According to Census 2011, India has 730 million people in the age group of 15-59 years. While the labor force world over will decline by about 4% in the next 20 years, it will increase by approximately 32% in India with one million young job seekers joining the workforce every month.
In the past, countries like China which had a surplus of young population, leveraged it and earned a substantial demographic dividend. India, on the other hand, is facing a dual challenge. One, there is a severe scarcity of quality labor with employability skills. Two, there is a lack of employment opportunities for a large number of educated people due to lack of inclusion of employability in higher education. To leverage the demographic surplus which is expected to last for the next 25 years, India’s 3E of education, employability and employment need to improve.
Considering that a large majority of our working population lacks employability skills, there is a danger of them becoming a ‘demographic drag’. While about 13 million youngsters join the workforce every year, the labor ministry, in 2015, reported that less than one out of four MBAs, one out of five engineers and one out of ten graduates are employable. The disengagement between the industry and the education system continues to churn out less than trained employees.
In European countries, the government, the employers and the academic community have equal participation in skills development initiatives of the nation. They set the foundation with a firm focus on skill development from the early learning days of a child. To make sure that the education system is more focused on employability skills, children must be exposed to skills-based learning early on.
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Apprenticeship and vocational skills training
Two of the biggest issues with the Indian Education System are rote learning and focus on theory. To a large extent, apprenticeships and vocational skills training can solve these problems, improve employability skills and address India’s 3E problem.
Over the last few years, the government has shown increased focus towards skilling and promoting apprenticeship. Entities like National Skill Development Corporation (NSDC) have important mandates to boost apprenticeship numbers from the current 4-5 lakhs to the original target of 50 lakhs by 2020. However, meeting the deadline should not be the only target and the focus should be more on bridging the skill gap in India.
In 2015, Ministry of Skill Development and Entrepreneurship (MSDE) launched the National Apprenticeship Promotion Scheme (NAPS) under the Apprentices Act. While it was mainly aimed at small and medium enterprises, they have not been very open to the idea. They are probably not sure about the cost effectiveness of the proposition. Some large enterprises continue to engage with apprenticeships, though the numbers are not enough to make a big difference yet.
Since 1961, when the Apprentices Act came into effect, there have been four amendments, but the government has not been able to scale it up to its full potential. It is still not a preferred choice by the youth as a career option as against higher education. Unlike European countries, which have apprenticeships-linked degree programs, there is hardly any connection between education and employability in India.
The recognition among employers have also been slow. They need a policy to recognize apprenticeship as practical education and look beyond formal degrees. Many organizations like Pizza Hut, Whirlpool, Rolls Royce, RBL etc. are working with universities to design apprenticeship programs specific to their needs. More such organizations need to step up and understand the importance of apprenticeship in building employability skills.
Retention has been another hindrance in scaling up the program. A big number of apprentices leave training for employment and the drop-out rate is estimated to be as high as 70%. There is also a reluctance of candidates to relocate from their hometowns due to a mismatch between wages and cost of living.
As of now, like employment, apprenticeships are largely unorganized and informal. There are about 50,000 employers who engage with apprenticeships as against 71 lakh enterprises. Only 4% of our organized workforce is formally trained as against China’s 84% formal training.
How apprenticeship can help India Inc?
Due to uneven demographics, focused urbanization and low employability skills of those with formal education, corporate India’s hiring cost have increased massively in the last decade. The total cost of hiring adds up to between one to three months of compensation. Adopting apprenticeship can cut hiring costs by more than 50% because the costs are shared by educational institutions, the government, parents and non-profit foundations.
Apprenticeship programs can cut attrition by an estimated 25-50% because their structure of learning while earning and learning by doing allow employers to test the employees before they are hired, and help the employees to understand the organization, job and colleagues while creating additional incentives for completion of the apprenticeship period.
Employee productivity is a complex mix of hard and soft factors like motivation, tools, process, skills, culture, industry, location, among many other factors. While corporate India is improving a lot on hard assets, it is far from realizing the intangibles like skills, fit and teamwork. The practice of apprenticeships before employment will nurture social, intellectual and knowledge capital and will improve the employability skills.
Carefully designed apprenticeship programs can provide a return on investment higher than the hurdle rates of 12-15% used by most employers to evaluate capital expenditure proposals. If India Inc shows an increased confidence on the apprenticeship system and the required changes are made in the system, India’s 3E challenge can be addressed to a large extent.
How can the Apprenticeship Program be scaled up?
Exposure to skill development needs to start early at secondary education. Also, there has to be a connection between apprenticeship and higher education to enhance employability and scale up apprenticeship enrolments. The community needs to accept that education, employability and employment must go hand in hand.
It is also extremely important to integrate various stakeholders like employers, skill universities and regulators to ensure execution, assessment, certification and monitoring of apprenticeships. The industry must play an important role in building the curriculum, designing assessments and delivering the program to address India’s 3E issue.
Blended learning must be adopted to ensure easy accessibility and improve the apprenticeship ecosystem. There has to be a blend between online, on the job and on campus education for the overall development of capabilities. It is not only a cost-effective way but it also caters to the complexities of the job requirements in this dynamic economy.
Different learn and earn schemes initiated by the Centre and state bodies need to come under one central recognized body to ensure standard practices and give more options to employers. Apprenticeship need to be an integral part of the government skilling schemes to enable students with relevant work-based exposure get paid as per guidelines under the Act.
The aging economy phenomenon will create a global shortage of approximately 56.5 million skilled manpower by 2020. If India’s 3E can be taken care of with increased skill development efforts, there could be a surplus of approximately 47 million skilled manpower in the country which can make it the Human Skills Factory of the world.
- India’s 3E challenge – Education, Employment, Employability – An apprenticeship looking glass- India Apprenticeship Forum, 18 July, 2019
- Launch of NCAER Labour Economics Research Observatory (N- LERO): India’s 3E Challenge- Education, Employability and Employment- 22 March, 2016
- Education, Employability and Employment- Bridging the Gap- Sridhar Korkonda, 04 July, 2018
- Scaling up apprenticeship schemes only way to boost formal employment- Sumit Kumar, 18 February, 2019
- Why India needs to add a new skilling chapter to apprenticeships – Manish Sabharwal & Sumit Kumar, 15 March, 2016
- Apprenticeships could address India Inc’s human capital hurdle – Manish Sabharwal & Sumit Kumar, 16 May 2019
- India Needs Better Skill Training Mechanism to Boost Employability- Sumit Kumar, 15 July, 2018