By Indraneel Pinnamshetty
Building on the efforts of the Skill India mission, the World Bank has recently sanctioned a loan of $250 million to the Indian government. The credit will help in increasing the market relevance of short-term skill development programmes (3-12 months or up to 600 hours) at the national and state levels.
The cleared loan will operate under the World Banks Skill India Mission Operation (SIMO), which will, in turn, be implemented through Indias National Skill Development Mission. The programme will provide skill training to adults 15-59 years of age, both underemployed and unemployed. This includes the 1.2 crore youngsters in the 15-29 years old age group who enter the labour market every year.
The young and the unskilled?
India has been witnessing an increase in its working age population, with youth consisting of a huge chunk of that demographic. However, this statistic isnt news to cheer about; the country is at a paradoxical juncture. On one hand, there are young people entering the job market. On the other hand, there are industries lamenting the lack of skill among the job entrants. The magnitude of the problem is made lucid by the statistics: out of the 12 million people entering the workforce every year, only 3.1 million are trained or qualified. With one of the lowest workforce readiness ratios in the world and an obsolete training infrastructure, India is facing a critical problem it must address: the woes of unskilled youth.
High investment, low return
The government is pumping huge monetary resources into skill development, with the latest instance being the $250 million loan from the World Bank. However, these initiatives haven’t proved productive in the past. This is because the approach places a heavy burden on the government with little pressure on industries. Typically, the government fronts almost the entire training cost while students pay a token amount and the industry pays nothing. These programs entail just 2-3 months of classroom training. Given the short duration and absence of industry exposure, training providers aren’t able to meet the minimum placement goals. Hence, they are losing money.
Letting the private sector take the reigns
Accommodating companies as the stakeholders in the process will bring about an overhaul in the approach to skilling youth in India. For immediate inspiration, India can consider the approach taken in Germany, where classroom instruction is supplemented with practical training through a paid apprenticeship model.
Governments also have a vast scope to incentivise companies to invest in skilling under the Corporate Social Responsibility (CSR) mandate. This is a win-win opportunity for companies as they can train potential future employees to work under their company and simultaneously fulfil their CSR obligations. Even if the potential employees don’t prefer to work within the company that has provided them with the skills for a job, it should not be seen as a loss. The industry, as a whole, benefits since these skills can be employed at a different firm within the industry.
An entrepreneurial solution
The entrepreneurial ecosystem is another path to solving both the issue of skill development and employment. The rural economy is burdened by an uneven supply of labour and demand for the labour’s output. This creates underemployment at best and unemployment at worst. Providing entrepreneurial skills to rural communities can help them start cottage industries or small local businesses. Such an ecosystem will create its own value chain and help absorb the burgeoning local youth.
A bad apple spoils the bunch
The prevalent infrastructure that does not add value towards skill development is the bad apple in the current scenario. Many colleges and educational infrastructures exist merely to draw money from the students without enabling their employability capacities. A case in point is the many sterile engineering or management colleges where graduated students have abysmal rates of employment.
The government has an immediate task cut out for it: change the educational curriculum and standards to adapt to the evolving employment scenario. Such measures will add meaning to the learning experiences of the students and prepare them for the job market’s demands. Before embarking on new journeys, it is imperative for the government to isolate and eliminate its existing infrastructure that doesn’t contribute towards skilling the people of India.
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