While the government has fixed the problem by insisting that all foreigners enter only on business visasthere are no visas to be given for unskilled/low-skill work, for which Indians are availablethe problem actually lies in how skill has been defined. Skills are defined typically as occupational skills where workers have the requisite training/qualification for a particular job description. If we look at the problem from the employers point of view, it is not a question any more of whether there are Indian electricians or welders, etc in abundance. As an Indian company executive employing Chinese labour noted, the Chinese would complete the job in 15 months while the Indians would take 8 years. The minute the time dimension enters, and therefore cost overruns loom, skill takes on a different meaning. Of course there is the added aspect of quality of output. In short, efficiency and productivity are not a part of the skill sets defined. The sad reality is that even while on paper many Indian workers have the requisite skills, they are just not employable.
And this is not just at the lower end. The problem exists at the high end too. Estimates put less than a third of Indian IT graduates as being actually employable in the IT sector; for engineering graduates this share is 25%; in fact just 10% of professionals with any kind of degree are suitable to be employed in multinational companies.
The Institute for Employment Studies put it together in a paper way back in 1999, saying that high productivity can be achieved when knowledge and skill levels are combined with the right work attitude. People also need the capability to exploit their skills and to market them. Essentially, this involves four crucial aspects:
* Knowledge and skills: basic skills, such as reading, writing, and numerical skills or subject and occupation-specific knowledge at different levels
* Personal attributes and attitudes: reliability, common sense, attitude towards work, integrity, problem solving, initiative, self-management and commercial awareness
* Marketing and deployment skills: career management, job search skills, and approach (i.e. being adaptable to labour market developments, realistic about labour market opportunities and willing to be occupationally and locationally mobile)
* Presentation: the ability to get a particular job, to demonstrate assets like the presentation of CVs or interview technique
But the ability to actualise employability assets depends on external factors, an individuals personal circumstances and the interrelationship between the two. Creating an environment that raises employability calls for action on many fronts, such as:
* Fixing the education systema huge task with numerous issues, as each and every entrant and dropout of the current system would testify
* Delinking public financing from the delivery of educational and training services
* Encouraging learning while earning and learning by doing to enable continuous skill upgradation
* Changing labour laws like Apprenticeship Act, Employment Exchange Act, Contract Labour Act
* Reducing regulation and increasing supervision of training centres and educational institutes to ensure outcomes match the desired targets
The magnitude of the problem is gravethe problem of unemployability is essentially a problem for the youth, who form the work force of tomorrow. Currently 57% of youth require some form of skill training or upgradation, that is, 82.5 million people (see graph). The India Labour Report 2007* by TeamLease Services and Indicus Analytics estimated the cost of creating a more employable workforce at 10% of GDP. Only a quarter of this is being done at present. But the returns to this investment are huge, generating extra income to the tune of 61% of GDP.
The government can act tough with foreign workers, but that hardly addresses the basic reason behind their being employed here. In fact, the government should know that unless it removes the structural deficiencies, it will end up with larger domestic tensions than those that raise their heads today. With large regional differences, this country cannot afford to take this matter lightly. Skill deficits have heavy social and political consequences, which are already being reflected every day on the news.
As the India Labour Report 2007 put it, We believe that the skill deficit is more dangerous than the infrastructure deficit because it not only reinforces inequality but also amplifies it. The longer it takes for the government to get its act together, the worse the situation will become.
* Report available at http://www.teamlease.com/images/reports/LabourReport-FinalB.pdf
The author is chief economist at Indicus Analytics firstname.lastname@example.org