Bengaluru: Even as the Indian economy struggles to create new jobs, employers in the country find it increasingly difficult to find employable workers. One reason behind this paradox could be the low quality of labour in the economy, new data from the KLEMS India database suggests.

While the quality of labour—measured in terms of education and experience of workers —has improved across most sectors, the pace of change has been considerably slower in sectors that employ the most number of workers, the data shows. The services sector has witnessed the biggest gains in labour quality since the turn of the 21st century, the data shows.

Sectors that witnessed faster growth in quality of labour also generally saw higher growth in labour productivity, measured in terms of real value added per worker. For instance, trade, business services and transport and storage services witnessed relatively higher growth in both labour quality and labour productivity in the period between 2000-01 and 2015-16.

However, sectors which have seen high growth in labour quality and productivity have failed to create many new jobs. Several manufacturing sectors such as textiles and leather, food products and beverages, and non-metallic mineral products—which witnessed a sharp rise in labour quality and productivity over the past three decades—did not see a sharp growth in jobs over the same period.

This suggests that the Indian economy has been able to create only a limited number of high productivity jobs which have been cornered by a small section of the educated labour force. And growth in labour quality and productivity has eluded precisely those sectors of the economy which employ the most people, namely construction and agriculture.

To be sure, growth in labour quality does not always translate into a growth in skills. But there is likely to be a close link between the two, according to economists.

“Education is not synonymous with skills," wrote economist Ashish Mehta in a 2015 IdeasforIndia article. “However, high quality education delivers foundational skills (literacy, numeracy, comprehension and reasoning) that are necessary for the successful acquisition of vocational and professional skills. More skill-intensive industries therefore require more educated workers.".

India lacks both high-quality education and vocational training. A 2015 CII report co-authored by two researchers from the NITI Aayog, Sunita Sanghi and A. Srija, showed that an overwhelming majority of workers in India lack vocational training. And a majority of those who had such training acquired such training informally, either on the job, or through other means.

The latest Annual Status of Education Report (ASER), Beyond Basics 2017, released earlier this year shows that while most of India’s youth in the 14-18 age-group are enrolled in the formal schooling system, a majority of them lack essential foundational skills. More than half struggle with division (3 digit by 1 digit) problems. A little less than half (44%) could add weights correctly in kilograms. About four in 10 youth could not tell time correctly, the survey found.

It is not a surprise therefore that a 2015 survey of 41,700 hiring managers in 42 countries found that Indian managers were most hard-pressed to find workers who matched their requirements. Fifty-eight per cent of hiring managers in India reported difficulties in finding suitable candidates against a global average of 38%.

When the National Democratic Alliance (NDA) swept to power in 2014, it correctly identified India’s skill deficit as a major challenge. However, its attempts to rectify this have not met with much success.

The flagship skills programme, Pradhan Mantri Kaushal Vikas Yojana (PMKVY) was launched with a lot of hope but has failed to live up to its promise. In its 2017 report, a government-appointed committee led by Sharda Prasad found that the targets under the programme were too ambitious, and funds spent on the programme were not subject to adequate monitoring. Job placements under the scheme has been poor even as the scheme ended up enriching private institutes which offered, or claimed to offer, vocational training to youth, the report said. The committee recommended that India should follow the global example of integrating skills with education to help create a skilled workforce for the future.

“In most of the developed societies, training (and skill development) is under the Ministries of Education," the committee noted. “But in India, they have remained separate, probably, because of the social stratification, which places premium on education and stigma on skills. Though the academicians have been trying to mainstream training with education, it could not happen in the last more than 150 years (sic). The present efforts also appear to be half hearted."

Unless India is able to create a high-class educational system and impart skills to its youth, India’s jobs challenge will only grow bigger.

This is the concluding part of a two-part data journalism series on India’s jobs challenge. The first part looked at the top job-generating sectors in India.

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