Business Today

Skilling for the Future

Prime Minister Modi shares the dreams and aspirations of a billion plus people of the country "to make India a global economic leader". To make this dream a reality, Make in India, Digital India, Smart Cities, Startup India and Swachh Bharat programmes, among others, have been launched by the government.

By Mohandas Pai & Shobha Mishra Ghosh | November 8, 2016 | Updated 19:47 IST
Skilling for the Future

Prime Minister Modi shares the dreams and aspirations of a billion plus people of the country "to make India a global economic leader". To make this dream a reality, Make in India, Digital India, Smart Cities, Startup India and Swachh Bharat programmes, among others, have been launched by the government. The recent analysis of the Sixth  Economic Census 2005-2013 highlights that manufacturing has employed over 30 million people, compared with 27 million by retail in this period and has the potential to contribute 25 per cent to the GDP and create 100 million jobs by 2022. Other occupations like transport, warehousing, hotels and eateries, healthcare and education have emerged as other large employers.

However, significantly large number of employers have cited lack of trained manpower as one of the major concerns for their growth aspirations. In sectors like telecom, capital goods or defence equipment manufacturing, training infrastructure is negligible. India's annual vocational and skills training capacity is only 4.4 million for a 500 million workforce as against 90 million in China and11 million in USA. Skill India Mission aims to bridge this gap of demand and supply.

While India's economy is transitioning towards a modern skills-based manufacturing and services based economy, away from being rural and agrarian, many are being left behind. This divide would further increase with the fourth industrial revolution knocking at our doors, where technological disruption like Internet of Things, automation, 3D printing, robotics, etc. would make certain jobs disappear while at the same time creating new jobs with requirement of higher order skills.  

With 65 per cent population being young, India is grappling with twin challenge of skilling millions of youth and employment generation. As per projections, over 109 million incremental people will be required in India alone, across 24 key sectors by the year 2022. Yet, only 4.69 per cent of the Indian population has undergone formal skill training. India still has the age old tradition of learning on the job through informal networks and needs to gravitate towards a formal system for rapid improvement in productivity through use of latest technology.

We have to accommodate the annual 18 million Indian youth entering the workforce for the first time during the next decade and a half. Against this need, at present only 5.5 million additional organised sector jobs a year are being created which is certainly not enough. Unless the skill programme of the country is based on the demography, geography, industry growth, migration of internal and international labour, India's demographic dividend would certainly become a demographic nightmare. We cannot expect to get radically different results if we do not make fundamental changes in our approach for policy planning and processes. This indeed calls for an urgent re-engineering of the skill ecosystem and actions on following identified areas:

Matching youth aspirations

Skill development and VET have never been aspirational for our country. To achieve the PM's vision, the fundamental requirement is creating an ecosystem which assigns dignity to vocational education and skill. The National Skills Policy 2015 proposes to link skill development in at least 1 school out of 4 in next 5 years from class nine onwards providing seamless integration of vocational training in formal education. Both the government and the industry need to revisit the recruitment criteria and move away from the degree bias. A massive campaign is required to bring in the mind set shift to make vocational education and technical training as a preferred career choice amongst the youth.

Transition from agrarian society to urbanised society

The Economic Survey of India data from 2001-2012 shows that although 50 per cent of employment was in agriculture sector, the per income capita rise was minuscule compared to manufacturing and services sector. Projection shows that the disparity will grow dramatically across sectors by 2022 where agriculture per capita income ratio would be 5.4X when compared to manufacturing which would be at 7.7 X and services at 15.7X. It is imperative that we shift employment from agriculture in rural areas to manufacturing and services. In this respect we must follow what China has done in terms of developing new urban centers across the country. This will help in arresting migration from rural areas to already choked metros.

Data mining and analytics to assess jobs in formal sector

The biggest problem before Skill India is the data, its accuracy and reliability!! Information on the demand for workers in specific occupations and the changing content of these occupations has to be developed using data from several sources. Currently, the baseline data on occupations is usually gathered along with other demographic and labour market data when a general census of the population is conducted. This basic data is then projected to represent the current labour market situation using the industry and occupational data available from household based labour force surveys and/or industry based establishment surveys. This data is not sufficient to provide the realistic employment scenario.

Alternately EPFO, ESIC and other official statistics on government employees provide critical data on formal employment. This data can provide authentic information on the sectors/industries that are growing and also indicate the geographic location to help in planning for skill development.

There needs to be an integrated effort towards data updation and frequency of data collection at the national level and percolate down to the states through the State Skill Development Mission. For continuous data analytics on employment by industry, skills and geography, a Labour Market Monitor is needed that would map short term labour market trends by collecting, analyzing and disseminating data on vacancies and registered job seekers. Multilingual dictionary of occupations and skills is needed to enhance transparency of vacancy information to improve matching between job seekers and vacancies. This would also remove the differential taxonomy of calling various job roles.

Industry 4.0

Future skill requirements of the economy are identified by gathering information from a variety of sources to determine historical trends and utilising various techniques to predict future requirements. The methods used to predict future skill requirements can range from basic projections that take into account the changing industrial and occupational composition of a country's workforce to the use of sophisticated econometric models that consider changes in investment, productivity, output by industry and the effect of changing technology on the occupational mix within specific industry. FICCI- NASSCOM are jointly working on a study on 'Future of jobs' with EY that will map key sectors for jobs and skill set required. FICCI supported by Rolland Berger, the German consulting organisation is also working on mapping Industry 4.0 to meet the future high order skill requirement.

Mapping of Internal Migration

India is like Europe or United States of America- each state at different level of development. Today our country is facing the challenge of internal migration. Over 100 Million urban migrants leave their homes, families and support networks in search of better opportunities seasonally. Labour from Bihar migrates to Kerala and Punjab for agriculture and construction work, plumbers come from Orissa and hospitality and retail industry has been seeing youth from North East migrating to all over India. Quality Training Centers on specific skills should be set up in these feeder regions. Alternatively, the government needs to incentivise industry to set up establishments in states where relevant labour is available to arrest internal distress migration caused due to unavailability of employment opportunities in the region.

International Mobility

We are creating only 5 million jobs where as 18 million youth will be entering the workforce annually for the next 10 years. It's clear that in the struggling economy and limited job creation rate, we need to identify global pockets that are facing the reverse demography trends and look at the institutional ways of filling the deficit. We need to create institutional mechanism to access international labour market data and map it with existing training facilities and global standards. The first steps of harmonizing standards with several countries has been taken by the government. However, with the rapidly shrinking demographic window, implementation of transnational mobility needs to be expedited.

Partnership with Industry Associations

In several developed and developing countries like Germany, Korea, Brazil, industry is a proactive partner in skill development. Although the Sector Skill Councils are set up to develop national standards in collaboration with the industry, training is not driven by the employers. While the large conglomerates have their own training institutions, MSME clusters should be provided fiscal incentives and soft loans to set up Training Centres that would cater to collective training requirements of establishments in the cluster. This would also bring down the cost of training and re-training for each company. It is also critical to assess skill premium against industry productivity for industry to differentiate between certified and non-certified workforce.  In a country, where 93 per cent of the industry is in the unorganized sector, it is important that SSCs in collaboration with industry bodies first sensitise the employers on the importance of the occupational standards, job roles and certification.

Mohandas Pai is Chairman, FICCI Skill Development Committee & Shobha Mishra Ghosh is Senior Director, FICCI

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