Economic revival? Focus on skilling India’s working age population

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The COVID-19 pandemic has triggered one of the worst jobs crises in the world since the Great Depression. In India, recent reports indicate that over four million young people have lost their jobs. Further, an estimated 18 million people are expected to face job transitions in the post-COVID-19 employment market. Sectors such as customer service, food and hospitality, have taken a massive jolt while e-commerce and related industries such as warehousing and transport have seen some growth over the past year. However, this growth is not adequate to offset the losses in other sectors.

India’s demographic dividend — the over-62-percent population in the working age-group of 15-59 years — is expected to propel the nation to high growth in the coming years. But how and where will they find jobs during an unprecedented crash in the employment market triggered by the pandemic?

To state the obvious, only those who have skills that are in demand by the employers will be absorbed in the workforce. The demand-supply equations are staggering. The International Labour Organization (ILO) has indicated that India is staring at a 29 million skill-deficit by 2030. A 2019 report by Accenture projected that the existing skill gap, if left uncontrolled, will offset the nation’s GDP by $1.97 trillion (~Rs 150 trillion) by 2028.

Skill Deficit And Gap

While in the past decade, governments at the Centre and states have made remarkable efforts to skill India’s youth, a lot more has to be accomplished. There are two kinds of challenges with respect to skilling. The first, skill shortage/skill deficit, means there are not enough numbers of a particular skill to fill a particular occupation. A recent study calculated that 30 percent of jobs requiring tech skills in India are currently ‘hard to fill’. The difference in the rates at which demand for talent is growing and tech talent is being made available, makes such jobs hard to fill. According to the National Council for Skill Development and Entrepreneurship, 53 percent of Indian businesses could not recruit in 2019 due to skill shortage!

The second, a skill gap, is a qualitative assessment by the employer that focusses on people who are supposedly skilled, but remain unemployable because their skills are not good enough for efficient delivery on the job.

There is a huge skill gap in India as can be seen from the fact that only 30 percent of graduates from Industrial Training Institutes (ITIs), which are the backbone of vocational skill programmes in India, get placed. Only a small minority venture into entrepreneurship, and the rest are unable to find jobs.

Invest In Skill Development

Often, students planning to pursue science as their major are mockingly asked, “Will you end up in an IIT (Indian Institute of Technology) or an ITI (Industrial Training Institute)?”, implying the wide gulf in the calibre of the two streams. Perhaps, its time society stopped considering vocational education as the ‘less smart’ option — a perception that could change only when ITI graduates earn better salaries.

Industry needs to play a vital role here by paying a premium to skilled workforce. While it may be apparently cheaper to hire untrained labour — the costs of training, mistakes, and lower productivity can all be overcome by paying a premium for skilled graduates. In addition, the industry needs to see partnerships with the ITI’s, colleges and universities as an investment in their future productivity.

The government can incentivise companies for hiring skilled workers. It can also subsidise skill training by supporting universities to set up learning labs and upgrading them according to the evolving demands. Universities may be nudged to update curriculum to be in sync with prevailing industry trends. Vocational pedagogy needs both focus on detail and an appreciation for the context of that profession. A mariner who does not love the sea and understand the science of communication, does not last long in the profession, no matter which school they graduated from.

India’s demographic dividend offers a great opportunity, with the proportion of its dependent population decreasing, and that of the working-age population increasing. However, this will not automatically lead to growth, unless there are timely policy interventions. The challenge of bridging the skill gap is urgent and vital to the government’s ambitions of making India a $5 trillion economy.

Vandana Vasudevan is Senior Fellow, World Resources Institute India, and Neharika Vohra is Vice-Chancellor, Delhi Skilling University.

Views are personal and do not represent the stand of this publication.