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In this regular column, our industry expert weighs up the impact of start-ups on jobs. There has been an ongoing discussion on whether technology creates jobs or kills them. With the surge in the number of tech-based start-ups on the rise, there have been discussions on the impact start-ups make on jobs. Research has time and again shown that technology has net-net created far more jobs than it has destroyed. A study by Deloitte drew on data going back to 1871 in England & Wales and found that technology has been a job-creating machine. The conclusions drawn in the report are resoundingly positive. It concludes that rather than destroying jobs, technology has been a “great job-creating machine”. It further concluded that if we want to create an economy that is a jobs machine, we are going to have to have more business start-ups. Research suggests that start-ups are responsible for all net job creation during most years, while existing firms (aged one year and older) are usually net job losers. To be fair, start-ups have a definitional advantage because they can´t lose jobs and some of their created jobs will surely be lost by the time they reach year one. But in terms of the life-cycle of job growth, policy makers, industry and other stakeholders should appreciate the astounding effect of job creation in the first year of a start-up's life. Globally, all major start-up ecosystems have reported huge number of jobs being created by start-ups in the economy. The Enterprise Research Centre had reported that Start-ups created a million jobs in the UK between 2014 and 2015. The Australian government's Department of Industry, Innovation and Science reported that start-ups and early-stage companies generated nearly all the 1.6 million new jobs created in Australia from 2003 to 2014. The US Census Bureau in its Business Dynamics Statistics stated that start-ups created over 2 million jobs in 2017. Many other start-up ecosystems globally have over the last few years reported substantial contribution of start-ups in job creation in the economy. In India, the situation is equally encouraging. Industry experts estimate that since 2005, start-ups have created more than 100,000 direct and over 300,000 indirect jobs in India. The jobs created by these start-ups are high-quality that have been created locally. The Indian unicorns such as Flipkart, redBus and Snapdeal together employ more than 7,000 people. According to a Nasscom report, start-ups are expected to create 250,000 jobs in India by 2020. The average annual salaries offered by start-ups (less than one year) range between INR 2 lakh to INR 5 lakh. These increase exponentially and touch about INR 12 lakh or higher as the start-up grows. These are not as attractive packages as compared to the large corporates, however, the challenges and dynamism in the start-up job attracts the millennials. But to attract and retain more talented start-ups and most importantly ecosystem stakeholders like investors, the government will have to find an innovative way to match the salaries with the market standards. While start-ups do come with their own set of risks and challenges and their success rate of 10 per cent remains a huge concern, one cannot deny the attraction they hold. Start-ups are creating and will continue to create more jobs, but they are not great-paying ones yet. If things start to turn around a bit, rising pay at start-ups should be next.
