex tasks. Factory automation is no longer limited to moving a widget from one point to another. Machines can respond to their surroundings and handle materials including cloth and paper, not only sheet metal. This expands the range of work they can perform.

The article says even labour-intensive activities such as welding and forging have been affected. Robots are appearing in firms with turnover of Rs 10 crore or Rs 50 crore, not only giant factories. AI is already affecting white-collar work across sectors, and Rajawat expects services to follow the factory trend. MSMEs, a major source of jobs, are also losing jobs to automation.

This changes both manual and office work. Some tasks disappear, while remaining and emerging roles may demand different skills. Technology can eventually create jobs, but the article stresses that the transition takes time and does not necessarily help the same workers who lose their jobs.

When automation removes a job, new technology-related work may not appear immediately. The article, citing Power and Progress, says technology eventually adds jobs but does so with a lag. During that gap, displaced workers may lose income and stability while waiting for suitable opportunities.

The problem is also about skills and age. Rajawat argues that people who lose work are rarely the ones who gain the new roles. Someone in their twenties may adapt to a major change, but an employee in their forties or fifties is less likely to do so. This creates a mismatch between the workers available and the jobs being created.

Reskilling is therefore central to the response. Hundred Million Jobs has urged the skilling ministry to recognise displaced workers as a category needing support. Rajawat wants the market to provide that support, including companies that reskill displaced workers as both a business opportunity and a source of employment.

MSMEs are considered India's largest job engine because the article identifies them as the country’s major source of employment. Their ability to create jobs matters beyond individual firms. If many small and medium businesses expand, compete, and hire, they can support broad employment growth.

Automation threatens that mechanism. Rajawat says even a firm with turnover of Rs 10 crore or Rs 50 crore may now have robots. These machines are becoming more capable. They can respond to their surroundings and work with cloth and paper as well as sheet metal. Automation has already affected labour-intensive jobs such as welding and forging, and the article expects services to follow.

MSMEs may therefore increase output or competitiveness without hiring at the old rate. That could weaken their role as a job engine, even if it helps individual firms survive. The response proposed includes reskilling displaced workers, reducing energy costs, improving legal enforcement, and giving MSMEs recognition similar to tech startups.

Large ecommerce and social-media platforms can prevent new businesses from succeeding when they control consumer data. Rajawat argues that entrepreneurs need this data to build and operate businesses. If dominant platforms hold it, newcomers may struggle to reach customers or compete on equal terms.

The mechanism is platform consolidation. A small entrepreneur may have an idea, but limited access to information about consumers can make it harder to develop, market, or improve a product. Dominant platforms then retain an advantage. The article links this imbalance to entrepreneurship: when new businesses cannot succeed, fewer businesses expand and create jobs.

Rajawat says this issue receives too little attention compared with automation and AI. Hundred Million Jobs is lobbying for changes to data-ownership laws. Its broader aim is to make the business environment more open to entrepreneurs, including MSMEs. If data access improves, the article’s logic is that more new firms could emerge and employment could grow.

Economic growth measures more production or value, while employment measures how many people work. They can move apart when investment makes each worker, machine, or factory more productive. A business may produce more without hiring in proportion because automation performs tasks that previously required human labour.

The article describes this shift in factories and MSMEs. Robots now handle more than simple movement. They can respond to surroundings and work with different materials. Automation has affected welding and forging, while mobile-phone and electric-vehicle plants are heavily automated. AI is also affecting white-collar work, and services may follow.

This explains why the old estimate of Rs 100 crore creating around 10,000 jobs no longer holds. Productivity and output can rise while the employment effect weakens. The article warns that technology eventually adds jobs, but with a lag, and that displaced workers may not be the ones who obtain the new roles. Reskilling and stronger entrepreneurship therefore become important.