The dichotomy of increasing workforce and growing skill deficit

One major issue that Indian industry is confronting at present is a shortage of skilled workforce. The deficit of skilled workforce is affecting business across various industries including construction, manufacturing, IT & Technology, transportation & logistics.

Increasing preference for white-collar jobs over blue-collar jobs is one of the main reasons behind the growing skill gap. The shortage of skilled workforce could be resolved effectively with the combined efforts of the government and industry.

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By 2047, India is expected to have about 1.1 billion people in the working age group (15-64). To employ this upcoming manpower, their skill development is an absolute necessity. In this context, the country has already started a systematic transformation to prepare its working-age population for jobs of the future. 

The Atal Innovation Mission and Incubation Centre, along with a separate Ministry of Skill Development and Entrepreneurship have been established to transform India from a labour-based economy to a skill-based economy. 

The National Policy on Skill Development and Entrepreneurship 2015, provides a comprehensive plan for all skilling activities conducted in the country while connecting them to a uniform standard of skilling requirements interlinked with the demand centres. 

The Ministry of Skill Development and Entrepreneurship (MSDE) runs its umbrella program, the Skill India Mission launched in 2015. National Skill India Mission (Nsim), is India’s first integrated national scheme for developing skills and promoting entrepreneurship at a larger scale. One of the key objectives of the mission is to develop skilful youth as a manpower resource for world markets.

The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is a skill certification scheme of the MSDE implemented by the National Skill Development Corporation (NSDC) which aims to mobilize and equip the youth population with the necessary industry-relevant skills and training. Those with prior experience are also assessed and certified under Recognition of Prior Learning (RPL). 

The PMKVY 2.0 was launched in 2016-20 and was targeted at 10 million young people, equipping them with demand-driven skill sets through Short-term training, Recognition of Prior Learning (RPL), and Special Projects Programme. 

The focus of PMKVY 3.0 (2020-21) was shifted from a supply-based approach to a demand-based approach. The aim was to upskill/reskill with a focus on future skills (industry 4.0) courses to increase the productivity of the existing workforce and provide an online/digital mode of training for wider coverage. Under PMKVY 3.0 in 2020-21, over 7.36 lakh candidates were trained.  The Customized Crash Course for COVID Warriors had helped another 1.2 lakh candidates. Although the PMKVY3.0 officially ended in March 2022 due to Covid-led delays, training under the scheme carried on for a few months into 2022-23.

With an aim to expand the skill development of a larger young segment over the next three years, PMKVY 4.0 will soon be launched.

The National Apprenticeship Promotion Scheme (NAPS) launched in 2016 has been promoting Apprenticeship in the country through financial incentives, technology, and advocacy support. Programmes like Project AMBER (Accelerated Mission for Better Employment and Retention) are a joint collaboration of the National Skill Development Corporation (NSDC) and Generation India Foundation (GIF) with MSDE as the nodal agency. With a 7-step skilling methodology, the project aims at providing holistic skilling to foster quality jobs, improved employment opportunities and retention outcomes.

In the last eight years, various initiatives of the government have resulted in about a 24% increase in the Skill Industrial Training Centres (ITIs). From about 11,847 in 2014, the number of ITIs in the country has increased to 14,747 up till 2022.  

Notwithstanding the various policy endeavours, there is a growing shortage of skilled workforce in the country. On one hand, there are lakhs of educated unemployed in the country, on the other hand, many Indian companies are facing acute shortage of skilled workforce. According to the International Labour Organization (ILO), India might face a 29-million skill deficit by 2030. The country may confront an estimated US$ 1.97 trillion skill deficit in terms of Gross Domestic Product (GDP) in the coming decade.

Current state of skill shortage 

The shortage of skilled workforce is spread across various business segments. In 2022 construction industry in the country experienced the highest shortage of skilled labour at about 85%, followed by IT &Technology and manufacturing, each facing a skill shortage of around 84%.

According to TeamLease Services, a leading human resources development consultancy firm, India is presently facing a shortage of about 150 million skilled workers, increasing from the 138 million skill deficit three years ago.

The infrastructure-led economic initiative of the government involves US$300 billion of annual spending in the building of roads, railway infrastructure, seaports, airports, transport, gas, and inland waterways. However, a large number of Infrastructure firms in the country are not getting enough skilled labour for their operations, although the pool of educated but unemployed youth in the country continues to expand. The unemployment rate in India is presently running as high as 8.1%.

While construction and building industries require about 33 million skilled workers, nearly 18 million workers are needed in the transportation and logistics sectors. 

The construction and building industry is essential for developing physical infrastructure in the country. It accounts for more than half of the investment needed to establish facilities like ports, power projects, roads and bridges. Although this industry accounts for a significant proportion of jobs created within the country, there is a growing demand for more civil engineers, hi-tech welders, and bricklayers. While in the transportation and logistics sector, the trucks tend to remain idle due to a shortage of drivers, there is a rising shortage of metallurgists in the steel sector.

Addressing the issue of Skill deficit 

Tackling the problem of skill shortages calls for a shift in perspective, specifically the ‘dislike’ of blue-collar jobs. The educated people in the country spend a lot of time hunting for employment in government. Despite having better education credentials, they frequently accept low-level employment as peons. As long as the current administration does not address the necessity of creating additional jobs, the prevailing situation will not change. One such way to fix this issue of skill deficit is by mandating the filling of a million jobs in the government. 

Training programs led by India Inc. also need to be undertaken progressively to address skill shortages. As the Indian corporates are cognizant of the kind of skills required for their operations, without larger participation on their part, a program like Pradhan Mantri Kaushal Vikas Yojana (PMKVY) cannot make significant progress. The outcomes of PMKVY thus far have not been impressive. The observation is that since 2015, about 14.3 million workers have been enrolled. Of these, three-fourths have received certification and one-fifth have been placed. If short-term training is taken into account, according to the PMKVY dashboard, out of the 5.6 million certified candidates, only 43% have been placed. 

Industries must come together to establish such Skills Development Centers throughout the country that support/collaborate with Colleges and Polytechnics to educate, train, and develop the skills needed by the industry and also to recruit these trained personnel. At present only 45% of the trained persons in India are employable and only 4.69% of the workforce possesses vocational training. 

The task of addressing the issue of skill shortage is undeniably intimidating, given that an average Indian worker has less than 8 years of education whereas a typical worker in China has 14 years of education. In comparison to countries like Japan and South Korea where 80% and 96% of the workforce respectively have formal skill training, only 5% of Indian workers have formal skill training.

In India, nearly 13 million youngsters enter the job market each year. For skilling this vast workforce some additional measures need to be undertaken. 

For instance, more measures for raising the standard of basic education need to be initiated. Along with adequate assessment, such initiatives should be in tandem with internationally applicable and measurable indicators. The early school curriculum shall introduce young people to vocational skills as 

an aspiring career option. Establishing a link between early education and technical training results in imparting of skills/expertise required to enter the industry along with other life skills.

Meticulous mapping of skill requirements can help in the development of a demand-driven skill-enhancing ecosystem and also facilitate the exploration of current trends in workforce supply and demand.

Labour market assessment studies with a focus on future jobs can be carried out to keep track of shifts in market demands. This will also enable the development of necessary skill sets and their integration into the existing training programs.

Encouraging women candidates to join the training sessions could prove to be a significant initiative towards meeting the skill shortage. The female LFPR (Labour Force Participation Rate) in the country stands at 22%, as compared to an average of 70% in the United States, China, and the UK. India needs to create nearly 43 million jobs for its female population over the next 10 years, to address this gender inequality.

Plugging the skill gap is an obligation

India requires an educated and skilled workforce for higher growth. While the syllabus, curriculum, and relevance will be largely influenced by the market and industry, sincere efforts in this regard are needed through the National Education Policy (2020). As the country is expected to supply 25% of the world’s working population in the years to come, it is mandatory to skill, reskill, and upskill our young population to fulfil the nation’s obligation to the world.

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