No jobs, no skills: What a sorry state

India’s jobless growth story is increasingly becoming worrisome and there is growing debate on if and how the country can create enough jobs to absorb its workforce. Simultaneously, another relevant aspect gaining prominence is the urgent need to adequately skill the labour force even for existing jobs.

In his budget speech, the finance minister reiterated the need for adequately skilling India’s youth. New programmes have been initiated, while the reach of some existing programmes have been extended under Skill India. Launched in 2015, Skill India set an ambitious target of skilling 40 crore people by 2022. A year down the line, the task appears daunting in light of the sluggish progress made so far.

India has a huge labour force, second only to China. Labour availability is expected to grow further as India is forecast to be the youngest country in the world with a median age of 29 by 2020. On the other hand, China’s demographic dividend is waning, with the country expected to have a median age of 37 by 2020.

In the next 20 years, the labour force in the industrialised world is expected to decline by 4 per cent, while in India it will increase by 32 per cent. This implies that India has a huge potential benefit in terms of labour availability and cost which the country needs to encash. However, little has been done so far to tap this structural advantage, which, if not addressed urgently, could cause socio-economic issues.

Only around 10 per cent of India’s workforce is trained which includes 3 per cent formally trained and 7 per cent informally trained. This compares poorly with a more than 50 per cent formally trained workforce in developed countries, including 53 per cent in China. According to the India Skills Report 2016, only 37 per cent of the Employability Skill Test takers (below 30 years) were found employable.

The Government has taken several initiatives in the last few years under the Skill India programme. The ministry of skill development and entrepreneurship (MSDE) was created in November 2014 to drive the programme. The National Skill Development Corporation (NSDC) set up in 2008 has been further strengthened to catalyse private sector participation. Eleven new sectors have been added since November 2014 under the industry-led Sector Skill Council. The Skill Loan Scheme was launched in July 2015 to fund training requirements.

The Government’s existing Industrial Training Institutes (ITI) are being upgraded. The Apprenticeship Act was modified in Dec 2014 to incentivise employers to take on more apprentices. Public sector units have also been roped in to provide training in their respective sectors, funds for which would be allocated from the concerned ministry. For FY17, the Government has allocated a budget of ₹2,173 crore for MSDE, 115 per cent higher than the previous year; for FY18 the allocation is ₹3016 crore (40 per cent higher than the previous year).

According to theMSDE report, these initiatives have resulted in the number of trained workforce in India growing by 37 per cent from 0.76 crore in FY15 to 1.04 crore in FY16. However, the number seems measly given that there is a need for 10 crore additional skilled personnel by 2022; 30 crore of the existing workforce requires further skilling.

So, where is the Skill India programme lagging? What can give it a fillip? The MSDE was set up to be a nodal point for coordination of all skill efforts across India. However, given the multiple bodies involved — different government departments, government training institutes, private training agencies — the required coordination and streamlining of efforts is still a challenge. Coordination with employers and/or industry associations also needs to be strengthened. Training institutes should widen their tie-ups with corporates to ensure placement of the skilled workforce. This kind of tie-up will also help agencies better understand the industry’s requirements.

On the other hand, there is need to change the mindset of people regarding these skill and vocational training programmes. In India we are still too obsessed with academic qualifications, which may not even be appropriate to obtain a job. Vocational training is still considered a last resort. There is need to spread awareness about the various skilling programmes/schemes. The training institutes need to tie up with more schools and/or colleges to make students aware of the opportunities. Training institutes such as the ITIs are under-utilised.

Existing degree courses also require to be revisited. Should they be tweaked to better meet the job requirements? In some cases, higher education is becoming a millstone.

According to the NSSO survey, unemployment was higher among those with higher educational qualifications. For instance, among the 18-29 years age-group, the unemployment rate was 15.6 per cent for graduates and about 9.3 per cent for diploma holders as against only 2.3 per cent for those with primary-level education.

According to the Employment and Unemployment Survey (EUS) 2016, 58 per cent of graduate unemployed and 62 per cent of post-graduate unemployed cited non-availability of jobs matching their skill and education as a primary reason for their unemployment. Skilling programmes should also target the younger age group (10-15 years), as the school drop-out rate is found to be high for this age-group. These drop-outs otherwise will not have even the minimum educational qualification required to avail themselves of ITI and/or diploma training.

Greater attention being paid to job placement after skilling will increase the appeal of these programmes and spread awareness. In the long run we may want to overhaul our education system to make it more job friendly.

We are proud to have academic institutions such as the IITs, IIMs, and AIIMS which have helped us become a source of rich human capital at the high-end. At the same time, we have a large number of youths passing out with degrees and qualifications that do not equip them with appropriate skills and abilities This calls for reflection and suitable action.

The writers are Mumbai-based corporate economists