Bridging the skill gap

Quality training remains an elusive goal

One of the paradoxes of India’s employment paradigm is that joblessness remains a challenge even as the country’s large potential employers complain of a labour shortage. Last week, Larsen & Toubro Chairman S N Subrahmanyan said the engineering giant was facing a manpower shortage of over 45,000 workers and engineers across its businesses. L&T is not an outlier in this respect. Across India, from steel manufacturers in the east to the textile hub of Tiruppur, companies are struggling to find skilled labour for such basic functions as machine operations, welders, fitters, drivers, technicians, carpenters, and plumbers. The shortage is not just on account of expanding order books, the elections, or hotter summers, which have sent labourers back to their villages. It is the result of a chronic weakness of the Indian labour market, pushing up wages and costs at a time when private-sector investment is still relatively sluggish. The shortage becomes more acute higher up the value chain, forcing companies to hire technicians and engineers from overseas, especially China, to bridge the gap.

At the base of this skew is the poor quality of education and training. This imposes an additional cost on companies of upskilling engineers or technical workers they hire. According to the latest India Skills Report, about 64 per cent of engineering graduates are employable, and 40 per cent of those coming out of Industrial Training Institutes. Overall, about half the youth are found to have the necessary skills to be employable. Interestingly, even this discouraging picture is an improvement over 2014, when only 33.9 per cent of the youth were considered employable. This improvement has been, in part, on account of the government’s focus on training programmes such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), and schemes for apprentices and craftsmen. Despite this progress, the report suggests that the challenge of delivering skilled labour to the marketplace is daunting. It points out that only 2 per cent of the workforce has formal vocational training and 9 per cent have informal vocational training. This apart, even the government’s skill programmes lack quality trainers or certification. As a result, less than 20 per cent of those trained under the PMKVY were reported as placed in companies. 

The core of the problem is that training programmes are out of sync with the needs of industry, underlining yet again the need for closer industry participation. Engineering courses are a good example of the problem. Of the 1.5 million engineers that India produces every year, less than 5 per cent come from top reputed institutions such as Indian Institutes of Technology (IITs), National Institutes of Technology (NITs), or Indian Institutes of Information Technology (IIIT). The bulk of the graduates come from private and state institutes of widely varying quality, despite certification by the All India Council for Technical Education. The National Skills Development Corporation, which the government set up in 2008 as a not-for-profit company to work with industry, has not been able to make a dent in the problem. The result is net negative for Indian labour. Large employers move to address the problem by deploying artificial intelligence to automate the shop floor, squeezing the job market even further for those entering it. That is why adequately skilling India’s labour force needs to be a bigger priority for the government.