Tag Archives | labour

What does it mean to be employable?

Why autonomous universities are essential to harness India’s demographic dividend

By Shobitha Cherian



India is currently in an extremely advantageous position, demographically speaking. Half of its burgeoning population of 1.27 billion people is comprised of individuals under the age of 25 and a quarter of the increase in the global working population between 2010 and 2040 is projected to come from the country. This so called ‘demographic dividend’ could be extremely beneficial to the Indian economy. According to the IMF, it could potentially result in an increase in the GDP growth rate by two percentage points each year for the next twenty years. However, in order to harness this demographic, it is necessary that this growing population also be productive and employable.

But what determines the employability of an individual? A lot of employers would say it is the extent to which a worker can utilise his attributes, skills or knowledge in order to contribute productively. So, in addition to a bare modicum of knowledge and skills, it is essential that workers are also capable of actually translating that expertise into productive labour. Unfortunately, such workers are far from being prevalent in India, and a vast amount of work is required before the majority of India’s young workforce becomes employable.

Higher Education in India: Vision 2030, a report produced by Ernst and Young for the Federation of Indian Chambers of Commerce and Industry (FICCI) states that 75 percent of graduates from Indian universities are said to be unemployable in the IT sector. This number decreases to 55 percent in manufacturing and 50 percent in the banking and insurance sectors. While graduates from the country’s top universities are much more capable, they comprise a small proportion of the national average. Overall, there is an apparent disconnect between the skills and knowledge of a majority of the Indian workforce and the needs of their respective industries. This must be rectified as soon as possible, otherwise India’s youth will age past the point of productivity without ever realising their potential.

One major problem with the current education system is that it churns out students that are theoretically proficient in their subjects but lack the ability to adapt and apply this knowledge to perform specific tasks required on the job. Theoretical know-how is relayed in isolation through prescribed text books and written examinations; this is not enough to understand practical or real world applications in their industries. The problem is particularly pronounced with science and engineering graduates; the ability to apply scientific theories to come up with practicable solutions is an absolute necessity in a job environment.

In order to ensure that students possess this ability, it is necessary that they are given expertise in the tools and practices actually used in their respective industries. In the United States, the Secretary’s Commission on Achieving Necessary Skills (SCANS) was appointed in 1990 to determine the skills needed for young people to succeed in the workplace. In its report, which is still widely used as a guideline for educational institutions in the States, it illustrates five competencies that all graduates must possess-

  • Knowledge of how to effectively allocate time, money, materials and human capital.
  • The ability to work on a team, teach, lead, negotiate, serve customers and work with people from diverse backgrounds.
  • Knowledge of how to acquire, evaluate, interpret and communicate data.
  • Knowledge of how to design and improve social, organizational, and technological systems.
  • Having the ability to effectively use technology.

It is vital that Indian universities adopt such guidelines when setting their curricula. In this regard, universities should be granted more autonomy in deciding their curriculums and with other such vital functions. The current framework empowers regulatory authorities to micromanage universities through various laws, rules and guidelines, often to poor results. This level of regulation makes it nigh impossible for progressive minded faculty to adopt more modern and practical curricula. This autonomy could be granted without detrimentally affecting educational standards by defining some basic pre-requisites for each university.

Creating a regulatory structure where universities are empowered to produce graduates that cater to industry requirements is the need of the day. Without it, the potential of the majority of India’s workforce will not be realised into actual contributions to the economy. Currently, the demographic dividend is closer to a non-performing asset about to turn into a liability.

Shobitha Cherian is an intern at the Takshashila Institution.

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Skill development in India

Skill development in India is a cross-departmental issue that needs concurrent engagement in multiple dimensions.

Many factors are attributed to the sluggish growth of skill development sector in India. But this is not an India-centric phenomenon. Industry experts and policy academicians have been forewarning the world governments for long about an impending skills mismatch epidemic. There are two reasons, which are of primary concern. First, the demographic dividend is becoming unfavourable and second, there is an employability deficit in terms of what the education institutions provide in the curriculum and what the industry actually requires. The former is prevalent in developed nations while the latter is prevalent in developing nations.

A McKinsey report released last year projected that global labour force strength will be 3.5 billion by 2030. The report states that India could face a surplus of low-skilled workers in the tune of 27 million and deficit in the medium-skilled workers to the tune of 13 million. This implies that more people could be trapped in subsistence agriculture or in urban poverty as we move into the mid-term review of our 12th Five year plan. India’s workforce today stands at nearly 472.9 million. India and has nearly 340 million adults without work-relevant skills and in need of training. Between 2010 and 2030, India would have 27 percent of the world’s share of tertiary educated labour force.

The story is that we are going to have a deficit of medium skilled labour and surplus of low skilled labour. A developing country like India needs both the export-oriented manufacturing sector and consumption-driven domestic market for a balanced economic growth. Both, though are related. Domestic markets become resilient with increased consumer expenditure, which in turn increases with a rise in real wages. Real wages will increase, among other factors, with greater labour mobility towards high-value sectors.

For India, that would mean a massive movement from agricultural to industrial jobs. But the manufacturing sector, which is usually the largest consumer of medium-skilled workers, saw an employment growth of only 4.4 percent between 2004-05 and 2011-2012. This is just one-fourth that of the services sector and one-sixth that of construction sector during the same period. According to the 12th Plan, employment in manufacturing fell by five million between 2005-06 and 2009-10, after adding about 12 million jobs between 2000-01 and 2004-05. The McKinsey report adds that the trend in manufacturing has to be reversed, as 183 million job seekers are expected to join the workforce through the next 15 years.

What does this mean for the skill development sector in India? The National Policy on Skill Development is an attempt to increase labour mobility from low-skill to medium-skill segment. There are two probable scenarios that arise now. One is that job growth is greater or keeps pace with labour skill-upgradation and the other, where it does not. No significant issues are foreseen in the former scenario but if it is the latter, then the question is, what are the alternative employment opportunities for the upgraded labour? The emigration of low-skill labour from India to Middle-East and high-skill labour to USA and other developed countries is already prevalent. But what will have to be facilitated in the future is the emigration of medium-skill labour from India to the global market.

This will require in return two issues to be resolved. Are the standards of training and certification in Skill Development in India comparable to that of the global standards, hence facilitating labour mobility without cost of additional certification or assessment? And are the immigration regulations of the different countries liberal enough to facilitate easy labour mobility? If our certification standards aren’t global then the cost of certification per capita would significantly increase, the magnitude of increase remains to be calculated. This would in turn mean that the government’s reimbursement of INR 10,000 per student in vocational training might need to be revised.

The status quo today is that while we have achieved globalisation in capital and goods, globalisation in labour is strongly resisted by local political economy and vested interests. For Indians to be able to push for liberal immigration rules in other countries especially those that will need medium skill labour such as the developed nations, a pro-active foreign policy is essential. All of this points to the simple fact that skill development in India is a cross-departmental issue that needs concurrent engagement in multiple dimensions. But unfortunately the policy debate today is predominantly unidirectional and linear. This will require us to go back to the drawing-board. While the need is imminent, the interests lie more with the business community to push the political establishment to approach the issue with greater concern.

Arvind Ilamaran works as Research Associate at Centre for Civil Society. He is a graduate of Takshashila’s GCPP and worked with ONGC for more than two years before becoming a policy enthusiast. 

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