India?s population is expected to be 1.8 billion by 2045 with most of it figuring in the working age group (15-64 years). Apart from the benefits arising from lower dependency ratios, the demographics are also expected to make Indians a major part of the global workforce over the next couple of decades. But the demographic advantages may not materialise if the Indian workforce remains largely unskilled.
As compared to industrially mature economies such as Korea, Germany, Japan and the UK, where at least 70% of workers between 15-29 years have formal vocational skills, the corresponding proportion for India is a dismal 2%. On the whole, India?s total training capacities are at a maximum of 3 million persons per year. This is rather insignificant given the annual addition of 12.8 million people to the workforce. It is also disturbing to note that dropouts from the formal education system increase sharply after students attain the age of 15 years. This is also the time from when labour-force participation increases sharply. The dropouts entering the workforce are hardly skilled for contributing productively to the economy and have poor employment prospects. The Planning Commission?s estimates show that more than 80% of Indian workers do not have skills consistent with job market requirements.
By preventing growth of the workforce in a manner that is productive and meaningful for the economy, the skill mismatch is constraining supply of labour for industry. This is in sharp contrast to successful export-oriented Asian economies such as Japan, Korea, Taiwan and China (more recently Vietnam) where supply of labour for export-oriented manufacturing was always uninterrupted. The skill gap is a key factor for India not being able to develop a diversified and competitive export manufacturing base.
The skill mismatch has been exacerbated by less emphasis on technical skills in India?s education system. India?s colleges and universities put more emphasis on the study of pure science, arts and commerce. While this has produced a large body of highly qualified scholars, their employability has been confined to narrow and niche areas.
Limited opportunities have forced many qualified scholars to take up low-paid jobs.
On the other hand, shortage of adequate people with appropriate skills has forced the industry to put high premiums on available skills. Thus, while highly qualified arts and science graduates are earning moderate salaries in qualitatively inferior jobs, several professionals with average skills are earning more than what their qualifications would otherwise fetch.
Correcting the existing distortion in India?s education system is an urgent imperative. The core issue in this regard is to offset the existing bias against technical training in the education system by expanding vocational and technical training capacities. The unsatisfactory level of skills on the part of Indian workers is, however, not just a result of lack of capacities. It is also a result of systemic deficiencies in the technical training system. The 11th Five Year Plan underscores the excessive focus on select training courses (particularly some applied engineering courses such as mechanical and civil engineering) with longer durations in India?s higher education institutions. This is in sharp contrast to China, which has a variety of short duration technical training courses imparting multiple skills. Most of India?s polytechnics and ITIs run dated programmes with poor infrastructural facilities and noticeable shortages in supplies of kits and tools. Further, there is a noticeable lack of interaction between industry and institutes.
India?s current target is to increase overall skill development capacity from 3 million to 15 million persons per year. The National Policy on Skill Development outlines the target of achieving 500 million skilled people by 2022. These are certainly laudable objectives. The key question is, how are these targets expected to be achieved?
Private training providers will need to play a key role in augmenting India?s technical training capacities. Furthermore, given the enormity of the targets, domestic private providers will not be enough. Foreign technical training providers need to step into the country?s vocational training system in a big way for fulfilling the policy objectives. Foreign collaborations should feature prominently in the public-private-partnerships (PPPs) in education.
Prospective foreign training providers from high-skill Asian economies such as Singapore can play an enabling role in India. Singapore is a particularly feasible choice given its well-developed technical education infrastructure of global repute. Singapore polytechnics can impart a wide variety of technical skills specific to workplace requirements in a knowledge-driven economy. The bilateral Comprehensive Economic Cooperation Agreement (CECA)?probably India?s most successful bilateral economic treaty till date?provides an enabling framework for trade in education services between India and Singapore. Such trade can be facilitated by the use of English in both countries as the medium for instruction. From a Singaporean perspective, investing in India?s technical training can help it in nurturing a workforce capable of meeting some of its own requirements of skilled labour in the longer-term time horizon.
Education?particularly technical and vocational training?is expected to be a cornerstone of India-Singapore collaboration in the days to come. This was iterated at the recent ?Singapore Symposium? organised in Delhi on December 16, 2009 by the Institute of South Asian Studies (ISAS), Singapore and the Confederation of Indian Industry (CII). A take-off in the desired direction can help India in addressing a significant part of its training requirements.
There are, however, some ?home-grown? issues that India needs to address before it can expect Singapore and other foreign training providers to set foot in the country. India?s current policies pertaining to foreign education providers need to be looked at carefully. There are guidelines issued by the All India Council for Technical Education (AICTE) in this regard. However, ambiguities in the interpretation of policies continue to remain. An important example is that of the division of authority between the University Grants Commission (UGC) and the AICTE. Technical programmes awarding degrees need to be approved by the UGC while those offering diplomas require sanction by the AICTE. These policies create confusion for service providers unfamiliar with India. Furthermore, issues pertaining to identifying capable local partners are also tricky. Lack of effective accreditation and certification mechanisms have resulted in growth of several institutes with questionable quality. However, for foreign training providers, it is difficult to judge these. This can lead to an erroneous choice of partners.
The vast business opportunities in India?s market for skill development are certain to encourage foreign technical training providers from Singapore as well as other economies to view India as a prospective investment location. However, domestic policy distortions might come in the way of such enthusiasm. It is important for Indian states and regulatory authorities to address these shortcomings at the earliest for making quick progress on bridging the country?s skill deficit.
The author is a visiting research fellow at the Institute of South Asian Studies in the National University of Singapore. Views are personal