This is not the only case where skilled workers seeking employment in Indian companies are facing disappointment with firms not paying them enough vis-a-vis their unskilled counterparts.
Krishna Kumar, HR manager at Cotton Blossom, admits the difference in wages is not much thanks to the global slowdown. An unskilled sewing machine operator at his firm gets paid Rs 4,750 and a skilled employee is paid Rs 5,850 per month.
“There is an economic slowdown with the factories closing and the UK market not picking up. In such a scenario, giving jobs is important. There is a government guideline for the minimum to be paid to the unskilled worker,” said Kumar of Cotton Blossom which has a tie up with IL&FS and Gram Tarang to source skilled labour as the two agencies train unskilled people and certify them. This is not the only company where the difference between the wages of skilled and unskilled labour is not much.
According to the National Skills Development Corporation (NSDC), many tier-II companies do not differentiate between the wages they pay to their skilled and unskilled employees which is not motivating the former.
“We feel companies like Andhra Pradesh-based Surya Kiran International and Jamshedpur’s RSB Energy, among others can increase salaries of their skilled staff so that they stay motivated,” said an NSDC spokesperson.
Data shared by the council show Bangalore based Shahi Exports pays a CTC of Rs 6,500 per month to a sewing machine operator while an apprentice for assembly line production operations at Samsung gets Rs 7,500 per month. Compare this with relatively smaller firms where NSDC officials say there is scope to improve salaries.
The NSDC projects and incremental requirement of 347 million personnel — both skilled and unskilled — in 21 high growth sectors by 2022. However, as per a recent Ficci-E&Y report, multiple pointers indicate serious gaps between the output of skill development institutions and industry requirements. Of around 0.4 million engineering graduates every year in India, only 20% are readily employable.
“By 2020, the country is expected to face shortage of 13 million medium skilled workers, posing a big impediment to labour intensive sectors. The five sectors that are expected to create a majority of jobs are infrastructure, auto, building and construction, textiles and transportation,” the report says.
NSDC's CEO and MD Dilip Chenoy attributes this state of affairs to companies not paying the refund fees to training agencies after the placements take place. Usually, the training agencies get one-month salary from the company which hires the skilled person.
“The industry pays a fee to the training organisation to incentivise it. Many times this fee is not paid and though it does not lead to a decline in the number of people coming to us to get skilled, they are discouraged,” Chenoy said.
In fact, NSDC-funded partners have been working on innovative models of payment, such as 10–20% of the fees being paid up front, with the rest either paid in installments/on placement with a corporate. In some cases, part of the fees is recovered from the employers as a placement fee. In another initiative, a vocational loan product was developed with banks. This allows the trainee to avail of an unsecured loan for as low as $90.
Garment manufacturer and exporter Cotton Blossom has 1,400 employees of which more than 800 have been hired through the skills network since 2010.
“We approach these two agencies for skilled people and after a year, they get paid anywhere between Rs 7,000-10,000 depending on the skills. We have hired a lot from our skilling partners as they get positive feedback from the villages from where they mobilise skilled workers,” added Kumar.