The skills gap and what it means for your business

September 21, 2015 12:03 AM

It is an opportunity for corporates to move away from a narrow vision of CSR to a broader ‘corporate responsibility’—leading to a people-friendly business environment

Skill-India-skill-gapThe fact is that 30 lakh graduates join the Indian job market every year but only about 5 lakh are considered employable.

It is a sad reality that even today people perceive skilling and vocational training as measures of last resort—meant for those who have not been able to progress in the formal academic system. This can be attributed to several factors. One is that industry still tends to treat skilled and unskilled persons at par—thereby depriving skilling of any meaningful economic incentive. Also, vocational training programmes neither are up-to-date with current industry requirements nor linked to employment.

The fact is that 30 lakh graduates join the Indian job market every year but only about 5 lakh are considered employable. The sectors facing acute manpower shortage include IT, BFSI, pharma, healthcare, infrastructure, retail, auto and consumer durables, amongst others. By 2025, India’s demographic dividend is expected to contribute 25% of global workforce. Therefore, the magnitude of the challenge is enormous.

While the economy grows at a decent pace, the demand for labour is increasing tenfold. The real issue we are faced with is not lack of jobs but lack of employable, skilled talent that can keep pace with the fast expanding industry. However, due to our single-dimensional, textbook-heavy style of education, young graduates entering the workforce are not equipped with the life skills they need to qualify as employable. According to NSDC, the growing skills gap in India is estimated to be more than 25 crore workers by 2022.

While employment augmentation remains a priority, the critical concern is that the young workforce entering the job market every year continues to lack the skills it needs to qualify as employable or require significant training investment once employed. With about 1.2 crore individuals joining the workforce every year, tackling the pressing issue of skills gap is imperative as it could derail India’s growth story.

Against the volatile business environment, talent has today emerged as the most important asset of a company. As the war for talent intensifies, strategic employee engagement initiatives offer companies an effective tool to attract and retain premium talent as well as the tipping point to enhance productivity.

Findings from Dale Carnegie Employee Engagement in India 2014 report indicate a high level of engagement amongst Indian workforce compared to the global average. But an alarming 52% of Indian employees remain somewhat dissatisfied in their jobs, signalling that companies have to take proactive steps to sustain engagement.

Increasingly, the private sector has been adopting CSR initiatives to skill its workforce. This has proven to be beneficial for the organisations themselves. For one, it leads to talent generation, creating an asset for them in the form of employees equipped with competencies and skills needed to achieve optimum results in their roles. It also leads to the creation of well-trained, qualified, well-rounded professionals who are fit to become part of the global market. This means higher levels of productivity, increased efficiency, lower turnover, and quality customer service.

A nation is said to be truly progressive only when it has an equitable society and, in order to do so, all stakeholders must pursue inclusive growth. It requires a multi-sectoral approach by diverse stakeholders to bring about collective impact to tackle critical issues which affect our future.

The mandate in the new Companies Act to spend 2% of an organisation’s profit on CSR has been a hot topic of discussion ever since it came into the public domain. While intense debates have taken place on how to best use these resources, it is social innovations that will ensure economic gains for every individual in our society. Indeed, ‘benefiting all’ is one of the most widely accepted definitions of CSR.

This context provides an opportunity for corporates to move away from a narrow vision of CSR to a broader vision of ‘corporate responsibility’, comprising actions that will help create a people- and planet-friendly business environment, thereby enabling generation of socially-responsible profits.

A holistic view of corporate responsibility will usher in innovation, collaboration and organisational transition that will not just make corporations commercially and socially viable but also provide the much-needed external thrust in augmenting government’s effort in achieving social goals.

Companies of all sectors and sizes are realising that they need a specialised function to manage their CSR agenda and partnerships. They have started moving away from using human resources or corporate communications to manage CSR initiatives as a supplementary activity. Businesses have a broad mix of views on how to execute their strategies, depending on their degree of comfort and trust with partners. Many organisations are keen to understand how they can consistently generate high-impact CSR actions.

It is crucial to acknowledge that corporate responsibility initiatives do not conform to a one-size-fits-all approach. Each organisation will approach this issue in ways that vary depending on the nature of its business model and operating strategy and, most importantly, the nature of its stakeholders. The current ecosystem for sustainable development encourages companies to realign themselves, move away from cheque-book philanthropy and embrace their obligation as a corporate citizen in order to maximise the return on their corporate responsibility investments.

As per the approach paper to the 12th Five Year Plan, the quality of employment in the organised sector is generally high. Significant employment generation is taking place in the tertiary sector, particularly in services industries. Self-employment and small business continue to play a vital role. Therefore, it is necessary to promote major employment generation activities like (1) agriculture; (2) labour-intensive manufacturing such as food processing, leather products, textiles; (c) services such as trade, restaurants and hotels, tourism, construction and information technology; and (d) small and medium enterprises.

The private sector could work in greater coordination and come together to address this issue. Corporates could participate actively in industry-led skill development programmes, and channelise funds allocated for CSR into funding and supporting skill development initiatives by the government. They could be instrumental in evolving the existing skill development infrastructure in India as per the changing market dynamics, which only the industry has the best knowledge about.

By Pallavi Jha

The author is chairperson & managing director, Dale Carnegie Training India

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