The decision to place ‘inequality’ at the centre of the proceedings of the World Economic Forum at Davos has generated a lot of hope and promise. However, the actual solutions still remain elusive and undeveloped. The anguish and concern in the speeches about the widening economic disparities within many countries, does not seem to be supported by the sincerity in policies and action.
Globalisation and the Fourth Industrial Revolution have increased the pace of change in labour markets, putting a premium on right skills and adaptability. Public policies should enable workers to cope with transition, via income support, and also support incentives and opportunities for deskilling and upgrading skills. This is critical for addressing job displacement.
The challenges of skill development
This rate of job displacement is not far out of line with previous periods. One reason why automation is so horrifying a prospect today is that the future was very uncertain in the past: We lacked skills and tools for long-range forecasts. An important current development is that today’s automation is likely to usher in machines that can plausibly replace humans in several spheres where it was once thought that humans would be irreplaceable.
The biggest contributing factor to growing income disparities is, without doubt, unemployment. Unemployment is a global problem, with more than 73 million youth unemployed worldwide. In India, the unemployment rate among youth is almost 13 percent (compared to 4.9 percent overall). Underemployment is even higher. Given the kind of opportunities available in the country, it is disheartening to note these dismal figures. The missing link here is skill development which is the key ingredient to robust economic growth.
The Davos camp has identified human capital and sustainable resources as the two key challenges for India. Education and skills are what normally comprise human capital. While educational qualifications are essential for entering the labour market, it is the skills that will finally determine one’s employability strength. Young people desperately search for entry-level jobs while employers, ironically, are unable to find people with the right skills. They face regular attrition and a monthly turnover sometimes as high as a fifth of their workforce.
At the same time, 40 percent of employers blame skill shortage for entry-level vacancies. The imperative for skilling young people is well-recognised and has been flagged as a national priority for almost a decade, with significant initiatives being launched by the government. The sad part is that only 10 percent of the total workforce in the country receives some kind of skill training.
India is poised to become the youngest country in the world by 2020, with an average age of 29 years. Its 869 million strong workforce accounts for around 28 percent of the world’s workforce. Although India’s huge demographic dividend is considered to be one of its strengths, our optimism needs to be moderated. If the youth are not skilled and face unemployment challenges, it might turn out to be a liability rather than an asset.
India faces a huge skill development challenge. It is estimated that around 50 to 70 million jobs will be created in India over the next five years and about 75 to 90 percent of these will require some vocational training. For India’s demographic transformation to be considered a “dividend,” the youth will need to acquire necessary knowledge and skills to contribute towards nation-building. Development programmes and their allied industries should develop the capability to cross-train the youth and build a culture of learning.
According to the National Skill Development Corporation (NSDC), a public-private partnership providing funding and direction to private skill development programmes can be beneficial in plugging the growing skill gap in India, which is estimated to be more than 250 million workers across various sectors by 2022.
The benefits of skill development have been clearly articulated by the government and the industry with regards to addressing the nation’s unemployment problem and creating jobs. Skill development will help prospective employees get easier access to the formal job market where they can bargain for higher incomes, work under more congenial labour conditions, have greater job security and better access to healthcare and medical facilities. Considering the fact that the academic curriculum is more or less similar across universities and colleges, graduates from tier two and tier three towns typically lose out due to a severe lack of exposure and soft skills in the race for employment.
By deploying its Corporate and Social Responsibility (CSR) capital on skill development projects, the private sector also stands to benefit enormously from the availability of a large skilled and disciplined workforce. This can parlay into better levels of customer service, increased productivity and efficiency, reduced absenteeism and employee turnover, along with lower wages and recruitment costs.
Drawbacks of some skill development programmes
The results of several programmes have, however, been mixed. Programmes have reported high dropout rates, low employment percentages and continued attrition post-placement, leading to dissatisfied employers as well as frustrated youth. Providing ‘skill-training and certification’ alone cannot be a solution to the problem. There is clearly a case for going back to the drawing board.
Adopting a lifecycle approach to skilling will make sure the kind of skills imparted to trainees are marketable and linked to the available jobs. A lifecycle approach looks at all aspects of skilling, from the aspirations of people before training, to counselling and following up with beneficiaries during their employment. Skill development programmes incorporating these principles will ensure that the training guarantees livelihoods and contributes to the economic well-being of communities.
It is also important to ensure that specific skills are not scaled across multiple areas in the same region as it saturates the market with limited opportunities for those who are trained. If everyone is trained in becoming a blacksmith, there will be too many blacksmiths and not enough jobs.
To this end, governments should boost investment in life-long learning to retrain, retool, and de-skill. For example, governments could use individual skill accounts to provide training grants throughout people’s working lives, conditional on stronger private-sector involvement in training and skills development. Governments should also reinforce the supply of skills by strengthening incentives for educational institutions to harness the power of digital technology and new business models.
Four lessons stand out, which redefine the economics of skilling. First, they noticed that investment for skilling needs to be comprehensive, covering not only the training itself but also screening, matching and mentoring. Second, programmes need to have measurable outcomes for the person seeking a job that will encourage other young people to get involved. Third, the generation has established a close link between skilling and business profitability that should stimulate employers to hire skilled people and finally, they should shift the measure for the efficacy of skilling from cost (and occasionally placement rates) to a broader metric, measuring social return on this investment. It may not have direct tangible benefits but the employers can leverage them for boosting their brand, and thereby enhance market penetration.
Government initiatives
Several laudatory steps have certainly been taken by the government like the ‘Pradhan Mantri Kaushal Kendras’ (PMKKs). These ‘model training centres’ have been established in 356 districts. Other schemes such as the Skills Acquisition and Knowledge Awareness for Livelihood Promotion (SANKALP), Skill Strengthening for Industrial Value Enhancement (STRIVE) and National Apprenticeship Promotion Scheme (NAPS) are being actively rolled out. The SANKALP programme has a $250 million loan assistance from the World Bank to boost the National Skill Development Mission. It is integral to incorporate them into the education system. A system that integrates skills and education can go a long way in ensuring that the youth are better equipped to handle a challenging employment market.
The Rashtriya Madhyamik Shiksha Abhiyan (RMSA) is a centrally sponsored scheme of ‘vocationalisation’ of secondary and higher secondary educations. Yet, its biggest drawback is that its modules are not customised to suit the requirements of children in different age groups. The same approach for skill training a 12 or 14-year old child cannot be followed for an 18-year old because skills need to be looked at more dynamically.
(Disclaimer: The views expressed in the article above are those of the author Moin Qazi, PhD in Economics and English. The matter of this article has not been edited and has been copied from an e-news portal by skillreporter.com. SkillReporter shall not be responsible for any damage caused to any person/organization directly or indirectly.)