At a recent roundtable on the future of employment in India, each participant was asked to bring an object that represented their outlook on the subject. To everyone’s amazement, a renowned JNU economist brought a knife. He explained that if India continues to witness its historical pattern of employment, our streets may soon be taken over by unemployed youth brandishing knives!
While India’s GDP continues to grow at one of the highest rates worldwide, the rate of job creation lags far behind economic requirements. Every year, over 20 million young Indians join the workforce. While a predominantly young population fuels the demand side of the country’s employment equation, factors like the democratization of technology are significantly impacting the supply side.
According to some estimates, India’s employment elasticity—the percentage point increase in jobs for every 1% increase in GDP—has been falling steadily over the past 10 to 15 years, and is lower than global and Asian averages. The future, too, does not look very promising. Industry 4.0—heralded as the biggest wave of technology disruption to impact all sectors—is likely to further reduce the labour intensity of most industries. Service sectors like ITeS/ IT and banking, which were hiring in large numbers until recently, may not require the same number of employees in the future amid the rise of robotics and artificial intelligence.
Given this scenario, the much-hyped term ‘demographic dividend’, once used to describe India’s growth prospects, is being replaced by terms such as ‘demographic time-bomb’. How can India overcome this crisis? How can we build a large, suitably employed workforce that underpins national economic growth? The answers lie in addressing the following three elements simultaneously:
1. Establishing a set of measures to ensure that economic expansion comes with adequate employment growth
2. Aligning India’s higher education and skilling efforts with the potential employment requirements of the future
3. Ensuring a functional elementary education system that effectively prepares children for secondary education and skilling
In this article, we focus on the last two points, examining how we can expand productive employment through educational and skilling reforms.
Successive Indian governments have invested extensively in skilling, creating a variety of institutional structures, like the sectoral skills councils and the National Skill Development Corporation. A number of schemes such as the STAR scheme, STAR II scheme and Deen Dayal Upadhyaya Grameen Kaushalya Yojana were also introduced to help citizens equip themselves with marketable skills.
However, several years after these efforts first began, the skilling capacity of the country still remains inadequate, both in terms of quantity as well as quality. While the number of skilling centres and their capacity is far below target, the placement rates of the existing centres is also poor, raising questions about the value of the skilling efforts.
Real transformation, therefore, calls for some fundamental changes in how we define and drive our skilling efforts. Three issues that need to be addressed are as follows:
1. Redefining skilling: The world over, skilling involves pursuing very focused, one- to three-year courses or apprenticeships that impart skills that are otherwise difficult to learn. These are high-quality programmes that ensure employment and offer long-term career pathways. However, skilling in India has come to mean taking up a three-month course in limited areas such as carpentry, call centre services or beauty and wellness. Such courses, therefore, are today largely perceived as something that is taken up “if one cannot get a proper job”.
Driven by this narrow approach, we have created significant capacity for a variety of short-term, entry-level courses. In doing so, we have failed to create a healthy ecosystem to promote the longer, more evolved courses that can deliver real value. While ITIs were set up to serve this purpose, they continue to lack both in footprint and quality.
A truly skilled mid-cadre can deliver disproportionate returns in terms of productivity across professions, from construction to education, and from shop floor manufacturing to software development. Consider this example. Where does a company find an entry-level analytics professional today? Nowhere. Firms usually just hire engineers or science or commerce graduates and train them on analytics. What if there were one- to three-year courses on analytics?
To realize India’s true economic potential and to boost industrial productivity by supplying firms with skilled resources, we need to think of skilling in a holistic manner. We have to stop focusing on just training people to become plumbers, security agents and beauty workers.
2. Identifying the jobs of the future: What are the industries and trades that will drive India’s economic growth, and stay relevant 10 to 15 years from now? One study suggests that jobs in the future will be divided into routine and non-routine, and manual and cognitive tasks. It is expected that non-routine and cognitive jobs will see a huge surge in demand, while vacancies for routine and manual jobs will reduce. Although new jobs will be created, several positions will also be displaced. Are we prepared for this? Will the new employment opportunities come from the industries boosted by the Make in India campaign, or from Start-up India? Will we need many more health and sanitation workers, given our increased focus on sustainable development goals? Where will the Indian food processing industry be in 2025? Will the automobile industry ecosystem look the same as it does today?
If we want to be ready for the opportunities of the future, we need to start thinking about how we should educate and skill our children today. All stakeholders—government, companies, education and skilling institutes, military and the public—need to be involved to make sweeping changes in the area. Economic and technology trends should also be taken into account while making amendments. Many countries, including several South-East Asian nations, have already taken this agenda up on high priority.
3. Transforming secondary and higher education: Today, India produces lakhs of arts, science and commerce graduates every year, most of who struggle to find jobs. We have nearly 4,000 business schools, many of them on the verge of shutting down. The same is the case with engineering colleges.
Corporates constantly complain about the quality of educated and skilled workforce in the country. Estimates suggest that around 80% of people joining the workforce today are unemployable. This implies that higher education in India requires a significant rethink. India should have a far higher number of ITIs (public and private) or similar institutions, offering a wide range of high-end skilling courses, and fewer generic arts, science and commerce courses.
Corporate enterprises also needs to play their part in this effort. The private sector has been roped in for many skill development schemes in the country. Yet, their contribution to course and curricula design has, so far, been limited. There is still not enough ‘pull’ for skilled employees in the system. The job market offers little premium for skill certification. Industries that have designed skill courses themselves refuse to acknowledge the value of those certifications. Clearly, something is not working and needs to be made better. The industry must take on some responsibility for this, and work towards addressing the challenges.
But the challenges are not just with respect to higher education, secondary school education also needs to incorporate skilling. Today, more than two-thirds of our children drop out of school because these see no value in continuing. Besides the addition of some vocational courses in a handful of schools, secondary education in India has seen no major shifts in decades. This experiment on vocationalizing school education needs a rigorous push in the right direction.
One possibility is setting up dedicated skills schools that students can enrol for at the secondary education level. These schools can offer a wide variety of courses and ensure significant learning and skilling over a three- to four-year period. Perhaps, with this effort, we can enable students to find meaningful careers after they graduate from high school.
We strongly believe that this three-step fundamental rethink, if supported with much-needed policy and budgetary measures, may help India achieve its vision for skilling.
An effective elementary education system is critical to ensure that children have the basic skills—academic, cognitive and social—as they enter skilling or higher education programmes. So far, India has done well on access and enrolment to schools. However, the quality of education remains a key concern across government and aided private schools, which together cater to 70-80% of the children. Half the children enrolled in Class V cannot do basic mathematics or read a simple sentence. How can we expect these children to move on to higher education or skilling institutions and learn effectively there?
While a lot needs to be done, here we highlight three levers that are perhaps most fundamental to transforming elementary education.
Greater investment in early childhood education: Education before the age of six remains a grossly neglected subject within the Integrated Child Development Services (ICDS). Anganwadis currently lack the infrastructure, human resources and the skill sets to provide children the learning inputs and stimulation that are critical between the ages of two to six. Consequently, children moving on from anganwadis to primary schools usually lack a strong foundation that is vital for their formative years. Studies show that this gap has a significant impact on not only an individual’s lifelong learning and employment capabilities but also at a national level on per capita productivity, and hence GDP. The business case for increased investments in early childhood education, therefore, is a no-brainer.
An outcome-driven primary education system: In most schools around the country, the first time a child’s learning outcomes are measured is in Class VIII or X. Therefore, this is also the first time the system’s effectiveness is measured, and that is just too late. Across the country, this has led to many shortcomings in elementary education. These include a proliferation of sub-scale schools, a large number of teaching vacancies, greater administration responsibilities for teachers and a general disregard for learning.
A system that is not held accountable for anything except enrolment and disbursement of the mid-day meal is unlikely to deliver on greater goals. The situation can be remedied by setting up a simple but frequent and robust learning assessment mechanism. This will help drive positive results in the system at all levels—from the centre and the state to the district, and all the way down to individual schools and teachers. By measuring and acting upon these results, we can ultimately plug the gaps in the system—ranging from human capital issues to curriculum and pedagogy, and everything in between.
Technology as the key enabler of change: If there is one sector that technology has not touched—forget transform—it is education. Technology still remains at best that one hour in a computer lab sometime during the week.
Learning is for the most part an individual journey—where every child learns at her own pace in her own style in the social setting of a classroom. It is nearly impossible for teachers to effectively teach 30 to 40 kids at the same time, especially in the multi-grade/multi-level classroom format in government schools.
Placing technology-based learning tools in the hands of teachers as well as parents can be a significant game-changer. Simultaneously, we need to enable educational administrators to harness student, teacher and school-level data to be significantly more data driven in their decisions and strategies.
For this to happen, incremental steps such as instituting computer labs in a few thousand schools every year will not suffice. Tangible results will hinge upon a thoughtful, large-scale infusion of technology into education. This requires the concerted efforts of key stakeholders at all levels of the system, supported by a proactive public-private partnership.
There are many challenges in the education system that have a direct bearing on India’s employment scenario. Fixing each one of them will likely become a catch-up game we may never win. Perhaps, there are different ways to do this. Perhaps, this is a time to pause and reflect on the future, on possibilities that we want to bring to life. Perhaps, this is not the time to think only about incremental changes, but also to bring about big shifts in our education system, in order to rewrite our destiny.
Seema Bansal is a director and leads the social impact and development practice for BCG in India. Ashish Garg is a partner and director at BCG.
25 years after liberalization, and 20 years after it entered India, The Boston Consulting Group collaborates with Mint on a series of articles on what lies ahead for the country over the next 20 years.