If it wasn’t already clear that India is walking a tightrope between demographic dividend and demographic disaster, a new working paper from Icrier, by Prateek Kukreja, provides fresh evidence of this. Using data from the 68th round of the NSS Employment and Unemployment survey, Kukreja shows that the educational mismatch—where a worker’s level of education (Kukreja, for the purposes of his research, considers education to be interchangeable with skill) is either lower or higher than the standard required to carry out her work—in India’s textiles and clothes (T&C) industry stood at a whopping 68% in 2011-12. This mismatch ratio is much higher than the overall educational mismatch ratio in Europe (33%) and even Turkey (54%). While 26% of the T&C workers in India were employed in jobs that required no formal education, 88% in ones that require upto eight years of education and 4% in jobs that require graduation or higher levels of education, the proportion of over-educated workers is drastically high. Close to 82% of workers with secondary education, 76.5% of those with higher secondary education, 48% of graduates and 45% of postgraduates in the industry are employed in jobs that require lower education levels. Levels of under-education are high, too, if not as much as levels of over-education—55% of workers with no formal education, nearly two-thirds of those with below primary education and 54% with primary education holds jobs that require higher education levels.
The appalling levels of under-utilised potential have a bearing on wages—as per one of the models Kukreja uses to estimate the wage impact of mismatched education, overeducated workers earn 18% less in terms of daily wage than similarly educated workers in a ‘matched’ job even though each additional year of schooling increases daily wage by 5.3%. It is intuitive, then, that these overeducated workers would be having high levels of dissatisfaction with their jobs. While Kukreja’s study considers data only for the T&C industry, it is likely that the picture is just as bleak for the manufacturing sector, which, in turn, means a mammoth employment problem in the country. Even as there is massive under-utilisation of potential, the mismatch also means that the hiring of low-skilled workers, who may be ‘matched’ for certain jobs, is pushed down as over-educated workers take their place. A 2014 paper by Sahana Roy Chowdhury, who was with Icrier at the time, published in The Indian Journal of Industrial Relations shows that the employment elasticity decline in the manufacturing sector between 2000 and 2010 was more pronounced for labour-intensive industries, indicating a lack of skilled manpower that brought about substitution of labour—exacerbating the employment problem.
The Integrated Skill Development Scheme for the textiles industry that aimed to create 15 lakh trained workers across segments of the industry by 2017, at the end of August 2018, had trained about 11.14 lakh, of which 6.84 lakh had found employment—more than a third, thus, are yet to find employment even after training. With growing automation, skill-benchmarks will only be pushed higher. The problem, thus, will only become more acute now unless skilling efforts shift to top gear.