When a country of 1.3 billion is also the fastest-growing major economy, it has to be on the radar of every global investor. But more importantly, the factor that enhances India’s attractiveness as an investment destination is the median age of about 28, which implies a predominantly ‘young’ population. However, despite adding 10-12 million to our work force annually, are we generating enough jobs? Are the workers equipped to meet the emerging job requirements?
Do we have the right skilling infrastructure in place? A closer look at the composition of our workforce highlights several disturbing aspects. In both the manufacturing and services sectors, there is a gross mismatch between skills that employers expect or demand from workers and the skills that workers actually have. Majority of our workforce is either unskilled or semi-skilled. Only 4.69% of our total workforce has formal training vis-à-vis 96% in South Korea, 80% in Japan, 75% in Germany and 50% in China. Our skilling infrastructure is not up to the mark and the education system is way short of enhancing the industry-preparedness and employability.
A lack of regular industry-academia interactions is leading to outdated curricula, resulting in unemployment. To address this, the central government has initiated a Skill India Mission. The National Skill Development Corporation (NSDC) has been re-modeled to carry out financing of skilling initiatives. However, one thing that the central and state governments must realise is that we are at the cusp of the fourth Industrial Revolution. The technological advancements are re-writing the rules of the game in every sphere, and many of the present jobs and skill sets will soon become redundant. Therefore, all skilling and up-skilling initiatives must be industry-led, because it is only the employers who can provide first-hand information on what kind of skill sets are required.
Under the corporate social responsibility (CSR) obligations, the maximum spending by industry is happening on education and skill training. This needs to be encouraged. If government allows tax deduction on the CSR expenditure towards training, this will further incentivise the corporate sector to spend on training. A mechanism whereby government and industry resources can be pooled together in the form of a public-private partnership (PPP) is also worth exploring. The education system also calls for a major overhaul in order to “synchronise with global technological developments”. In countries which churn out a higher proportion of industry-ready workforce, the education system acts as the primary incubator.
However, in India, just about 45% of our fresh graduates are employable. Our education system needs to be more case-study based so that students can develop their cognitive and intuitive skills and are able to cope with real life situations. Bridging this skill-gap presents a huge investment opportunity. Going forward, it will be essential to rope in foreign training institutes from developed nations to stay ahead of the curve. If India can successfully implement this government-corporate-academia partnership to set up the necessary skilling infrastructure, it can emerge as the global supplier of a workforce equipped with new-age skill sets. Investors will be more than willing to get involved in projects which have government support, active involvement of corporate sector and collaboration from training institutes.
There is no restriction for investments in education service provider companies as these are not regulated. Therefore, there will be no dearth of private funds. In fact, if the government plays its role as a facilitator well, a time will come when the government will not even need to allocate funds for training. Institutionalising a “train the trainers” programme for knowledge dissemination can have a cascading impact on the economy. Led by the government, an interactive web forum can be developed to enable the corporate sector to engage with education and training institutes from across the world. Bringing in foreign experts and trainers will facilitate our trainers to catch up faster with the latest developments, while new institutions that come up subsequently will be in a position to absorb the growing number of trainers.
To enable faster dissemination of knowledge, creation of quality digital content on training modules is also necessary and these must be available to all on the internet. Free digital content will encourage more people, esspecially self-employed people and entrepreneurs to proactively work towards improving their skill sets. Like developed nations, a system of licensing and regulation can be introduced whereby workers from different sectors can update their skills at regular intervals. In the present scenario, where skill requirements change frequently, a similar system of annual licensing and certification must also be introduced for the trainers so that they can also keep updating their knowledge.
Vice-chairman, Srei Infrastructure Finance Ltd