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BW Businessworld

The New Employment Exchange

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Most readers of this magazine will not be familiar with this institution. Spread through the nation's 612 districts across 28 states and seven Union Territories, there are 969 registries you could go to and plunk your name and detail down if you are looking for a job. Fuddy-duddy though they might be, the government-run employment exchanges have over 40 million people looking for work registered with them —from rural to urban India.

Official estimates show that in 2012, India will have to create over 51 million jobs. One would think that given the number of people registered with the exchanges, meeting the demand should be a lot easier than it is. But in 2010, these exchanges filled in a little over 500,000 jobs. Because they are government-run, most of these jobs were in the government or quasi-government sector. Privately owned businesses — where most new jobs are — do not use these repositories of potential employees.

One reason could be that employment exchanges do not have the kind of people firms may wish to employ. Second, labour is on the concurrent list — meaning both central and state governments can establish labour policies and enact legislation for job creation. All too often, the two levels of government do not act in sync. Third, while the potential employment pool at the exchanges is large, the people on the lists may not have the requisite skill sets that potential employers are looking for.

For India to maintain its current pace of growth, millions of jobs have to be created each year. Given the country's demographics —there are more than 200 million people in the working age group of 18-59 years of age, with millions being added each year — the urgency to modernise and make the employment exchange system effective cannot be emphasised enough. Is anything being done?

From Slow And Unsteady...
In his July 2009 budget speech, finance minister Pranab Mukherjee announced a plan for modernising employment exchanges. At a meeting of labour commissioners from all over the country held in June this year, the urgency of modernising employment exchanges across the country was again emphasised. "This is the most immediate need — to address the skill gap in various industries," says Sharda Prasad, director general, employment and training, at the Ministry of Labour and Employment.

"We discussed a report prepared by Hyderabad-based National Institute of Smart Governance and consulting firm Ernst & Young (EY), which recommended creating a national Web portal that would link all industries with the Industrial Training Institutes and vocational training institutes for effective mobilisation of human resource," he adds.

The 2009 Union budget earmarked Rs 2,167 crore for the modernisation plan, of which about Rs 1,800 crore would come from the Centre, while the rest would come from states. The project, which will take 22 months to implement, is awaiting approval from expenditure finance committee and the Cabinet, says Prasad.

Over the past four years, Haryana, Orissa, West Bengal and Karnataka have announced modernisation plans to convert these exchanges — a misnomer, because there is no exchange or matching of potential talent with real jobs on the required scale — into efficient job portals. One, Karnataka has come with an approach, the public-private partnership — that seems to be producing some encouraging early results.

...To Leading The Way
The state started off with pilot projects in two districts — Bijapur and Mangalore — with a private partner: TeamLease, a Bangalore-based staffing solutions company. The objective was to get private firms and companies to use the human resources registered at the two exchanges. At Bijapur, only 30 people got jobs in 2010. But in the first six months of 2011, that number has jumped to about 1,200. The Mangalore story is also similar: more than 2,600 jobs in the past 18 months after the centre tied up with TeamLease in early 2010.

So, what exactly did the government and TeamLease do? The first was recognising the ground realities. "The existing employment exchanges act only as repositories and are reactive in approach," says Vishnukanth Chatpalli, executive director at the Karnataka Vocational Training & Skill Development Corporation, an organisation under the state's department of labour. "We realised that the employment exchanges have to go beyond a registration centre, and have to be equipped to do assessment, counselling, training and finally employment."

It has been recognised that there are more jobs in the private sector compared to the public sector, and that competencies are to be tuned to present needs. It was not easy; the exchange acted as repository of candidate data and job openings, but had no system of matching supply with demand. There was not attempt to match job requirements with candidate skill descriptions. Mismanagement was rampant.

After private partners such as TeamLease were brought in, what followed was a complete overhaul of the old system. "Our focus was not just on generating employment, but on also on increasing employability," says Neeti Sharma, vice-president, TeamLease. First, there was assessment: all candidates who walked in to the centre were assessed for their core area of expertise. Second, candidates were tested to judge soft skills and general awareness about jobs. Third, candidates were recommended for short-term training to sharpen soft skills and the use of computers. Finally, they were sent to job interviews when they were deemed ready. Throughout the process, candidates were counselled regularly.

Positioning The New Avatar
The revamped exchanges were re-branded as HRD (human resource development) centres, providing jobs (as interns, apprentices, temporary or permanent) and employability solutions (counselling, assessments, certifications, training) under one roof. "They are supposed to act as catalysts for the shift to organised employment," says Rajesh A.R., business head of iRize, the employment services arm of Manipal Group, and one of the public-private partnership firms contracted recently.

iRize plans to provide training in soft (behavioural, communication) and hard skills (welding, handicrafts) at the HRD centres through Manipal's vocational education company, India Skills. "We will also collaborate with local training vendors in areas where we are not present, and take candidates to colleges to fill the academic gap," says Rajesh.

Besides expertise and knowhow, private partners also bring in recruiters. For instance, TeamLease got more than 300 companies to recruit at the Mangalore centre, and almost an equal number at Bijapur. In Mangalore, since November 2009, TeamLease has helped about 18,000 people either get training or employment.

Apart from iRize and TeamLease, the Karnataka government has tied up with Laurus Edutech, a Chennai-based vocational education provider, as partner. For each centre under public-private partnership, the private company provides four staff — career counsellors, a field- sales executive and a business development executive. It trains the government staff on business development and general management at the centres.

Counselling government staff for a redefined role was a challenge. "The immediate reaction was reluctance and to some extent, hostility," recalls Sharma. But resistance gave way to support as the staff realised what their profiles would be in the emerging ecosystem. "The government has been supportive," Sharma adds. "Frequent visits by the labour commissioner and the minister were a big boost to the morale."

Show Me The Money
Candidates registered at these exchanges are not charged for assessment, counselling or training. The government foots that bill. "The state government is spending Rs 30 lakh per HRD centre annually, and Rs 1 lakh per month towards recurring costs," says Chatpalli. Computerised databases and a professional look and feel to the exchange, and salaries of support staff are the other expenditure, in addition to a fee of Rs 50,000 per month, to the managing companies for each centre.

Karnataka has also set up a private employment exchange — the Karnataka Employment Centre (KEC) — with TeamLease in Bangalore. "The KEC's model is the reverse of the HRD centre," says Chatpalli. "The private partner invests in the infrastructure — physical and technical — and the government subsidises it on a per-candidate basis."

The KEC is about a year old and has been deemed a success. "We have placed about 1,300 candidates in the past 10 months and have trained several people," says Sharma. TeamLease showcases KEC as a futuristic employment exchange. Walk-in candidates register with the TeamLease database from a phone booth that connects them directly to staffing executives, where academic and professional data are entered into the system. Counselling and training follow, depending on skill sets. The fee structure is quite different here. For assessments, the government pays TeamLease Rs 225 per candidate and Rs 15 for per hour of training per candidate. This system gives private players independence and is economically viable, being a low-margin, but high-volume game.

Other states are following suit. Employment exchanges in Maharashtra, Tamil Nadu and Gujarat are being computerised. Maharashtra is planning to decentralise employment services. "As a first step, we will offer registrations and job posting services from our 12,000 citizen service centres (CSC) across Maharashtra," says V.K. Gautam, commissioner, employment and skill development, Maharashtra. "Through the CSCs, we will be able to extend such services directly to villages." They are privately managed, offering several services to each cluster of four villages.

The beginnings are encouraging, but the road is long and winding. The transition from registry to portal is not just a technological shift, but a cultural one too. Hopefully, the objectives will not get lost in translation.


(This story was published in Businessworld Issue Dated 08-08-2011)