Skills 3.0

Skills can change lives in ways that no subsidy can.

Written by Manish Sabharwal | Published: July 18, 2015 2:28 am
Prime Minister Narendra Modi visiting an exhibition at the launch of the National Skill Development Mission, in New Delhi on Wednesday. Minister of State for Skill Development & Entrepreneurship (Independent Charge) Rajiv Pratap Rudy is also seen. (Source: PTI) Prime Minister Narendra Modi visiting an exhibition at the launch of the National Skill Development Mission. (Source: PTI)

Sardar Vallabhbhai Patel once said that the best time to plant a tree was 30 years ago but the second best time is today. Skills should have been a priority after 1947 because an unskilled or unemployed Indian is not a free Indian, and the launch of the Skill India programme earlier this week finally rights that wrong. Taking a historical perspective, Skills 1.0 lasted from Independence till the UPA government; a pathetic drift without vision, execution or institutions. Skills 2.0 began with the UPA government; the vision was sound but the execution was assassinated by a lack of institutional structures — anybody could say no and nobody could say yes — and the failure to nest skills into a broader job-creation vision. While the test will be execution, the new skill programme announced earlier this week — Skills 3.0 — has good odds of succeeding for three reasons. First, it is part of a multi-point agenda for creating jobs. Second, it strikes the right balance between continuity and change. Finally, it strikes the right balance between poetry and prose.

Before diving into Skills 3.0, let’s recap learnings from Skills 2.0. We have three distinct problems: matching (connecting demand to supply), mismatch (repairing supply for demand) and pipeline (preparing supply for demand). We can’t teach children in six months what they should have learnt in 12 years of school. We have licked our school enrolment problem and Class 10 is the new Class 8 for employer filtering. We confront a financing failure: employers are not willing to pay for skills or candidates, but are willing to pay a premium for skilled candidates; candidates are not willing to pay for skills but willing to pay for a job; and banks/ microfinance institutions are not willing to lend for skills unless a job is guaranteed.

The National Classification of Occupation codes are a poor framework to align demand (what employers want) with supply (the skills kids have), and we need to move from periodic interventions to build a self-healing structure. Young job-seekers are unable to get a job without experience, but it is unclear how they can get experience without a job. India’s firm size distribution — 63 million enterprises only translate to 14,500 companies with paid-up capital of more than Rs 10 crore — is a binding constraint for skills because low-productivity enterprises create the vicious circle of being unable to afford the skill wage premium.

The massive divergence between real and nominal wages in our 45 job hubs (cities with more than a million people) is murdering migration at the bottom of the pyramid. It is much more efficient to send trainers to areas with high outward migration. But it is rarely possible because trainers are unwilling to move (this is not unique to India, even Russia’s Joseph Stalin was unable to get doctors to move to rural Russia). Finally, college isn’t what it used to be (60 per cent of taxi drivers in Korea and 15 per cent of high-end security guards in India now have a degree) but the social signalling value of a college degree matters; vocational training is usually for other people’s children, not your own.

Now let’s examine why Skills 3.0 has better odds. Nobody knows whether jobs or skills come first for an economy; the only way to solve a chicken and egg problem is to become vegetarian, that is, change the problem frame completely. The outlines of a complex job-creation policy agenda are emerging — smart cities, Make in India, Digital India, GST, ease of doing business, labour law reform and cooperative federalism. This will combine with some of the wonderful “daily life” objectives listed in the new skill and entrepreneurship policy, like unique enterprise numbers for all enterprises, composite application forms for all approvals and registrations, revised exit policy, etc, to catalyse productive entrepreneurship.

The new programme strikes the right balance between continuity and change. One of the more painful policy narratives of the last few years has been junking everything done by predecessors but the new skill programme maintains continuity in the structures and leadership of sector skill councils, the National Skill Development Corporation (NSDC) and the National Skill Development Authority. The earlier target of skilling 500 million people has been revised to 400 million and unpacked into specific chunks.

The birth defects of the earlier Star scheme have been fixed in the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which cleverly adds recognition of prior learning. Yet the new structure has a separate ministry for skills: putting ITIs, apprenticeships, sector skill councils, the NSDC, skill universities and the PMKVY under one roof not only improves coordination but also gives state governments and other Central ministries one neck to catch. The erstwhile Planning Commission’s decision to write a new apprentices act was smartly reviewed and the existing act was amended instead; these amendments create the space to take India’s apprentices to one crore from the current four lakh (China has two crore).

New connectivity being created by state vocational universities will be amplified by the proposed national vocational university; vocational universities pray to the one god of employers and have only 5 per cent of their kids physically on campus (the rest are in apprenticeships and distance education), and only 5 per cent of their kids are doing degrees. The rest are doing certificates and diplomas with modularity to go all the way to degrees.

There are some loose ends in Skills 3.0. The ministry of human resource development needs to recognise that massifying higher education requires separate regulatory regimes for small research universities (whose target would be global rankings) and large vocational universities (whose target is volume and employer connectivity with online delivery and blended apprentices). It also needs to amend the Right to Education Act to become the Right to Learning Act, because the most important vocational skills are reading, writing and arithmetic.

India’s war on poverty cannot be won without skilling India. We may still not get there but at least now, we have an integrated plan and can die trying.

The writer is chairman, Teamlease Services

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