Agenda for education and labour reforms

Habil Khorakiwala | Updated on January 12, 2018

Without skilling India’s millions for a digitalised age and making labour laws flexible, our growth prospects will suffer

One of the biggest challenges facing Indian economy is that of job creation. A holistic approach is required to address the issue. Every year, nearly 13-15 million youth enter the working age group, seeking appropriate earning opportunities. Additionally, the agriculture sector that supports nearly half of country’s population, cannot absorb more people. Hence, jobs would have to be created in the non-agricultural sector.

Another key concern relates to employability. With the rapid changes in technology and movement towards a digitalised economy, combined with a decline in their costs, Indian manufacturing is increasingly shifting away from traditional, labour intensive methods. It is important for individuals to keep abreast with the latest technology and upgrade skills to remain employable. Addressing the issue of employability requires significant policy initiatives. The efforts of the government in this regard, especially in the form of initiatives like Skill India, Make in India, are commendable. Nevertheless, the task at hand is so daunting that much greater efforts and reforms are necessary.

To give a historical perspective, the reforms carried out in 1991, focused on expanding the industrial base by abolishing industrial licensing and removing import controls. The present day scenario calls for the next generation of reforms especially focused on labour markets and education.

Academia-industry interface

Education: There must be a drastic overhaul of the prevailing education system. We need to revisit all the rules and regulations in the education sector especially the manner in which universities are being managed, designing of the curriculum and giving degrees. To meet the changing needs of the population, the Government needs to ensure quality education, innovation and research. We need to identify the knowledge and the skills which are needed today to generate decent jobs, going forward.

For example in the pharmaceuticals sector, sales and marketing form a very critical part of our business. However, I have hardly come across any standard programme/course in the education space which caters to these specific areas in today’s context. Academia-industry interactions need to be encouraged to facilitate meaningful collaborations. Organisations need to be incentivised to contribute to research-based activity at universities.

There is a need to grant autonomy to best-in-class institutions, public or private, to devise their own mechanisms to recruit faculty. Ensure active participation of the industry in encouraging industry professionals to accept faculty positions ( by offering sabbaticals, incentives such as high weightage to a teaching stint for career enhancement). Centralised control of universities by the government should be done away with. An outcome based approach is needed. Greater autonomy should also be provided in the use of funds, while ensuring greater responsibility in the effective utilisation.

Moreover, as the economic profile of the country is changing, we should focus more on increasing the role of digitalisation in the education sector. This should start with basic school learning. The country should aim at establishing world class institutions and set up an expert body to understand the best practices prevailing globally.

Social security

Labour Reforms: If the country needs to create quality jobs, it needs to ensure a minimalist labour regime in the country. Too many labour laws both in Central and State levels have resulted in many bottlenecks, which has affected industry’s growth. For example the growth of SMEs is being mainly constrained due to large number of regressive laws.

Labour reforms must be framed in such a manner that it ensures the ease of doing business and simultaneously leads to jobs creation. India’s labour laws are extremely rigid and discourage industrial employers to hire. Rather, it encourages contractual labour without social security benefits. The need is to have a modern labour law that encourages employers to keep more workers in formal roles, with work-linked wages and social security benefits. Besides, the laws should also focus on easing the compliance burden on small and medium enterprises. Some steps have been taken in this direction with the introduction of unified labour portal. However, a lot more needs to be done.

Road Ahead

The government along with industry needs to frame a holistic policy, identifying sectors with high job potential like healthcare, tourism as well as MSMEs. The government should involve more industry people in various specific sector areas to mainstream their efforts and also get an industry perspective on job creation.

For example, the pharmaceuticals sector, which is growing at around 15-20 per cent per annum, has the potential to create quality jobs in our economy. As per FICCI estimates, around 2.5 million people are currently employed by the life-sciences industry (including chemists, stockists) and with growth projected to continue at around 20 per cent per annum, the sector will create several jobs in pharma manufacturing, sales and marketing as well as pharma R&D.

Potential of healthcare

There have been a number of major scientific and technological advances, coupled with socio-demographic changes that have revived the job prospects in the pharma industry. In sales and marketing there is a tremendous need for skilled workforce in our business. High burden of disease, good economic growth leading to higher disposable incomes, improvements in healthcare infrastructure and improved healthcare financing will drive job prospects in this sector. As per the Life Sciences Sector Skill Council and KPMG’s Skill Gap study, the industry is expected to create 1.31 million new jobs between 2015 and 2024.

In addition, healthcare has huge potential for expansion in the rural sector. At present more than 50 per cent of the villages in India do not have any pharmacy shop and are being served largely through medical vans.

To ensure deeper penetration we need to create many healthcare practitioners, which is a challenge given the current system of medical education. We may also need to rethink the concept of a minimum education degree for practising medicine, for instance, and create an acceptable qualification below the minimum MBBS degree — especially to serve the needs of rural India.

A holistic approach is needed to address the issue of a large number of poorly educated labour force and the skills mismatch prevailing at present. Once education reforms are introduced and implemented, it will be revolutionary and will have a long lasting impact on the future growth and development of the country.

The writer is the chairman and group CEO of Wockhardt

Published on January 11, 2017

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