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BW Businessworld

The Skills Shortcoming

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Recent forecasts predict that India will become one of the major economies shaping the world’s future. Its size, its youthful population and its reform path, even though halting, are seen as propelling the country towards greater power and influence in the world. The latest forecast by the US National Intelligence Council (NIC) Global Trends 2030 is no exception. “In 2030, India could be the rising economic powerhouse that China is seen to be today,” it notes. 
With the exception of the NIC report, such forecasts do not often emphasise the obstacles that India would have to overcome in order to realise this potential. A key lacuna that needs to be remedied is the skills gap separating India’s aspiring youth from jobs that would ensure them a prosperous future.
The NIC report says that while India’s demographic dividend (69 per cent of its people will be aged 15-65 in 2030) will help it overtake China’s growth rate, the challenge will be to find jobs for its large youth population. “To maximise its advantage from the greater proportion of youths, however, India will need to boost its educational system, both attainment and quality at lower levels,” the report states. This problem is not in the future, however. It is today. Although nowhere near the level in some European countries or in South Africa (where 25-50 per cent of youth are unemployed), joblessness among India’s growing youth already poses a threat to social stability. 
The shortage of employment opportunities is compounded by a lack of training. In an important report released earlier this month, McKinsey Center for Government dissects the reasons behind what it calls the “twin crises of a shortage of jobs and a shortage of skills”. The report, entitled “Education to Employment: Designing a System That Works”, and covering nine countries including India, Turkey and Brazil, found that 53 per cent of Indian employers are unable to fill entry-level vacancies mainly because new graduates lack the right skills. The average number of vacancies by country for large employers remains the highest in India.
The gap in the perception of skills needed is striking among education providers and employers. While 83 per cent of education providers believe that students are adequately prepared for the job market, only 52 per cent of Indian employers agree. Unless both sides can be brought onto the same page, finding jobs for ordinary high school or college graduates will continue to pose a challenge.
The problem is further exacerbated by the youth’s lack of confidence in the value of post-secondary training or education. Although the cost of education is low on the list of concerns of Indian youth, they were the most pessimistic about improving job prospects through further education. The report’s authors were struck that the youth felt that “their socioeconomic background will largely determine their future occupations and career”. This sense of being trapped, born perhaps of the caste system, rigid familial structures, endemic corruption and an absence of meritocracy, makes the challenge of preparing the youth for a 21st century workplace even thornier.
The report notes recent efforts by private companies, trade associations, non-government organisation (NGO) and government agencies in trying to bridge the skills gap. India’s NGO Pratham Institute for Literacy Education and Vocational Training has sent outreach workers to villages to recruit youth for short training with assured jobs at the end. In the past six years, they have trained over 10,000 young people, most of them disadvantaged and lacking in formal education. Companies like Larsen & Toubro, Wipro and Infosys have been recruiting students with or without engineering degrees and training them for specific jobs required by the companies. 
Another example of skills development through private initiative is a for-profit venture, IL&FS Skills, one of some 50 private partners selected for support by the government-funded National Skill Development Corporation. Funded by private charities, government and corporations, they have recruited in 2012 alone some 100,000 rural youth for training and job placement — from computer repairs to welding and hospitality services. 
However impressive these initiatives may be, they are but a drop in the ocean. The yawning skills gap that India needs to fill totals 500 million, but, in the meantime, the frustration of India’s ambitious but under-skilled youth is growing.
The author is director of publications at the Yale Center for the Study of Globalisation and Editor of YaleGlobal Online 


(This story was published in Businessworld Issue Dated 31-12-2012)