Skill development has emerged as a key strategy to realize the potential of a young workforce with an average age of 29, by enhancing their employability. The National Skill Development Mission launched by the Union government envisions skilling at scale with speed and standards, with a focus on strengthening institutional training, infrastructure, convergence, training of trainers, overseas employment, sustainable livelihoods and leveraging public infrastructure. The national policy for skill development and entrepreneurship 2015 provides an enabling framework to realize this vision. The policy framework outlines the paradigms and enablers to realize the potential of India’s demographic advantage by addressing challenges such as aspirations and mobilization of youth, quality and relevance of training; access to training, inclusivity and leveraging available technology.

Yet, several challenges remain for skill development in India. First, the huge proportion of informally trained workers who form a part of the informal sector, where skill training is generally carried out through individual learning, observation, or a transfer of skills from a master craftsperson to an apprentice. The proportion of the formally trained in India is low at 4.69% of the total workforce compared to countries like Germany (75%) and South Korea (96%). Recognition of prior learning (RPL) has been introduced in India to facilitate an assessment and certification of the skills acquired by the individual through experience, observation and self-learning in order to give him/her an edge in career advancement.

The mismatch between skill, academic training and employment has widened, leading to a situation where, on one hand, employers are unable to find appropriately trained people, and on the other, the youth are unable to find employment that they aspire for. The latest India Skill Report indicates that only about 45.6% of the youth coming out of educational institutions are employable. In order to address the mismatch between supply and demand, it is necessary to harmonize youth aspirations with industry demand and the training offered by training institutes.

The significant variation in demographic profile necessitates local interventions. Southern states like Goa, Tamil Nadu, and Kerala have a higher median age, between the range of 29-31 years, due to early fertility transitions, and will soon be ageing. Hinterland states such as Uttar Pradesh, Bihar, and Rajasthan have a low median age between 20 and 22 years. Thus, this northern belt will have a rising working age population. This requires addressing skill challenges of access, equity, relevance and financing differently.

Given that developing skills requires huge investments, availability of real-time data on challenges faced by a region/area/district/state, identification of sectors requiring skilled manpower, and demand-supply match, it is important to assess the outcomes of various interventions undertaken thus far so that the future course of policy action can be planned or modified. This calls for the need to develop skill development indicators (SDIs).

Internationally, the first such efforts to develop indicators for skill development were made by the Organisation for Economic Co-operation and Development (OECD) that established the world indicators of skills for employment (WISE). The WISE framework includes a focus on contextual factors in a country, such as the gross domestic product (GDP), population, employment in informal sector; factors affecting skill acquisition, such as educational attainment, literacy rate, enrolment ratios, vocational programme, participation in training/apprenticeship, factors affecting skill requirement, such as employment share by level of education, occupation, incidence of self-employment, skill use and outcomes in terms of growth in GDP, labour productivity, employment rate, earnings, etc. Adapting from this framework, indicators must be developed to address challenges such matching skills across sectors/regions to realize the potential of our youth and the working population.

SDIs would improve the effectiveness of various platforms set-up by the ministry of skill development and entrepreneurship. They would also enable the states to evaluate and compete with their own past performance and facilitate sharing of best practices across different sectors and states/union territories. They would help assess the match between employers’ needs and future labour market opportunities and based on the assessment of existing policy initiatives and their outcomes, the future course of policy action could be planned or modified.

The indicators can be classified under broad parameters of access, equity, quality, relevance and finance.

The parameter of access would measure the capacity and outreach of the programmes. Relevance would measure the ease of entry to the labour market with an enhanced employability. Equity will measure the equal accessibility of the opportunity to all and quality will evaluate whether the training imparted meets the required standard of employability. And finally, the parameter of finance would measure the cost-effectiveness of the funding provided.

The dearth of reliable data is a pressing challenge in developing these indicators. There is a need to generate data leading up to the labour market. This can be done by systematically including key questions on skills in employment-unemployment surveys. Once the indicators are finalized, an index can be built, ranking the states based on their performance outcomes. The creation of indicators itself is expected to catalyse the availability of reliable data on a periodic basis.

With the advent of the fourth industrial revolution, it needs to be ensured that our youth manage the shifts in skill requirements. The need of the hour is to build evidence that can redirect policy solutions to address the constraints, make policy inclusive and sustainable according to the demographic context of each state in order to fully realize the potential of youth and ensure optimum income and employment for the workforce.

Sunita Sanghi, Sakshi Khurana and Lakshmi Parvathy are, respectively, senior adviser, and young professionals at NITI Aayog.

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