Work experience contributes 58% to worker’s lifetime earnings in India: McKinsey Global Institute

MUMBAI: Work experience contributes 58% to a worker’s lifetime earnings in India, especially for those with lesser educational qualification, highlighted a report by McKinsey Global Institute (MGI). The research noted that those with bolder job moves grew faster in the corporate ladder and earned many folds more than where they started off.

"Experience accounts for 40-43% of lifetime earnings in the US, UK, and Germany, and 58% in India, where fewer people have higher education," highlighted a report by MGI- the business and economics research arm of McKinsey.

According to the study, people who start their careers in roles requiring education and credentials earn more and their entry-level skills continue to drive most of their earnings over a lifetime (65% for physicians and lawyers). In contrast, those who worked in jobs that required lesser credentials saw more than 70% of their job shifts because of work experience.

The MGI and McKinsey’s People & Organization Performance Practice called ‘Human Capital at Work: The value of experience’ -researched around 1 million work histories in India to understand how work experience adds value over time.

The study found that 87% of role moves involved people switching employers (as opposed to moving roles within organizations), highlighting that companies need to attract talent by delivering the learning and advancement workers want.

“This report tells a story of possibilities,” says Anu Madgavkar, a partner with the MGI. “People’s lifetime earnings aren’t necessarily dictated by their education. Those who start with disadvantages because of a lack of qualifications can make up ground by accumulating skills," she added.

The research found out that role moves help workers to accumulate skills and experience, the average person in the data set changed roles every four years. It also noted that despite gaps in educational qualifications, almost 25% workers surveyed in India managed to move up one or more earning quintiles. Experience accounted for 80% of their lifetime earnings (vs only 55% for those who stayed flat or dropped down). This group made more frequent and bolder role moves, acquiring 30% new skills with each role move, compared to only 20% for the cohorts that stayed flat.