The right to first job: Why apprenticeship hasn't taken off in India

Apprenticeship in India has failed to take off majorly due to the lack of awareness among the firms especially in the services sector, believe industry observers

It has been close to a year since Sonu (20) started working as a ‘helper’ in a metal forging unit in Mayapuri – an industrial neighbourhood in the Western part of the national capital. Housing hundreds of small and medium light metal factories, scrap shops and automobile service stations, this greasy industrial locality provides work to close to 500,000 people, mostly migrants and low-skilled workers in its vicinity. 

“I usually run the machines that clean, harden or anneal (heat treatment) metals ready for use in the production of manufactured components. This is my first ‘job’ after I completed my schooling a couple of years ago. I had no prior training and one of my uncles, who works as a blacksmith in a nearby unit, had to plead with the owner to take me in. Initially, I was afraid of the hot ingots. But now I can safely manage these machines,” Sonu said.  

Sonu is among the millions of people who join the workforce in the country every year and have to take up work in the vast informal sector without availing any skill training. Sonu would have been better off taking up an apprenticeship program where he would have gained both classroom (theory) learning followed by on-the-job (practical) training, leading to skill acquisition and higher employability. 

 

A recent report by the International Labour Organisation (ILO) on the employment situation in India notes that India is poised to reap the demographic dividend for at least another decade as the youth population will remain at 23 per cent of the total population in 2036 from the current levels of 27 per cent in 2021. This ‘youth bulge’ translates into a mammoth employment demand. However, youth employment has by and large remained of poorer quality than employment for adults, with the unemployment rate among educated youth remaining high. 

The ILO report notes that policymakers need to take adequate and timely steps to ensure rapid integration of youth into the labour market through skill development measures like apprenticeship. It will be helpful to ensure that the training programmes are responsive to the needs of the labour market.

How apprenticeship has fared in India?

To promote the uptake of apprenticeships in the country, the government passed the Apprentices Act in 1961. The latest Apprentices Rules formulated under the Act in 2019 states that in each financial year, each establishment having thirty or more number of workers are mandated to engage apprentices in a band of 2.5-15 per cent of the total strength of the establishment, including contractual staff, of which 5 per cent apprentices are to be freshers and skill certificate holders. 

Additionally, the central government is implementing two major apprenticeship promotion schemes – National Apprenticeship Promotion Scheme (NAPS) and National Apprenticeship Training Scheme (NATS). While NATS is administered by the Ministry of Education to deliver apprenticeship programmes in respect of freshly passed out engineering and general stream graduates, diploma holders and those who are pursuing degree and diploma level courses; NAPS is administered by the Ministry of Skill Development and Entrepreneurship (MSDE) in respect of designated trade apprentices, fresher apprentices and vocational apprentices. 

Data from the apprenticeship portal shows that the number of total apprentices trained under NAPS has hovered around four million since this scheme was launched in August 2016. 

Sumit Kumar, chief strategy officer at Teamlease Apprenticeship says apprenticeship is one of the most efficient ways of fulfilling the skilled human resource requirements of the industry by utilising the training facilities available in establishments without incurring extra expenditure on separate training infrastructure.

“Varying estimates show that merely 1 per cent of people who enter the workforce annually are apprentices in India. In any modern economy, it is expected that apprentices comprise between 3-4 per cent of the total workforce, which roughly translates to a total of around 20 million apprentices in the country,” Kumar said.

Business Standard reported last month that to generate awareness and promote apprenticeship in the country, the MSDE has sent compliance notices to nearly 180,000 registered companies on the apprenticeship portal to fulfil their obligations under the Apprenticeship Act and hire more apprentices as only 20,000 companies are fully compliant with the provisions of the Act and nearly 44,000 firms somewhat comply.  

“Usually, paying a fine is easy for these establishments. Thus our effort is to make them fully comply and get the remaining establishments to hire apprentices fail. We are also working to bring more firms to register on the apprenticeship portal,” a person aware of the matter had said.

Under Section 30 of the Apprenticeship Act, the shortfall in apprentices is punishable with a fine of Rs 500 per apprenticeship for the first three months and thereafter Rs 1,000 per month until such seats are filled up.

Surinder Bhagat, founder, Gigin, a talent sourcing platform, says apprenticeship in India has failed to take off majorly due to the lack of awareness among the firms especially in the services sector, as the attrition rate is quite high in this sector and employers see little value in training someone instead of directly recruiting them. 

“It is a misconception that apprenticeship is majorly for the manufacturing and production industries. The other is the non-integration of education and apprenticeship which leads to a lack of an ‘aspiring’ value among the students. Also, the fragmented nature of the apprenticeship regulatory regime in the country like NAPS, NATS, railway apprenticeship among others generally makes people and firms both stay away from apprenticeship and not engage with it all, given that cost is quite low,” says Kumar. 

 

The ILO report mentions that the top five sectors engaging apprentices include retail, automotive, electronics, IT and IT-enabled services (IT & ITeS), banking, financial services and insurance sectors. The top five states engaging apprentices are – Maharashtra, Gujarat, Tamil Nadu, Karnataka and Haryana. 

In contrast, in Europe, the apprenticeship system has deep roots throughout the entire economy, in particular in Germany, where apprentices are almost 4 per cent of the workforce.

“One of the major differences between the Indian and European countries is that apprenticeship is intricately linked with the higher education curriculum in these countries and more importantly, it is also linked with the small and medium enterprises, whereas in India, the MSME sector is completely out of this whole apparatus. In India, only the big firms partake in apprenticeship,” says Kumar. 

Right to Apprenticeship and skilled workforce

In 2019, the government brought in new Apprenticeship Rules to promote apprenticeship, which included bringing additional establishments under the mandatory category, lowering the size limit of establishments from 40 employees to 30 employees, doubling of stipend to Rs 9,000 for graduate apprentices or degree apprentices and Rs 5,000 for school pass outs and introduction of general degree apprenticeship among other things.  

Earlier this month, as part of its five ‘guarantees’ for the upcoming general elections, Congress announced the Right to Apprenticeship to every diploma holder or college graduate below the age of 25, if it is voted to power. Under this, the party ‘guarantees’ a one-year apprenticeship as an assured first job with a private or a public sector company along with a stipend of Rs 1 lakh a year to every youth.

Praveen Chakravarty, chairperson of the All India Professionals’ Congress and a key member of the Congress’ manifesto drafting committee had told Business Standard in an interview that the proposal involves replacing the current Act with the one that will enable anyone below the age of 25 years with a diploma or other qualifications to demand an apprenticeship with a private or a public sector firm or a government organisation. 

“I have held extensive consultations with industry bodies and MSMEs have told me that they wanted to be part of it because it will lower the labour costs for them. Based on the latest GST data, it is expected that 1 million firms will participate in it and anywhere between two million and four million people are expected to demand it initially. The cost will be shared between the government and the employer concerned. So at two million people, this works out to be Rs 20,000 crore,” he said.

However, Santosh Mehrotra, a visiting professor at the University of Bath, UK, says though apprenticeship is one way of bringing down youth unemployment and creating a skilled workforce, the need is for government intervention at multiple levels. 

“To start with, school education must include skilling and vocational education, which, in turn, needs the National Education Policy 2020 provision for skills and vocational training from standard 9 onwards to be implemented urgently. Out-of-school children also need to be imparted training for employment. Industry must also collaborate with educational institutions across levels so that the training and content is matched to its needs to give employability a boost,” he said.