Skills are finally gaining recognition and there is a new appreciation of the importance of performing tasks in a culture that has put a premium on theoretical knowledge in the past. The growing pressure to create jobs for millions of youngsters, combined with increasing demand for talent, has put skill development at the centre of economic policymaking.
The latest data on unemployment have only stressed the need for rapid skill development. The Labour Bureau report puts the national unemployment rate at 5 per cent, the highest since 2010. Moreover, it is nearly equal in the supposedly booming urban economy and the laggard rural economy. In fact, this situation is an extension of the long-term trend. According to the Census and the National Sample Survey (NSS) numbers, the aggregate employment growth rate in the country slipped from 2 per cent in the 1990s to about 1.6 per cent during the 2000s. And that was in spite of the fact that the first decade of the new millennium enjoyed a 2 per cent higher average GDP growth rate over the 1990s.
Automation is the usual suspect for jobless growth. However, considering that labour offers significant cost and flexibility advantages over automation in India, the explanation must lie somewhere else. Even as job growth lagged economic growth over the past decade, Indian companies flagged the lack of talent at all levels as a key constraint on their growth. This simultaneous coexistence of unemployment and unemployability has been a cause for concern.
Over the past decade, there has been a growing policy emphasis on skill development. But so far, there has been an overwhelming emphasis on traditional industrial skills such as fitting, welding and plumbing while technology and the global economy are changing fast. In the drive to make up for the past skill deficit, there is a risk of rapid skill obsolescence.
India's approach to skilling is still evolving as the country tries to equip hundreds of millions of people with economic skills quickly while addressing the changing character of the economy. The present skilling strategy is rooted in the classic theory that manufacturing is the refuge of surplus farm hands, which India has in abundance. The current Make in India and Skill India programmes have their genesis in the National Strategy for Manufacturing, prepared in 2006, and the formation of the National Skills Development Council in 2008. It was then envisaged that at least a quarter of India's GDP must come from manufacturing and 500 million people should be trained in contemporary skills by 2022. But the massive programme was slow to take off; only 5.5 million people have been trained so far and only half of them have been placed.
The good news is that the structure for such an ambitious plan is now falling in place. A slew of schemes for funding and facilitating training are up and running, and the private sector has created 40 Sector Skill Councils to provide standardised, certified training in hundreds of skills that the industry needs. In addition to the manufacturing and services skills required by specific sectors, some sector skill councils have come up to arm the workforce with vital add-on skills required across all sectors. For instance, the Management, Professional and Entrepreneurship Skills Council (MEPSC) has been set up by All India Management Association (AIMA) to provide essential business skills to workers at all levels and in every sector. NASSCOM's skill council is also training workers in essential IT skills.
However, the predominant concern--that of producing skilled workers in large numbers with a few weeks or a few months of training--should change as there is limited value for both workers and employers in such training. India can draw on the German model of vocational learning to create a sustainable skilling ecosystem.
In Germany, children can choose their trade when they are only 10, and they can switch between pure academics and vocational learning any time. While studying at vocational schools, they have to divide their time between classes and actual work done for their prospective employers. More important, being a certified master craftsman has as much social and economic value as being a doctor or an engineer. The key to the success of this system is the intensive involvement of the industryw, which accepts young apprentices so that they can maintain a robust pipeline of talent with the latest knowledge and skills. The employers are best positioned to forecast skills and employee requirements and by investing in training, they are able to control the supply of trained workforce according to market movements.
India has taken initial steps towards such a dual learning system by creating the National Skills Qualifications Framework, which allows mobility between vocational and academic studies and recognises learning across streams.
Amid the pursuit of technical efficiency, there is not enough appreciation of the change in technology that is redefining jobs and creating the need for enhanced skill sets. Increasingly, technology is allowing consolidation of tasks and functions, and fewer people are required to do more work. The repetitive, non-creative tasks are easily automated and machines are controlling other machines. Therefore, skill training has to ensure a higher level of digital proficiency and people must be prepared for creating solutions instead of just executing tasks.
An effective skilling strategy should not only focus beyond the immediate term but should also prioritise resources for sectors with the highest growth potential and employment intensity. Although significant job growth is expected in the manufacturing sector, the services sector will remain less vulnerable to skill obsolescence as people will be able to compete better with machines in areas such as logistics, health care, hospitality and retail.
Globalisation of skills has to be an essential element of any skilling strategy. India will be struggling to accommodate an (approximately) 800-million-strong workforce in the coming years. To reap its demographic dividend, it has to attract overseas work and also has to give its workers the capability to ply their trades elsewhere. It means India's national occupation standards and certification benchmarks have to be in sync with the best markets.
In spite of the prevailing economic jingoism, the movement of work and workers across borders is only going to grow. The ageing rich countries and the skill-short developing nations will have to either send work overseas or invite workers home. Japan, for example, is desperately short of health care workers and it is unlikely that robots alone will solve its care-giving problem.
In a changing and unpredictable scenario, India's skilling strategy must focus on skills that can withstand technological change and global competition. It must focus on investing in training for jobs in high-growth sectors, with high employment intensity. Given the demographics, India must give up on its obsession with academic degrees and should integrate skill learning in the education system. In the new world, income and status are about what one can do and not about what one knows.
The writer is Director General, All India Management Association