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Business News/ Companies / News/  India’s skilling firms have entered the ICU

India’s skilling firms have entered the ICU

Post-pandemic India faces a massive skills crisis at a time of demographic flux. What can be done to quickly fix it?
  • The 15,000-odd vocational centres need some sort of a rescue package. Else thousands of budding blue-collar professionals would be left in the lurch and India’s economy hit
  • About 60 million people between the ages of 15 and 30 are expected to join India’s labour force by 2023. They will need training, but vocational training centres are in bad shape (Photo: Ramesh Pathania/Mint)Premium
    About 60 million people between the ages of 15 and 30 are expected to join India’s labour force by 2023. They will need training, but vocational training centres are in bad shape (Photo: Ramesh Pathania/Mint)

    NEW DELHI:On 21 March, a few days before India announced the nation-wide lockdown to combat covid-19, Ganga Ram, 23, boarded a bus from Ahmedabad, where he worked in the welding shop of an automotive company, to Barmer in Rajasthan, his hometown. “I wanted to briefly visit my family of two brothers, two sisters and my mother," he said. “But the lockdown made my stay permanent."

    Ganga Ram was lucky—he didn’t have to walk back to his village like millions of migrants eventually ended up doing. But he was now without a job or money. Ganga Ram was a contractual worker and the employer had stopped paying. Two months into the lockdown, he approached the placement officer at Learnet Skills Limited, a skilling company.

    “I wanted to work somewhere closer home. I was asked to apply through the Pravasi Rojgar portal and got a job at an engineering company working at the Pachpadra refinery project (a refinery-cum-petrochemical complex being built), 50km from my house," Ganga Ram said.

    Pravasi Rojgar, started by actor Sonu Sood, is working to connect returning migrants to employers. Ganga Ram, however, couldn’t be connected to a welder’s job. He works as an office assistant now and takes home 12,000 a month. Ganga Ram has what skilling experts say are ‘transferable skills’; he is a rare case of a worker who could land on his feet.

    Fact is, hundreds of thousands of students training for short-term and even long-term vocations—from sewing machine operators and LED Light repair technicians to plumbers and retail sales associates—are stranded as skilling institutes remained shut for over six months. Out of funds, many of the private training companies face an existential crisis. They cannot pay rentals. Some have shut shop, laying off their trainers, counsellors, hostel wardens, security and the placement staff.

    Learnet Skills closed 50 of its 250 institutes. Gram Tarang Employability Training Services, which provides training in vocations such as automotive, manufacturing, apparel, and hospitality, ran 42 centres pre-covid in different states. It shut down 14. Another firm Inductus runs over 12 centres and said it is on the verge of closing some of them down because it cannot pay rentals without income.

    These companies are the larger ones. Things could be worse for the smaller training firms. According to one estimate, about 30% of the 15,000 blue-collar training centres in India could eventually close down if the cash flow issues don’t get sorted soon. Much of vocational training piggybacks on central- and state-government funding; programmes are mostly placement-linked.

    This model has collapsed since the demand side has collapsed. Sectors such as hospitality have no jobs while manufacturing is yet to spring back to life. India, therefore, not only faces a jobs crisis; it is staring at a skills crisis at a time of significant demographic flux.

    About 60 million people between the ages of 15 and 30 are expected to join India’s labour force by 2023, an analysis by the National Skill Development Corporation (NSDC) showed. They need training. Besides, India’s existing labour force needs re-skilling to remain relevant. The pandemic complicates things for the blue-collar worker.

    There’s not that much of an impact at the white-collar level because this category of professionals can up-skill online through courses offered by umpteen universities. In contrast, training for a welder, an electrician, a swing machine operator require dexterity. Long-term vocational training —provided by government and private-run Industrial Training Institutes (ITIs)—is in trouble too. Manpower from these institutes form the backbone of Make in India.

    “The big one staring at us in the face nationally, is the evaporation of jobs for the ITI and Polytechnic trained youth who have graduated this year. Unlike engineering graduates, most of whom come from better earning families and hence will have economic ability to survive the situation, these young people come from the bottom of the pyramid," Subroto Bagchi, chairman of Odisha Skill Development Authority, said.

    “In India, we do have an apprenticeship policy, well intended but varied in its execution and effectiveness. The central government should consider taking the entire graduating class of 2020 and sending them out for apprenticeships funded by the government as a special drive for a year," he added.

    The skilling crisis

    Abhinav Madan, the co-founder and CEO of Gram Tarang joined this writer for a discussion on Zoom. The call gets interrupted twice—Madan is trying to negotiate a pending payment with an executive of a private company. Gram Tarang implements training programmes for both the private sector and governments. Money is stuck on every side.

    “It is a bloodbath. We are as badly hit as hospitality," Madan said, pointing to government schemes where payments are stuck. “We have no clarity on when the money will be paid," he added.

    Training companies have dues pending from central government schemes such as Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY). Also from state governments. DDU-GKY is a Ministry of Rural Development scheme that focuses on short-term training for those between 15 and 35 years from poor families. PMKVY is the flagship scheme of the Ministry of Skill Development & Entrepreneurship and is implemented by NSDC through training partners such as Gram Tarang.

    The dues have added up because most government programmes follow a staggered model of payments. The training provider invests upfront in infrastructure, people, and enrols the candidates. The government then reimburses in three tranches based on milestones. The first tranche is usually released on enrolment; the second on completion of training and certification; the third after the candidate is placed and remains employed for at least three months.

    The lockdown has disrupted this system. Candidates in training have gone back to their villages and are unwilling to come back. Some of them were just days away from being certified. Those who were placed in factories have either been laid off or have reverse migrated less than three months after being placed. Navanit Samaiyar, CEO of the Alliance of Skill Training Partners, said that across the country, 250,000 to 300,000 students and about 200,000-250,000 direct and indirect employees in the ecosystem are currently stuck.

    “The training institutes are brick and mortar. There are fixed costs but no corresponding activity through which revenue can be generated," RCM Reddy, MD and CEO at Schoolnet India Ltd, the parent company of Learnet Skills, said. The training skills ecosystem has got into a vicious cycle, he pointed out. “They borrowed money and invested, and started training. The government now doesn’t have money to release dues. Since you haven’t got money back, you can’t re-invest."

    NSDC’s aid

    Manish Kumar, MD & CEO at NSDC, agrees that the risk of the small falling is high but peppers his comments with a dose of hope. “As soon as the economy rebounds, there will be a huge surge and need for people because the industry is hungry. All of us are in the waiting game, hoping that we get back up quick enough," he said.

    NSDC, a company where the government of India holds 49% of the share capital, is India’s nodal body to promote skill development and catalyse the creation of quality vocational institutions. What is its plan to cushion the pain? The company lends to vocational institutes. It provided a moratorium on both the principal and interest for six months till September. A decision on if the moratorium on the principal should continue is pending. Kumar said that NSDC wants to protect the better training partners with working capital loans. However, government grants are constrained at the moment.

    “The government is trying to do as much as possible but most of the money and resources would go for covid-related issues," Kumar explained. The central government recently approved a new version of PMKVY. “That implies funds will begin to flow. Once funds begin to flow, the health of many of these companies will get better," Kumar added.

    NSDC, in the meantime, has stepped up efforts to match the skilled workforce to jobs. Much like the private effort of Pravasi Rojgar, it created an e-platform, the Aatmanirbhar Skilled Employee Employer Mapping (ASEEM), which matches demand with supply using artificial intelligence (AI). As of August 2020, about 7 million candidates’ data have been uploaded; 557 employers are registered; over 300,000 jobs have been posted by employers; 210,000 jobs are offered.

    New directions

    Ajano Ngullie, who is from Dimapur, has a family of siblings and her mother to support after her father’s death. A friend directed her to a training centre of Orion Edutech Private Limited, a skilling company. Under the PMKVY scheme, she picked a three-month course in beauty therapy that trained her in threading, facial, pedicure, and manicure. Ngullie migrated to Delhi thereafter where she worked in a spa, earning 20,000 a month. “It’s not only that I am supporting my family financially but I am also supporting my sibling’s education," she wrote on the impact of her training on PMKVY’s website.

    An important role in her course choice was played by a counsellor at the training centre who could guide her to a job role that is in demand. But this was before covid. Beauty and wellness faces turbulence over the short term with many spas still closed. The post pandemic demand scenario is therefore forcing skilling providers to reorient what they teach over the medium term.

    Institutes Mint spoke to said they would lower their focus on hospitality, food and beverage, sales and marketing for organised retail for some time — these sectors may take time to revive. Data from ASEEM indicated the likely areas of interest, going ahead. Logistics is the top sector in terms of the number of jobs posted (31.8%), followed by healthcare (22.2%), retail (6.2%), Banking, financial services and insurance (6.1%) and construction (5.7%).

    The rise of e-commerce is fuelling logistics jobs. The pandemic, meanwhile, has underlined the supply-demand gap in healthcare. Dr Srinivasa Rao Pulijala, CEO at Apollo Medskills Ltd, a healthcare skilling company, said that there is a spike in demand for phlebotomy technicians or those who collect samples. Pharmacy assistants and those who deliver home healthcare are in short supply, too. At the top-end of the healthcare workforce pyramid, doctors have to be up-skilled in critical care. “We trained 86,000 doctors through e-learning and a lakh nurses during the last six months," Pulijala said.

    Meanwhile, white collar professionals have it better: they ‘snack’ on new learning content while continuing with their day jobs. India’s vast army of software engineers have started up-skilling in technologies such as AI, cloud computing and cyber security with industry bodies pushing the re-skilling agenda.

    But for now, it is India’s 15,000-odd vocational training centres that need attention, some form of a rescue package. Else, lakhs of budding blue collar professionals would be left in the lurch, in turn impacting India’s economic goals.

    Subroto Bagchi said a rescue could include clearing dues on trust; forwarding zero-interest loans for a year; and suspending the placement-linkage prevalent in government schemes over the short-term. Training providers could also be compensated for reduced batch-sizes—since social distancing would be the norm in training spaces.

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    Published: 05 Oct 2020, 08:52 PM IST
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