ITI graduates form only 12 per cent of labour force in formal sector: Study

Study shows that ITI graduates form only 12% of the labour force in the formal sector; firms don’t think the institutes meet their requirements.

There is a common perception that Industrial Training Institutes generate a skilled workforce. A recent study has, however, found that in Tamil Nadu ITI graduates form only 12% of the labour force in the formal sector and 9% in the informal sector.

This is the major finding of a survey on skilled labour market in the State which was carried out by Abdul Latif Jameel Poverty Action Lab (J-PAL), a global research centre based at the Massachusetts Institute of Technology, U.S., and commissioned by the State Labour and Employment Department. J-PAL has shared its recently finalized findings with The Hindu .

Salary expectations

For the purpose of this study, during 2015, 750 firms were surveyed, of which 450 were in the formal sector. Six districts – Chennai, Kancheepuram, Tiruvallur, Cuddalore, Coimbatore and Madurai – were covered.

The formal sector comprised food processing, leather, chemical, heavy engineering, automobiles, software/BPO and textiles while firms in the informal sector were enumerated randomly.

According to the report, less than a third of the firms were receptive to the idea of hiring candidates from ITIs. This was due to two reasons – ITIs were not teaching those skills needed by the firms and the salary expectations of ITI graduates were too high.

Also, the firms pointed to “outdated curricula” followed by the ITIs. Besides, an overwhelming majority of both formal and informal firms was said to be unaware of the Tamil Nadu Skill Development Corporation’s (TNSDC) short-term programmes on skills.

At the same time, 84% of the firms would prefer, the survey revealed, to hire a worker with skills from previous experience to someone who has passed out of an ITI or an industrial training centre. Another finding of the survey was that as a general practice, the firms, both formal and informal, hired people through referrals. In respect of the former, the figure was 70% and the latter, 75%. Walk-in interviews was the other common method. On the parameter of providing on-the-job training, only 40% of the formal firms and 10% of the informal sector firms fulfilled it.

The main problem faced by a third of the firms offering on-the-job training was the loss of employees right after completion of training. Such candidates left the firms as they were assured of a higher starting salary somewhere else.

“The threat is particularly large in the software/BPO (66%) and leather (46%) industries,” the J-PAL report pointed out. Also, only half of the formal firms and a quarter of the informal firms were familiar with the Apprenticeship Act, leading to very low recruitment of apprentices.

Appropriate training

The study brought out the need felt by the industries for skilled labour as 44% of the formal firms and 42% of informal firms said it was “difficult or very difficult” to find workers properly trained in the skill or trade that they would require in the next two years.

Notwithstanding the perception among the industry that ITIs rarely engaged the companies for skillings programmes, the firms, when approached, had shown their readiness to cooperate. Of those formal firms contacted by the ITIs, most of them had agreed either to send their nominees for Institute-Management Committees, provide inputs for ITI syllabi, or offer on-the-job training.

Greater involvement of the industry and modifications in the incentive structure for ITIs were among the recommendations made by the J-PAL.