ABSTRACT
With the opening up of the economy and increase in exports, improving the productivity of the workforce is a key challenge for many corporations and entities in India. Further, as the Indian economy grows, a large number of skilled persons will be required to sustain this growth. Current studies indicate that net enrolment in vocational courses in India is about 5.5 million per year compared to 90 million in China and 11.3 million in the United States (US). A mere 2 per cent of Indian workers are formally skilled. Signifi cantly, the bulk of the labour force in India — about 93 per cent — who work in the unorganised sector are largely untouched by any kind of formal training. By way of comparison, 96 per cent of the workers in South Korea receive formal skills training. This is 80 per cent in Japan, 75 per cent in Germany and 68 per cent in the United Kingdom (UK). According to a Boston Consulting Group (BCG) report prepared for the Confederation of Indian Industry (CII), India’s workforce in 2006-07 numbered 484 million (Sinha et al. 2008). Out of this, 273 million were working in rural areas, primarily in agriculture, while 61 million were working in manufacturing and about 150 million in services. As per the BCG study, 40 per cent of the current workforce is illiterate and another 40 per cent is made up of school dropouts. Those who are vocationally-trained, diploma holders, graduates and above comprise a mere 10 per cent of the overall workforce, while those who have completed 12 years of schooling comprise another 10 per cent. Software industry body National Association of Software and Services Companies (NASSCOM) says that of the 400,000-odd engineering graduates who pass out every year, only 20 per cent would meet the requirements of the Indian
industry. The rest would have to go through rigorous training before businesses could fi nd use for them. Given this background, one would expect that fi rms would invest in in-service training. But the World Bank India Country Strategy 2009-2012 (World Bank 2010) indicates that in-service training is received by only 15 per cent of workers in the manufacturing sector, which is far below what is observed in many countries, with the inadequate availability of training capacity being one of the major reasons for this. So the fi rst challenge is to increase the number of skilled persons in the workforce. Yet this is far from easy. The 11th Five-Year Plan document mentioned that while 12.8 million people join the Indian workforce each year, the annual training capacity is less than half of that (GoI 2007). With one of the youngest populations in the world and projected to have 64 per cent of its likely population in the 15-59 age bracket by 2021 (GoI 2012), India is uniquely positioned to take advantage of this favourable demographic profi le to take that giant leap from being a developing country to a developed one in a decade from now. However, leveraging this ‘demographic dividend’ (the average age of an Indian would be 29 by 2020 compared to 37 in China and the US, and 45 in western Europe [GoI 2012]) is easier said than done on account of the poor level of skills possessed by the vast majority of those joining the workforce each year — a situation that has arisen owing to high rates of school dropouts, inadequate skills training capacity, a negative perception around skilling, and low employability of even those holding professional qualifi cations, such as degrees in diff erent engineering disciplines. An additional issue is that these outcomes vary from state to state. According to the Economic Survey 2011-12 (ibid.), 63.5 million new entrants would be added to the working age group during the period 2011-16. The challenges are
further enhanced by the studies by consulting fi rms IMaCS and Aon Hewitt that forecast an incremental shortfall of nearly 350 million people1 by 2022 in 20 high-growth sectors of the Indian economy, the infrastructure sector and the unorganised segment.
