A Rs 15,000-crore public-private plan, 10 mn skilled labour a year. Can it work?

It's been dubbed the most forward-looking proposal in Budget 2008. When the FM announced the decision to set up a non-profit skill development corporation, he said it would harness a "demographic dividend". Failure, as the Economic Survey warned, would lead to a "demographic nightmare". Ask industry, and they say it's already close to a nightmarish scenario: every year, around 13 million young people enter the job market—but only about 2.5 million get enrolled for some sort of formal training. Even then, most don't get remunerative jobs.

Much, then, hinges on this ambitious, Rs 15,000-crore public-private partnership to create at least 10 million skilled people annually to feed the growing demand from manufacturing, services, construction, engineering and so on.

For now, the corporation's structure is in the works. Industry partner CII is mulling options to raise the remaining funds—the government has put down Rs 1,000 crore—and hopes a structure will be in place by April. S.S. Mehta, CII director-general, says, "The finance ministry has asked us to submit the approach paper on how the corporation will be operationalised. We'll give it by March 25." But how will
the scheme work? How will industry raise funds? And by when will it start showing results?

The corporation's role is broadly known: it will map areas where there are skill gaps, set industry standards for vocational training in association with the UK-based City & Guilds, and work like a regulatory body with industry looking after delivery. The aim is to design an accredited certification for industry-endorsed training, and continuously evaluate trainers. Under the new PPP initiative, roles at all levels will be clearly demarcated—the trainer, assessor and certifier will be independent functions registered with the authority, which will act as an apex body.

 "The authority will benchmark standards as the workforce will be trained to work overseas also," says Mehta. For now, the corporation is searching for a professional CEO.

The key, clearly, lies in finding good trainers—particularly as the target is to have around 10-15,000 of them. One solution lies in redeploying retired personnel, including from the defence sector. "In the case of defence personnel, many of whom retire at a young age, it will ensure that their skills and training will be utilised to train youngsters while they too get engaged profitably," says a senior finance ministry official. The carrot is an avenue for people to upgrade their skills to the next higher levels or garner multi-level occupational expertise. Currently, corporate India directly trains about 40,000 people annually via various short-duration vocational courses, but a government certification will impart more credibility and boost that number.



What about funding? Countries like Germany have for decades entrusted industry with the task of skill development. Even now, over 50 per cent of students there work in an industry for a year or two after high school before embarking on further studies. In case industries don't offer training facilities, they have to pay a levy to fund government efforts. Similarly, in South Africa and Brazil, industries have to fund training based on their production. Not surprisingly, Indian industry is studying the Philippines model—there the government provides relief equivalent to the investments made on training. Adds Harmeet Singh Sethi, head of CII's skill development cell: "We are looking at a system where the informal sector, which makes up 93 per cent of industry, comes on board and helps fund the project to make it more viable."

Interestingly, so far none of the 17 ministries and departments—including the rural development and labour ministries—have been tapped to provide inputs.

It is estimated that between the various ministries, the Centre invests around Rs 20,000 crore annually in various skill development, vocational training and entrepreneurship programmes. The new mission is also not expected to impact the existing PPPs forged by CII and several industries to upgrade facilities at the over 1,800 industrial training institutes (ITIs) in the country.

After a hesitant start, around 300 companies have come forward to take up the World Bank offer of Rs 2.5 crore funding for upgrading each of 1,396 ITIs to provide specialised training. "What is already in progress on the ITI front will continue.

Our effort is not to be competitive but improve on existing programmes and scale up skill development," says Mehta. Currently, the ITIs train about 7,20,000 children and other vocational institutes train one million people.

But with 300 million people expected to enter the job market in the next 19 years, that's clearly not enough. As things stand, "there is
not only a mismatch in the quantity, but also the quality of training...it doesn't always match up with job market requirements. And this is at the middle level," points out Sukti Dasgupta, ILO senior specialist on employment and labour market policies. According to consultancy firm Manpower, engineers, IT staff, technicians, sales representatives and teachers are the top five categories where there is a major shortage of skilled manpower. "Around 58 per cent of youth seeking employment suffer from some sort of skill deprivation, impacting productivity. The agony and ecstasy of the Indian labour market is that companies can't find suitable employees and workers can't find remunerative work," says Manish Sabharwal, chairman of TeamLease Services, a major placement provider.

Experts blame the lack of political will and a clear public policy for the present state of affairs, where millions are looking for employment while specialised jobs, even those of plumbers, electricians and masons, have no takers. As Sabharwal puts it, "Lack of skill development is hindering growth of the labour market on many counts—transition from school to work, farm to non-farm, rural to urban and unorganised to organised." Arguing that the already yawning gap in skills and job requirements has widened in the past five years, labour secretary Sudha Pillai says: "Technology development is generating its own skill requirements. Competition is so high everybody wants to cut costs, get the right manpower skills to reduce manufacturing costs."

It's clear that current efforts to impart skill development and vocational training are just not enough. Says Ashok Khosla, chairman of NGO Development Alternatives: "There's a huge resource underutilisation. Skill development courses have to be designed to match 21st century requirements. Apart from upgrading skills and ensuring placements, there's a need to impart literacy, help build number skills, hone the ability to properly execute a job." Be it a mechanic or a mason, experts underline the need to help trainees brush up on even softer skills like personality development.

While CII is optimistic that the new mission will start showing some impact within two years of its launch, ficci's opinion is that "in a country like India it will take at least five years to make some difference. For this, the skill mission will have to focus on both urban and rural areas to stem migration". It's obvious that industry will have to look for alternatives in the short term. "Willy-nilly, in the short- to medium-term, industry will have to implement a substantial repair mission for imparting the necessary skills if job openings are to be filled," warns R. Raghuttama Rao, MD of ICRA Management Consulting Services.

There are no easy or quick solutions.The national mission is looking at a 10-year span to bridge the skills gap. It will have to get all constituents—government, industry, academia, vocational and skill training institutions, placement agencies—to work together. The new corporation, first of all, will have to skill itself to move fast and take everyone along. There's far too much at stake.

© Outlook Publishing (India) Private Limited