Can Reskilling Missions Defuse India’s Demographic Timebomb?

India needs to create hundreds of millions of jobs by 2050, besides replacing the many that will go out of fashion.

Perhaps the biggest policy challenge awaiting India is finding jobs for the approximately 280 million more workers expected to enter the Indian workforce by 2050. It’s a figure that has raised alarms within the United Nations, whose Human Development Report of 2016 highlighted India’s poor job-creation performance vis-a-vis China.

The problem is twofold – not just finding a job for new entrants, but for those already struggling to find employment. Despite two decades of rapid economic growth, between 1991 and 2013, only half of those searching for work obtained it. One reason is the slowdown in employment growth, with employment growth stagnant in all sectors since 2011. As an Economic and Political Weekly report stated:

There was an absolute decline in employment during the period 2013–14 to 2015–16, perhaps happening for the first time in independent India.

Very few are formally employed, which is why the 2011 National Sample Survey records unemployment at a low 2.2 percent. But these figures are seldom taken as accurate measures, especially when you consider that many take up contractless, low-paying jobs for want of a better alternative. As Montek Singh Ahuwalia, former Deputy Chairman of the erstwhile Planning Commission, explained, this comes under disguised unemployment.

Breaking out of such employment demands skill. And education is no longer enough. The unemployment rate for graduates is 18.4 percent compared to that of 2.2 percent for illiterates. In fields like engineering, more graduates are unemployed than are employed after college, with unemployment at 60 percent. A much-cited study backs up this argument less than 8% of engineering graduates were employable in 2016, based on a sample of 150,000 engineers.

Simply put, graduation is no longer enough to ensure employability. Employers across sectors are looking for unique job skills that the education sector has yet to provide. To this aim, the Skill India mission was launched, and the Ministry of Skill Development and Entrepreneurship was set up in 2015. The plan was to skill train 500 million workers by 2022.

Two years since that promise was made, it has since been abandoned. Rajesh Aggarwal, director-general of training and joint secretary in the skills ministry said:

We don’t want to chase any number. Whether it is 150 million by the National Skill Development Corporation (NSDC) and 350 million by ministries — we are delinking it, not attaching any number.

The Government’s flagship skilling programme, the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), also proved underperforming. Of its three million trained candidates, fewer than ten percent received placement offers. The government has since tried to rejig its approach with a better understanding of supply and demand within the job market.

Representational Image; Teenagers learning carpentry; Image – 7MB

By and large, the government’s massive target was proving unmet. But companies had already stepped up in the government’s absence to train the youth. The IT sector, which employs 3.9 million workers, has been working on re-skilling employees to make them more competitive. But this is a drop in the ocean when it comes to the largest chunk of Indian employment – informal labour.

Informal labour contributes to about half of the national income. But 90 percent of its workers operate as self-employed. As such, it’s estimated that only 2.5% of informal sector workers have received any kind of formal training, with 12.5% receiving non-formal training at some point in the past.

How important is skill training for the informal sector? The answer depends on which aspect of this unregulated economy we look at. Skill training is most needed for those professions that are at risk of job loss caused by automation. Within the informal sector, agriculture and manufacturing emerge as fields where major productivity gains are possible through rethinking old professions.

India’s agricultural output, for example, maintains a low productivity compared with that of developed countries. Countries like Netherlands export nine times more in the value of produce than India does as a whole. The reason has to do with value-addition to crops. An issue with agricultural policies in India is that they focus on raising output rather than raising the post-harvest value. As the second largest producer of fruits and vegetables in the world, India has an extremely low rate of value addition and processing for its produce, at seven and two percent for fruits and vegetables respectively. This, in contrast to a rate of 80 percent in countries like Malaysia, Brazil and Thailand.

Skill-training is not just about teaching workers new skills but giving entrenched sectors new avenues of value-creation. As this Federation of the Indian Chambers of Commerce and Industry (FICCI) report states, skill-training programmes are on offer for everything from the vocational training of secondary school children to aeronautical maintenance and food processing.

But in some sectors, it may also be about changing mindsets. As reported by a data journalism portal, women seeking work in the hospitality sector must overcome several taboos to settle in their work. The reason being parents unwillingness to see them occupy ‘low status’ jobs and of landlords unwilling to rent out to single women who work far from home. Hospitality is important and lucrative, with chefs earning far more than engineers in many parts of the country.

Above all, geography will prove important to skill training missions. The North-Eastern states stand poised to benefit from the completion of projects like the Trans-Asian Railway and the India-Myanmar-Thailand trilateral highway. Sectors that enhance trade and commerce, like logistics and warehousing, highways, mining, heavy vehicle driving etc show great potential for employment generation in the North-East.

India’s skill development mission will be key to defusing the demographic time bomb. It wasn’t long ago that this time-bomb was seen as a potential dividend. Turning a disaster into an opportunity will be the real goal of India’s skill mission, for both the private and public sectors.

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