Harnessing the demographic capital: how effective are skilling programmes?

A review of initiatives so far and what needs to be done to improve them

Dr. Chavi Asrani and Dr. Palakh Jain | June 2, 2020


#Economy   #labour   #emlpoyment   #skills  
(Representational image: GN Photo)
(Representational image: GN Photo)

Probing data concerning increased job creation and the decline in unemployment has been holding the attention of economists and been subject of discussions in several think tanks in the preceding months. The NITI Aayog reports that 3.53 million new jobs were created between September 2017 and February 2018 and 7 million people could have been added to the payroll in fiscal 2018. These numbers are based on the data of the Employees' Provident Fund Organisation (EPFO) and Pension Fund Regulatory Development Authority (PFRDA).

Experts have been examining the real job market situation vis-à-vis the above numbers. Many regard it is the formal sector which has witnessed the growth, and overall unemployment scenario is still dismal. Even while economists have taken a contrary stance on the data published by EPFO, there are unsettled questions connected with these fresh employment opportunities. These questions include: Is the growth in job creation leading to skill development? If substantial formal jobs are created, are these opportunities sustainable? Do the new employment offerings result in wage premium? If the response to the above questions is affirmative, it hints there is a sizeable overhaul in social security that India’s job market is allowing.

Response to these inquiries depends on the vibrancy and the growth of the services sector. Since the 1990s the share of agriculture sector in India’s GDP has weakened from about 30% to about 17% in 2017-18, while that of the services sector has progressed from about 45% to 60% during the same period.  While most of the workforce has shifted from the agricultural sector to the service industry, two fundamental points demand attention, while assessing the growth of the services sector. One, most jobs in this sector demand skills of some sort which was not there in agriculture and; the agriculture sector had the indulgence of disguised unemployment which is absent in the services sector. So in today’s services-led Indian economy, each member of a family has to account for his/her skills. On the positive front, each member earns for his/her ability, and those with better skills will command a wage premium.  These structural changes of the Indian economy have led to alterations in the task content of jobs, and therefore there is a concern around skill creation. Shortage of skilled workforce is something India has lived with several decades.

With the advent of the ‘fourth industrial revolution’, concerns are foremost for the prospects of employment and intensifying income inequalities. The Information Communications Technology (ICT) revolution has obliged the wage payouts of skilled worker vis-à-vis unskilled workers globally. A study by Carl Frey and Michael Osborne in 2017, ‘The future of employment: How susceptible are jobs to computerisation’, provides evidence that over the next two decades 47% of the US workers are at risk of automation. The World Bank’s ‘World Development Report, 2016’ also observes that 57% of jobs in the Organisation for Economic Co-operation and Development (OECD) countries could be automated over the next two decades.

However, Asian Development Bank’s ‘Asia Development Outlook 2018’ report reveals that while there exists growing anxiety that technological progression could lead to extensive job loss, there is optimism about developing Asia’s job outlook. The report explains that rising domestic demand in these economies could offset job displacement driven by automation.

Further, technological advances coupled with economic growth would generate brand-new jobs and industries. Various new professions have come up in the ICT sector, and new careers will arise in healthcare, education, finance, insurance, real estate, and other business services. Nonetheless, technological headway has altered the workforce’s skills requirement, which may instigate joblessness as some firms downscale or close. Thus, the key to deal with the technologically induced changes is primarily through upskilling.

A recent study by the Indian Council for Research on International Economic Relations (ICRIER), titled ‘Changing Task Contents of Jobs in India: Implications and Way Forward’, confirms that in line with the worldwide trend, non-routine cognitive analytical and interactive task intensity of jobs has augmented in India, whereas manual task intensities have weakened. However, unlike in the US and Europe, the routine cognitive tasks have not decreased in India. The analysis records that technology is the primary factor that led to the increase of non-routine cognitive analytical and interactive functions in India whereas structural change and alteration in the labour supply shaped the manual task content.

To secure the potential of the demographic advantage (the median age in India currently is about 28 years), India needs to ensure that its workforce is aptly skilled. Further, even though human capital is not transferable by nature, it inevitably spills over via knowledge and information sharing and also passes over generations. Fortunately, these kinds of jobs are flooding the Indian market, which can be taken advantage of.
 
To get the much out of India’s job-seeking youth, the Indian government had established the National Skill Development Corporation (NSDC) in 2010. The public-private joint venture aimed at upgrading skills of youth including school dropouts through various training schemes and programmes. The NSDC’s flagship programme, ‘Pradhan Mantri Kaushal Vikas Yojana’ (PMKVY), was a novel scheme launched in 2015 focussing on skilling the school and college dropouts. Although the placement was low initially, PMKVY II launched in 2016 aims to skill one crore Indian youth by 2020, with an outlay of Rs 12,000 crore. According to NSDC data, between November 2016 and February 2018, over 13 lakh candidates have been certified under the Yojana’s Short Term Trainings Programmes and Special Projects. Under the third component of the scheme, Recognition of Prior Learning (RPL), targeted at those with prior work experience and who require up-skilling and certification for better prospects, over 4.5 lakh candidates were certified till February 2018. Further, besides providing training according to the National Skills Qualification Framework, the PMKVY also focusses on developing soft skills, entrepreneurial traits, and enhancing financial and digital literacy.

The need to introduce the skilling programmes in India has been the failure of the formal education system. The Pratham Foundation’s Annual Status of Education Report (ASER) since 2005 has been writing about India’s schooling status. Time and again the report has emphasised the weakness of the Indian education system. The ASER documents that although over 95% of children are enrolled in school, they are not acquiring the foundational skills that could enable them to propel themselves forward. One of the reports finds that in 2014-15 only 44% of grade VII students could solve a grade IV level division problem and about 75% of class VII students could read grade II level text.

Although the most prominent skill India scheme, PMKVY, is a step in the right direction, it is not directed towards cognitive skill formation and, thus, cannot be a substitute for formal education given at various levels. But in the intervening period, it’s a welcome fix from getting the youth disillusioned and keeping them in the workforce. Strengthening the Indian education system is crucial if India is to realise its potential growth amidst the destructive technological advancements. Programmes like PMKVY cannot be substituted for the weak education system if India aims to harness the full potential of its demographics and the ICT revolution. However, in the interim phase, these programmes shall majorly benefit the first generation learners and cohorts who have been on the unfortunate side of the Indian education sector.

This returns our attention to three questions: whether adequate skills have been acquired, whether such jobs can be sustained resulting in social security and if the people with skills are getting a wage premium. On the surface of it PMKVY, with its several features, appears to be echoing these inquiries. In reality, answers to such questions are complicated and not straightforward. However, if these answers are not attained the objective of such training programmes is only half met.

Meanwhile, to ensure that the PMKVY 2016-20 delivers tangible results, the NSDC has been organizing Rozgar Melas (job fairs) across districts, to provide a platform for employers and employees to interact. Till May 2018 PMKVY connected the job candidates to over 7,000 employers via about 800 Rozgar melas, which included wide-ranging industries, from e-commerce to manufacturing. SROI can help NSDC and the Ministry of Skill Development revisit their curriculum if need be. 
 
The Ministry of Statistical Implementation and Planning’s report, ‘Youth in India 2017’, claims that PMKVY has the potential to increase India’s skilled labour force, which in turn can directly lift the overall quality of life of about 35% of the population. However, an independent socio-economic impact valuation of the training programme would enable us to assess the effectiveness and sustainability. Observing the socio-economic outcomes for those who have undergone training under PMKVY and comparing it with youth who were not a part of the training programme will allow evaluating the real cost and benefit of the skilling programme. Further, while the Yojana envisages providing job placement, it is also critical to ensure retention of trained youth in the labour force to ensure that the programme is effective. Currently, under the Yojana the skilled candidates are tracked for three months, but tracing the candidates trained under the scheme for a more extended period post the PMKVY training is necessary to help understand the effectiveness of the Yojana better.

Dr. Chavi Asrani is Consultant at Indian Council for Research on International Economic Relations (ICRIER), New Delhi. She can be reached at chaviasrani@gmail.com
Dr. Palakh Jain is Assistant Professor in School of Management at Bennett University. She can be reached at palakh.jain@bennett.edu.in

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