The employment-income crisis

Reforms of the education and skill continuum could usher in an Indian miracle

While India is the fastest growing large economy in the world, it has to urgently address unemployment and income. The Ukraine war, high inflation— though lower than many developed nations — the changing workforce requirements in the post-Covid world, all call for a transformational education-skill continuum. It is time to repeat the East Asian miracle. The new National Education Policy 2020 is an opportunity.

The significant improvement in the ease of living of the poor through a pro-poor public welfare thrust over the last many years has improved the asset base of the poor and their ability to access public services. Today, 50.2 per cent men and 41.0 per cent women have 10 or more years of schooling in the 15-49 age group. We need to reach out to this educated cohort that only needs finishing skills to become employable.

The Ministry of Skill Development and Entrepreneurship was set up in 2014 with a strong thrust on standardisation. Sector Skills Councils were set up from 2009-10 onwards, and competency frameworks were prepared for short- and long-duration skill programmes. Industrial Training Institutes (ITIs), polytechnics and other skill-oriented institutions were brought on a common platform. As a result, apprenticeships increased. Over 100,000 training institutions came forward to work with 55 million youth to prepare them for the job market. 

The implementation of skill programmes, which was done centrally, is now rightly giving way to a greater role for the states and districts with agreed norms and standards. However, incentivised thrust on employment is leading to some misreporting, as pointed out by the Comptroller and Auditor General of India. New beginnings are being attempted through Skill Hubs linking schools to ITIs/polytechnics, apprenticeship/internship embedded courses, credit equivalence frameworks, and so on.  

Colleges and high schools had some apprenticeship and vocational opportunities but not on a transformational scale. The challenge of the unemployed and unemployable graduates or secondary school drop-outs remains the biggest crisis flaming disaffection among youth. What will help us to fight the challenges outlined above through a reform of the education–skill continuum? 

Illustration: Binay Sinha.

First, over 50 million households each year do unskilled wage labour under the Mahatma Gandhi National Rural Employment Guarantee Programme. It is a clear indictment of our development efforts. While half of the manufacturing and construction and one fifth of the services sector have already become a part of the rural economy, meaningful skilling for enterprise and jobs remains to be integrated with the hinterland. High value agriculture and animal husbandry, horticulture and its processing and packaging thrust can also create employment on a large scale, especially for women. Waste-to-wealth can also generate jobs on scale.

The production possibility curve of our economy will only expand through an upward movement on the skilling ladder. Tamil Nadu’s opportunities for skilling for all, and Madhya Pradesh’s pilot in some villages for full employment through the Livelihood Mission are worth emulating. Every skilling programme must have life skills components including basic IT and communication skills.

Second, it is important to understand the education and skills continuum. Skills must necessarily be seen as a part of the education system that undertakes certification. Streaming services for vocational courses have not worked anywhere in the world. In India’s case, a large number of opportunities are in the services sector, where the linkage with formal education is even stronger. The equivalence credit framework for academic and skill courses has to be made fully operational to ensure preparedness of mainstream education for skill courses.

The community colleges and bachelor’s degree in vocational education, certificate and diploma courses that have high employability in graduation courses (counselling, tourist guides, accountancy, IT skills, etc.) are an opportunity for making BA/BSc/BCom graduates employable on a large scale with modest investments. Tamil Nadu and Maharashtra’s fairly good student-teacher ratio in higher education, with a large number of technical and service-oriented institutions and courses, explains women’s higher work participation as well. 

Third, a similar re-orientation of the ITIs and polytechnics with a focus on reskilling and upskilling is needed. This requires flexibility in curriculum development and course design. 

Teachers and health care providers have a large domestic and international demand in an ageing world. It also improves women’s participation rates. The emerging field of digital finance will need its own set of professionals where 10 years of schooling is a starting point.   

Fourth, local governments and community organisations like women self-help groups and youth organisations should be fully involved in the skilling plan for a local area. A database of all men and women seeking employment or enterprise support needs to be drawn up for each and every local body, rural or urban. Equally important is a detailed micro credit plan for each and every household developed after assessing the asset base of a poor household. 

Fifth, skills and credit have to go hand in hand. Innovative technology-enabled financing through community collectives after adequate skilling opportunities will allow those newly-trained to develop their enterprises. Livelihood initiatives have demonstrated how a community cadre of Bank Sakhis and Bank Mitras and a community-based recovery mechanism help in reducing non-performing assets and in ensuring timely credit where it is needed. An all-encompassing credit guarantee fund that provides loans for economic activity to women and youth collectives will facilitate entrepreneurship.    

Sixth, employers ought to have a larger role in the placement-based wage employment efforts. Apprenticeship or skill programmes managed by potential employers must be encouraged to enable a more need-based development of skills. This has been a practice across industries that work as finishing schools. 

Seventh, the Rural Self Employment Training Institutes (RSETIs) ought to emerge as the enterprise hub for their respective districts. Courses in partnership with the Krishi Vigyan Kendras can meet the skill deficits in mechanisation and modernisation of agriculture and allied activities. SHGs, farmers producer organisations, joint liability groups of women and youth, primary agricultural cooperative societies, should all work closely with RSETIs for skill and credit linkage. 

Eighth, the certification and assessment arrangements should be in accordance with the systems for higher education as the equivalence of academic and skill courses needs mainstreaming. The linkage with higher education, however, needs to be established.

All of this could also benefit from merging the skills ministry with the Ministry of Education, as that is where we can leverage partnerships for a higher-order economic activity requiring higher-order skill sets. This alone will tackle the employment-income crisis. 

The writer is a retired civil servant. The views are personal