India will become Skill Capital of the World? What’s the idea behind it.

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How to make India, the Skill Capital of the world

In this article, we are going to do a deep discussion on a very interesting topic— How to make India, the Skill Capital of the world.

India is all set to be among the youngest countries in the world by 2021 with 64% of its population in the working-age group. This demographic potential could provide India with a significant advantage and could add up to 2% to the GDP growth rate.

India faces a great opportunity to utilise this demographic shift and position itself for growth. To leverage this opportunity, India will need to make substantial progress in providing enough opportunities to the youth to meaningfully contribute towards economic growth.

However, providing opportunities will not be sufficient, as India will need to ensure that the youth is ready to take advantage of these opportunities. A significant effort will be required to skill the youth to take up opportunities available and thrive. A slew of measures have already been initiated, and there exists a need to extend these and channelize the efforts in sectors and jobs where there is high demand. This means tightly monitoring economic trends not just in India but across the globe and continuously keeping the skilling program relevant and current.

While India enjoys this demographic shift, the populations in the West, Japan and even China are getting older. Therefore, it provides India with a unique opportunity to not only lay emphasis on skilling for meeting its own demands but to also provide a skilled workforce across the globe. The stage is set for India to become the Skill Capital of the World.

This context presents a number of key questions. How is India currently positioned in its skilling initiative and what can it do further in the area of skill development so as to not only serve its own needs but also play a significant role in meeting the skilled workforce needs of the world?

Clearly, even as many initiatives have been taken up, a lot needs to be done to help India become the skill capital of the World.

Current Skill Landscape Scenario

Good economic performance and growth of industries are essential for the development and growth of a country. A key factor driving the economic growth of any organization, therefore the industries and the nation is the quality of the skilled workforce. Focused skill development of individuals can accelerate the growth of the entire nation. India is uniquely poised with a large population in the working-age group. However, as per the Labour Bureau Report of 2014, only 2% of the current workforce is skilled which is significantly lower compared to many other countries. By 2022, India has targeted to skill up to 400 Million people. At present India adds 12 million people every year to its working population.

The Indian education system is currently centred on academic education and does not focus on skill-based or vocational education to cater to the needs of the skilled workforce. In addition, the students graduating from the formal education system are often considered not sufficiently skilled for employment. This restricts the growth of Indian industries and deprives the country of economic growth of its demographic dividend.

It is evident that there are drastic steps required to skill the current workforce and the people entering the workforce and bridge the skill gap.

 Let’s Know about the Skills Gaps across the world 

Skills shortage is a global phenomenon. As per a manpower shortage survey done by OECD, most nations are facing a shortage of skilled workforce. According to the report Japan faces a skill shortage to the extent of 81%. Brazil and Turkey face a skill shortage of 63%. Australia, Germany and the USA are experiencing shortages of skilled workforce close to 40%.

According to current estimates, there is going to be a shortage of 40 million highly skilled workers and 45 skilled workers globally.

According to CEDEFOP, The European Centre for the Development of Vocational Training, businesses in Europe is finding it difficult to find people with the right skills. This shortage has led to adverse consequences on productivity and the overall competitiveness of European enterprises. Europe has reported a maximum shortage of skilled workforce in the manufacturing sector, wholesale & retail trades and transport sectors.

According to a survey, organizations in the Middle East also are struggling to find candidates with the required skillsets and most candidates seeking employment lack both technical skills and soft skills.

According to another report, in the United States, there is an increasing skills mismatch, brought about by simultaneous growth in both unemployment and job vacancies. Companies are grappling with finding employees with the right skill set.

Similarly in Asia, Japan is looking for a skilled workforce. There is a skills shortage in China as well, but it is anticipated that given the domestic employability, language and political nature of challenges, the skills shortage in China will need to be addressed locally.

According to United Nations Population Division, there is an estimated shortage of 15% in demand of skilled workers. Most of the additions to the global labour force will occur in India and the developing economies of Africa and South Asia. The situation thus provides India with the opportunity to cater to the ever-growing skilled workforce need of the world.

Over the next few years, labour markets in Europe, North America, Australia, New Zealand, Japan and the Middle East alone will have a shortage of tens of millions of skilled workforce.

There are several reasons for the shortage of skilled manpower especially in the developed countries:

  1. Demographic change and its implications: Worldwide the population is showing a slowing trend with declining fertility and rising life expectancy rates.
  2. Economic transformation and its implications: There is an expected change in skill requirements due to economic transformation. For example there is a profound change from agriculture sector to manufacturing and services, there are changes within an economic sector. Also, there is a movement from labour-intensive manufacturing to higher value-added manufacturing. Hence, there is a continuous challenge in adjusting the skills of the current workforce to the changing requirements. Businesses are showing an increasing demand for people with combinations of skills. This leads to demand of people with newer and more integrated skillsets.
  3. Lack of focus on employable skills: The focus on employable skills currently is limited. There is a gap between what the industry demands and what the trainees are being trained on, thus leading to a mismatch between desired skills and actual skills. It is important to note that in these labor markets, shortage of skilled manpower will co-exist with oversupply of unskilled manpower.

This raises an important question. By 2025, will the labour markets fix their skill-employability challenge or will a country like India leverage the opportunity, work intently and emerge as the skill capital of the world? Which will happen before the other? Is there a risk that neither will happen? Is a combination more likely?

Challenges in meeting the skill requirements 

Globally there is a shortage of skilled workforce across industries. This is preventing industries across the world from growing at the pace that they can. The companies have therefore been looking at developing countries with large populations to help fulfil these needs for decades. Thus countries like India, Pakistan, Bangladesh, Nepal, Sri Lanka, Thailand, Jordan, Egypt, Vietnam and the Philippines have become manpower providers to large parts of Europe, the Middle East, Australia, the US and Canada. Similarly, Mexico, Poland and Algeria have become manpower suppliers to the USA, Western Europe and France respectively.

While India may be among the largest suppliers of manpower all ready for the world, has India emerged as the skills capital? The answer is an emphatic NO.

While a large number of Indians queue up for jobs in different countries, there are structural challenges in the current system.

Most workers who move out of India in search of work are currently in the lowest level of skills and earning brackets; their skill levels are in unskilled to semi-skilled categories; their preparedness to migrate for jobs is poor, the cost to migrate is prohibitive, the worker-job match is informal, chancy and risky and their landing in the host country hard. There is little facilitation in their move from the skill development system in India.

A systemic approach is needed for this to be done at a larger scale with greater efficiency and effectiveness; for India to have even a remote chance of being the world’s skill capital.

Opportunities and approaches to meet the skill requirements 

India has one of the youngest populations in the world and a very large pool of young speaking people. Therefore, it has the potential to meet the skill needs of other countries and also cater to its own demand for skilled manpower.

Demographically, India is relatively well-positioned. India has the potential to skill its manpower for domestic jobs and also job across various locations.

According to a UNDP report, India is projected to dominate the growth in the working-age population in the Asia Pacific by 2050, becoming home to over a billion people eligible to enter the job market. For a country such as India, there is a huge opportunity to invest in education and skilling. This is further proven by the fact that during the next 20 years the labour force in the industrialized world is expected to decline by 4%, while in India it is expected to increase by 32%. 

According to Financial Times, India will have a surplus of around 47 million skilled workforces if the skill development programs are taken up effectively. This is a great opportunity for India to meet the demand that will exist in the rest of the world, thus, allowing India to be truly the skill capital of the world.

Though the opportunity exists, what is critical is the need to understand that currently, India is not in a position to play the pivotal role in being the supplier of skilled workforce to the rest of the world. However, with a structured approach, India has the potential of creating a demographic dividend. For India to be successful, an approach encompassing multiple areas will need to be adopted.

There are various challenges in the current ecosystem of skilling and employment of workers from India abroad and several interventions are required to be taken up in India to address them: 

A systemic approach to skill development with simple but robust National Occupational Standards (NOS) aligned to global skill standards developed in PPP mode;

Mechanism to deliver skill development as per the NOSs with technology enablement, standardised curriculum, large number of professional large scale training, assessment and certification agencies including through entry of large corporate players in these businesses;

Creating awareness and changing traditional and hierarchical mind-set of Indian youth towards a more positive world view on skill focussed jobs, engaging them in the process and moving away from the ‘entitlement’ and ‘freebees’ based approach;

Identification of sectors, destination labour markets, roles and skills for a special and strategic focus; 

Embedding of vocational skills in the educational system; leveraging and upgradation of skill development infrastructure; development of well trained, well-paid and certified trainers and master trainers; 

Research in the area of effective skill development with scale and speed; commercialisation of this research and development of forums to share practices;

Identification of enabling soft skills to complement the technical skills including spoken English, discipline, can-do approach, openness to learning, basic IT skills, cultural sensitivity, understanding of the destination countries, etiquette and values;

Professional management of the skill development efforts; application of innovative approaches to addressing the issues at scale cost effectively;

Moving from a disbursement based volume-centric milieu to effective monitoring and evaluation of efforts by the government which shall play an enabling and regulatory role with the execution role being played by the private sector as for-profit enterprises as well as CSR efforts;

Institutional development and capacity building of the government agencies, integration of efforts in different ministries and across states and center;

Partnerships with governments in destination countries, their authorised recruitment agencies and a technology-enabled transparent facilitative emigration system without middlemen so that the workers are not exploited, provision of movement support, continued assistance post movement and for job changes and advocacy for workers rights and interests at all stages;

The skill development for global markets will need to be done as a mission mode project integrating the key components. The effort will need to identify key labour markets (say USA, Canada, Australia, New Zealand, Europe, Japan and the Middle East) and key sectors (say IT, construction, healthcare delivery, beauty and wellness, energy, hospitality, manufacturing, facility management, urban services etc.)

  The skilling for international markets can’t be an island of excellence in otherwise and skilling effort in India- the entire skill development eco-system needs to become efficient and effective which will serve both the domestic requirements and prepare a fertile ground for mission mode projects for skilling for international markets.

 While India prepares to leverage the opportunity thrown up by the likely shortage of skilled manpower in the developed world, it must be remembered that it’s a race:

  1. Race against time because the demographic dividend in India in not for ever- India tool will begin to get old in next few decades and there will be more people to be cared for that the number of people caring for them.
  2. The developed countries, India hopes to supply skilled manpower too (e.g. USA, Australia, Saudi Arabia) are themselves struggling with unemployment for their own people and its social, national and political implications. There is growing unrest in these societies where the perception is that foreign workers displace locals because they come for lower wages. Even when the locals may not have the skills or interest in skill-based jobs (as is the case in Saudi Arabia), the governments are working on nationalisation programs to motivate and skill locals to replace the existing expatriate workers. The tightening of employment visa regimes in these countries is likely to intensify in coming years. Thus it’s a race against skill development initiatives in the destination countries.
  3. It is also a race against other developing countries which are similarly eyeing opportunities in developed countries for jobs for their people. This makes international skilled worker market a competitive place. Several countries in South Asia (Bangladesh, Nepal, Sri Lanka, Pakistan), Far East Asia (Philippines, Vietnam, Cambodia, Thailand), Middle East and Africa (Egypt, Yemen, Algeria, Nigeria, Kenya) and North America (Mexico) see this as a an opportunity like the way India does. Skill development for international markets is a race among these countries.

The race with time, efforts in developed markets and against efforts in competing developing countries is only going to get fierce.

India has a huge population that is young and eager to join the global workforce. At the same time, the world is facing a shortage of skilled workforce, a shortage which is ever-growing. While there is a global deficit in the skilled workforce, there is an equal abundance of the workforce in India. If India is able to provide the right skill to its youth, not only will it meet its own growing need for a skilled workforce but will also cater to the skill needs of the world. However, this requires intensely focussed mission-mode efforts in terms of skilling Indian youth for jobs abroad. If this is done well, India could well save itself and the world blushes and emerge as the Skill Capital of the world.

Article by – Dr. Kamlesh Vyas (Education and Skill Development, Deloitte)

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