Unleashing India’s demographic dividend

Published: April 13, 2015 12:04:29 AM

As the government builds industrial corridors, it needs to recognise that it is the classrooms where the leaders will be created to herald these industries

Make in India, India skills, India labouresWhile about 13 million youngsters join the workforce in India every year, the labour ministry reports that one in every three graduates up to the age of 29 remains unemployed.

There is a provocative dichotomy at play in India today. With over 600 million people below the age of 25 years, the country’s workforce is surging with young and aspiring workers; however, this “youth bulge” lacks the skills required for India to remain globally competitive. This decade and the next offer a golden opportunity for the nation to skill these youngsters and build a strong workforce. But what will it take to unleash the force of this much-touted “demographic dividend”?

While about 13 million youngsters join the workforce in India every year, the labour ministry reports that one in every three graduates up to the age of 29 remains unemployed. The wide disconnect between industry and academia continues to spin out graduates who are less-than-trained for the job. At the same time, India’s vast unorganised sector continues to employ unskilled labour, which is costing companies dearly. The skill gap is evident.

There are two areas of focus that emerge here. One, the organised sector, which needs more industry exposure to improve “employability” of graduates. Two, the unorganised sector, where the maximum potential lies in a country exploding with cheap labour. While Prime Minister Narendra Modi has set a clear agenda to develop India as a business and manufacturing hub, how the government tackles the demand for globally competitive skills in the workforce is where the rubber will meet the road. This will only happen if we are able to bring a gradual but sure change in the “mindset”. We need to inculcate a behaviour where we respect work. We need to move away from the mentality of acquiring degrees/certificates to acquiring skills in line with industry demand to get a job.

India’s education system has long been criticised for its lack of vocational training. According to aFIC CI report, India has around 5.5 million people enrolled in vocational courses, while the number stands at 90 million in China. Clearly, the education landscape has gaping holes in terms of fostering “employability”. The path from academic qualification to work experience seems broken.

In order to increase the employability of this burgeoning workforce, the emphasis needs to shift towards making soft skills and value-based training a part of the curriculum. Academic learning should be integrated with industry exposure through workshops where students can interact and learn from professionals as well as on-the-job training through internships, apprenticeships, etc.

But this cannot be achieved through arbitrary governance. What India needs is a structured approach, with phased government planning and policies. The government needs to play a big role as a facilitator and bring in the right policy framework to build this education/skilling infrastructure. Take Singapore, for example. Over the last five decades, Singapore has built one of the most globally competitive workforces by closely linking its skilling initiatives with the nation’s economic development. The government adopted a forward-looking approach to identify areas where job demand would increase and focused on building capabilities in these, while preventing oversupply in areas where demand was bound to decrease. The government realised early on that vocational and technical training will be crucial and, in 1992, the Singaporean ministry of education formed the Institute for Technical Education (ITE). Its agenda was to provide technical and career training to improve employability of graduates. Like any other country, technical training had its detractors in Singapore, with academic learning still accorded higher importance. But the government took it upon them to educate and inform the public on the need for “employable” skills. Today, youth unemployment in Singapore is amongst the lowest in the world.

Other countries in the region are now waking up to such government interventions, to keep their workforce competitive. A similar approach has been adopted in Malaysia, where demand for professional and technical skills is amongst the highest in Southeast Asia. In the Philippines, the government has set up a programme to expose high school students to vocational training so that they are open to more choices for further studies.

The scenario is also changing in the Middle East, where a major chunk of labour and skilled workers has traditionally been sourced from developing countries. In the UAE, the government is seeking to reduce dependence on non-native workers and diversify from its oil-based economy. It is apparent that the workforce is poised for a transformation. Workers will need a different set of skills—indeed, more knowledge-based skills that match global standards—to drive this vision.

In India, with its sights set on becoming a manufacturing hub, the unskilled labour market still plays a palpable role. The country can learn from global best practices to make this labour market more productive—identify the areas where job demand will go up, ascertain the skills required to feed into this demand and ensure that these reach the workforce in a phased yet timely manner. This can only happen if we have strong collaboration between government, industry and academia. One cannot keep looking at the other to take the first step. The government should look at simplifying the policy framework and measurement metrics so that one can understand and execute easily.

Under India’s current government’s skilling initiative, the chief sectors expected to generate maximum employment in the coming years have already been recognised. The top five are infrastructure, textiles, construction, auto and transportation. One vital way forward would be to partner with prominent players within these sectors for skill development and training that is relevant and hands-on. For example, while Industrial Training Institutes (ITIs) have traditionally been a government prerogative, but how relevant they are in today’s scenario? Are we measuring skilling initiatives from employability and employment perspective? Yes, from India standpoint, we need to gear up to handle volume, but what about quality? These are serious issues which need due attention as we move forward.

From a demographic standpoint, are we really tapping into our women workforce and retired professionals to bridge the gap between demand and supply? Women happen to be the largest consumers, happen to be the largest percentage in a graduate school, but why the numbers drastically reduce in the workforce arena? Why are we not tapping into retired experienced workforce who are looking at “career after career”. The sheer expanse of their geographic reach and localised operations put companies in the best position to train and tap into this high quality workforce.

It was the Nobel prize-winning economist Arthur Lewis who first pointed out that developing countries could fuel growth by transferring labour from agriculture to industry. China is one country that has exemplified this by building a massive labour force, which has made it the manufacturing hub of the world. But the country is now also reaching what is termed as the “Lewis turning point”, as wages rise and supply of surplus labour reaches exhaustion. The global economy will soon witness a skilled manpower shortage, and India is poised better than any other country to fulfil this demand.

The government has set the target to skill 500 million people by 2022 and its message to “Make in India” promises to create better jobs for this workforce. But to make India a truly global manufacturing hub and world-class business destination, it will need a globally competitive and strategically trained workforce. While the government builds industrial corridors, it needs to recognise that it is the classrooms where the leaders will be created to herald these industries. By giving this its due emphasis, India cannot just be developed into an attractive business destination but also a global powerhouse of skilled workers. The next 10 years will be critical towards this. Is India prepared to rise up to the challenge?

By Sanjay Modi

The author is managing director, Monster.com (India, Southeast Asia, Hong Kong, Middle East)

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