Grimy hands and a fistful of dollars, or white collars and tighter belts?

A number of out-of-work Indians would plump for low-paid office jobs rather than roll up sleeves to be skilled professionals—an elitist approach to employment one skill trainer calls “Brahminical".

Acute talent shortage and armies of the unemployed go side by side in India, where such attitudes, coupled with insufficient support from the government and the corporate sector cast a giant question mark over the future of its educated youth.

At least six million students graduate from India’s educational institutions every year, a fifth of them from engineering and management schools.

How does the talent shortage hurt? Graduate unemployment rate in the 15-29 age group is 33%, according to official data.

Out of the 12 million Indians joining the workforce every year, only 7% end up in the organized sector, meaning the rest are largely cut out of social security benefits.

Less than one in 10 job seekers in India is trained in desired skills.

Demand, demography and democracy make India a compelling investment destination, according to Prime Minister Narendra Modi, a point he has raised repeatedly during launching the “Make in India" mission or during his overseas tours.

While there is no question about the first and the last, whether demography is India’s blessing or its curse is not a settled debate.

“That’s the fear—our demographic dividend could become a nightmare. It may sound cliched but the reality is there is dearth of human capital that can be deployed on job productively from day one," said Rituparna Chakraborty, senior vice-president and co-founder of staffing company TeamLease Service Pvt Ltd.

The uncomfortable glare on India’s skill gap comes at a time when poor placements force several engineering and management schools to shut shop and reports point to poor employability levels.

Where does one start fixing this mammoth challenge?

According to Santanu Paul, chief executive officer of TalentSprint, a skill training company, the Indian society is too “Brahminical" even when it comes to education or skill training. There is too much taboo attached to vocational training. Aspiration is not something people attach to blue-collar jobs, Paul said.

For Paul, three things are critical to raising skill levels—reforming the education system, promoting entrepreneurship, and supplying talent where there is a demand.

The Prime Minister seems to understand the issue: At his Madison Square Garden speech, he said India wants to create entrepreneurs, and others talented enough to work anywhere in the world.

Education reform

When ICICI Bank Ltd, India’s largest private sector bank, faced a talent shortage, it decided to do something about it. “We talked to a whole lot of colleges and asked if they are ready to relook at their curriculum, but got a lukewarm response", T.K.Srirang, head of the human resources at ICICI Bank, says.

The bank then joined with the Manipal Group to set up the ICICI Manipal Academy for Banking and Insurance (IMA) which opened in 2007. The academy trains probationary officers chosen by ICICI Bank and makes them work-ready, in an example of how companies and institutes can work together to groom the right talent.

If India wants to bridge the talent gap, education reform is the need of the hour, says Srirang. Academics, management and engineering schools must be ready to review their curricula to suit the needs of industries if their alumni are to find jobs, says Srirang, who calls the scarcity of right talent among the hordes of educated youth “paradoxical".

According to Srirang, MBA students want to become CEOs and are taught strategic marketing, but they may have no idea about labour compliance, which is critical if one is joining the human resources vertical. Such candidates need to gain the right skills and knowledge in the first three to four years. Srirang says there is always demand for basic sales officers, and that he too would hire if such talent was available.

The poor quality of education shows up in an August white paper by Education Promotion Society for India, private education providers and MBAUniverse, a management education think-tank. The paper said India must reduce the number of business schools from around 3,900 now to about 2,500. “Of these, the top 50 should aspire to become global institutions, the next 500 as national B-schools and rest skill-focused B-schools," said the paper.

The talent deficit straddles management education to vocational schools.

Industrial Training Institutes (ITIs), which once provided foot soldiers for the industrial work force, have not kept pace with the times. Most of India’s ITIs—run by both government and private entities—need to be overhauled. Though official data says two out of three ITI students are employable, some companies believe they need to be trained further.

“We have tie-ups with several ITIs but they don’t support all our needs," said Rajiv Gandhi, executive director (plants) with Maruti Suzuki India Ltd, the country’s largest carmaker.

He said Maruti has a full-fledged training system to train workers.

Sharda Prasad, former director general of employment and training (DGET) at the Union labour and employment ministry, agrees there is a critical skill shortage. He said while nearly 45% of those pursuing post-secondary education in China and 60% in Germany are in vocational training schools, the number is less than 15% in India. Though ITI placements have improved and corporates are helping at some ITIs, such institutions are relatively low.

According to Prasad, while India has over 11,500 ITIs, it needs about 50,000 such schools. The need to have such institutions is much more than having thousands of colleges imparting regular academic courses without a career attached to them, says Prasad. India has more than 35,800 colleges and 660 universities.

The share of vocational education in schools remains minuscule. Among all the Central Board of Secondary Education (CBSE) schools, less than 700, or less than 5%, offer some kind of skill courses, according to the school board. The situation is worse at India’s more than two dozen state school boards.

Prasad says the national skill qualification framework (NSQF) that aims to integrate vocational education with mainstream education has not been implemented. Most universities don’t have vocational departments.

“Our education system is not geared to accommodate vocational courses, with due respect," says Prasad. Vocational workshops are omnipresent at Australia’s Sydney University, says Prasad, pointing to their relative absence in India.

“The University Grants Commission has started giving some financial help to universities to set up skill centres, but they are inadequate and look more piecemeal. In India, we have not been able to develop holistic education," says Prasad.

Policy change

Experts and stakeholders say the government’s outlook towards skill education must change. As a society, the dignity of labour must be restored.

Training in skills should not be seen as a last resort for the poor and those who are not academically exceptional.

Experts welcome the formation of a skill ministry at the Centre but say the concept is flawed. “Instead of making it a coordinating ministry, it should be made a hands-on ministry," says Prasad. “The government should take away departments like DGET from labour ministry and respective departments from rural development, MSME ministry, textile ministry and put everything under the new skill ministry so that they can take real decisions."

Sunil Arora, secretary of department of skill development and entrepreneurship, says he won’t force anything upon any ministry, working instead as an enabler. A revised skill mission is being crafted which will set the ball rolling, Arora said.

Prasad mentioned six points to take skill education to the next level: A labour market information system to map aspirants to requirements on a particular time-frame; a national occupational standard to tell what kind of jobs are available and the role in a particular job; a national training standard to map national competitiveness; a national accreditation institution for all skill trainers; a national assessment system to evaluate the education input; and a national certification system.

Sarbananda Sonowal, the minister of state for skill and entrepreneurship, is hopeful, though. His ministry will do whatever required to fulfil Modi’s mission of Skill India. “You will see the change sooner than later," Sonowal says.

It won’t be easy. In the last five years, there have been several attempts to transform the 1,128 sick employment exchanges to act as a bridge between job seekers and job providers. But the labour ministry has received just 111 crore from the government, against a requirement of at least 1,400 crore.

While India can train 8-10 million annually at most, the need is to train 50 million.

“The capacity needs to be scaled up five or eight times," said Dilip Chenoy, chief executive of National Skill Development Corporation (NSDC), which operates under the new skill ministry.

Promoting entrepreneurs

Apart from widening the talent pool, it is also important to create the job creators.

“The problem is, not many people want to get their hands dirty. If young Indians take to entrepreneurship and follow good work ethics, it shall be a win-win," says Rajendra Somany, chairperson and managing director at Hindustan Sanitaryware and Industries Ltd (HSIL Ltd), a company that manufactures glass to sanitaryware and kitchen appliances. “Industry has faith on Modi, and we hope things will change in two years."

The new government’s first budget pegged 10,000 crore to promote start-ups that focus on delivering products and services to small and medium-sized businesses. An additional 200 crore has been earmarked to establish a technology centre network to promote innovation and entrepreneurship in the agribusiness. The budget also allocated 100 crore for a rural entrepreneurship scheme and 200 crore more for developing young entrepreneurs from underprivileged backgrounds.

Himanshu Agarwal, chief executive of Aspiring Minds, an education services company, said that if India wants to create jobs in a structured way, the government must back entrepreneurship. “You have to empower the new generation of job creators," says Agarwal, who now employs nearly 200 people.

T. Muralidharan, chairman of TMI Network, a skill training and human resource consulting company said skill training must be linked with labour productivity in the long run.

“Companies need to understand this while devising their skill requirements. Second, authorities need to promote entrepreneurs so that they create jobs than only focusing on job seekers," he said.

Agarwal says that while skill training is great, what is more important is the assessment. “Unless you assess a job seeker, how will a company know that he is job-ready," he says.

“Skill mapping is a must. Else you won’t know what kind of people you are producing and whether there is a need for them in a particular region. A labour market information system then can keep it in its database to map skills to jobs," said Prasad.

Funding the training

There should be three models of financing skill development, says Paul of TalentSprint. One, if the jobs are aspirational, then aspirants should pay; if there is specific demand for a particular kind of jobs, then the industry must pay; and if it is for a greater good, the government must chip in.

Sivaramakrishnan V., executive president (education services) at Manipal Global Education Services, said the ICICI Manipal Academy is a perfect example of skill training that is demand-driven rather than supply driven. ICICI Bank selects students and sends them to the academy. Those who fail are not recruited. The bank also extends them study loans. If the recruit stays with the company for a certain number of years, the bank repays the loan interest and capital.

“The success of the model has now encouraged many financial institutions to follow suit," said Sivaramakrishnan.

But not all jobs are as attractive as that of a bank officer.

Training providers and students said banks often feel skill loans will turn bad. And the credit guarantee fund for skill development that the government has planned has not taken shape either.

Ramesh Naik, a security guard in New Delhi, is saving to finance some kind of training for his son who dropped out of school. “If the government can help, it will benefit many," Naik said. Trainers say it’s not easy to get students to join vocational studies.

“Ask them to get trained for a bank job, the response is good, but ask them to come for a plumber or housekeeping job course, the response is very bad," says Ajay Mohapatra, head of Justrojgar, a training and staffing company largely dealing with blue-collar jobs.

“At times, we get trainees who are ready to do a low-level 8,000 business process outsourcing job than a 10,000 (per month) housekeeping or sales job," says Mohapatra.

Rohit Bisht, a contract data operator in a government department, agrees and says that youngsters find outdoor work unappealing and prefer office jobs.

“We understand the issue and are trying to change the perception of skill courses," says Sonowal, adding his ministry will help mobilize youth under different wings of the ministry of skill, entrepreneurship, sports and youth affairs, to improve the situation. “Make in India and Skill India are two key focus areas of the government."

But training may not be all.

“Trained unemployment is a far bigger challenge than simple unemployment," according to Prashant Rai, head (learning and development), Voltas Ltd.

For a country that grows more populous by the day, success or failure in ensuring a skilled workforce could mean the difference between a demographic dividend or chaos.