Who needs skilling, anyway?

The title is part rhetoric and part serious. The perilous state of skilling and jobs is often characterized as a supply and demand situation notwithstanding the fact that there are enough jobs and enough people to take up those jobs especially at the entry level. But the jobs on offer may not grant the stability of government jobs which perhaps the youth are looking for. For an economy to shift from a primarily agrarian (here about 85% of landholdings are less than 5 acres) the incentive to take up a job may not be strong enough if the offer is a job with a "validity" of few years (when they can get terminated). Ultimately, the nature of the job entails the same. With agriculture the risk of crop failure is strong in any cycle. The same goes for any private sector job-the risk of being fired is strong. The trade off, if any, is marginal which is accounted for by the intangibles such as comforts of being with family and the influence in their community.

This is where skilling hopes to make a mark and improve the trade offs. Armed with skill, the assurance to find a new job or switch to a different job with higher salary incorporating the high wage premium is the USP of all programs. The flagship PMKVY has seen placement rates of only 45% as per a report submitted to the parliamentary standing committee. The minister claimed in an interview that about 5000 crores has been spent on skill development programs including PMKVY and other programs but the result is far from desired. When governments with their reach and deep pockets are not able to facilitate then the success of other organizations is a huge question mark. The MSDE reports have flagged the inability of programs to deliver from time to time. Besides the perception of "skilling" is for someone who is not academically excelled. Who would want their social standing being affected merely by joining a skilling program?

If this is the view from the side of workers, the side of employers is even starker. One of the biggest banes of Indian enterprises is low productivity. With approx 97% of establishments in MSMEs employing about 11 lakh workers, productivity gains aid in augmenting scale. However, that is blunted because of the allure of the low cost operational model that MSMEs have perfected instead of growing big. So the skilled workers, while important, are perhaps not very welcome in these sectors. The reason is simple-cost. A skilled worker expects (fairly) to be compensated suitably. But this is a drain on the enterprise margins. So the way to go about it would be to employ the least number of skilled workers and increase the proportion of unskilled workers. This operational model was shared by a few owners of establishments involved in producing different goods.

In the construction industry, something similar is witnessed. The site supervisor needs to be skilled enough to know what is going wrong and set it right. The rest is carried out by masons and labourers who are at best semi-skilled.

The second aspect is the demand for jobs. Though a skilled worker expects a premium, there are equally semi-skilled workers who the employers can pay at much lesser price than market demand rates. This skews the game for skilled workers leaving only a few companies to chase thereby creating an artificial job supply crunch which is detrimental to the skilled workers' interests.

Therefore the more fundamental question that we seek to answer is the need for skilling itself. Is it making any material difference? The answer as Sir Appleby would attest to- Yes and No. Job creation (or the lack of it) almost always has skill development as an important component. But why is that? Many studies have been conducted to show that while the technical knowledge possessed by graduates alone are not enough to secure them a job, they are what is termed as "employable". For instance, the India Skills Report 2021 says " Due to lack of professional skill sets, not even half of the Indian graduates are employable". Such damning conclusions ought to draw a wider look at the whole education system with the employability merely being the output in the long assembly line starting from kindergarten. By the time they arrive at the steps of jobs,

Thankfully, key stakeholders in the eco system such as MSDE and NSDC recognize this missing piece. The reports allude to building a bridge between education and skills. This can be done in a variety of ways. Primarily, building for the future skills.

First, a comprehensive analysis on jobs in the immediate future need to be conducted. With emerging AI tools, the nature of jobs are set to be different. Hence it is imperative for us to be prepared for this transformation. It is important from a societal standpoint too to safeguard the social fabric.

Secondly, industries need to have a "skin in the game" for skilling. With most companies preferring to train on the job, involving them at an early stage will help catch them young and impressionable minds. The apprenticeship concept that was popular needs to be reimagined for future jobs.

Thirdly, policies disincentivising MSME from scaling needs to be removed so that workers productivity can be improved.

Through such steps the skilling initiative

can be revitalized to achieve a future ready workforce.