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New govt has huge skills gap to bridge before creating jobs

Both the BJP and Congress manifestoes for this general election had flagged job opportunities as their primary challenge.

Written by Surabhi | New Delhi |
May 16, 2014 12:43:37 am

Of the total working age population in India, only 6.7 per cent have any skill training. The number from the government database shows the huge employment challenge facing the new government that takes over at the Centre next week.

The percentage for comparable economies are far higher. Skilled workers in the Chinese working age population 15 to 60 years is close to 50 per cent while in the European Union it stands at over 75 per cent.

The Indian data implies that out of the 400 million employees in the organised and unorganised sector, only 27 million have some useful skill for their employers to use. The problem is complicated further because of the slowing economy that has eroded employment opportunities as well as raised fresh challenges of re-skilling the existing workforce.

The National Skill Development Corporation mandated to skill a quarter of the targeted 500 million youth by 2022 has stressed that reviving growth is critical to ensuring that all candidates get jobs.

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“The challenge is that the overall target of skilling 500 million was set assuming a growth rate of 8 per cent. If the economic growth does not revive, we may have to scale down the target,” said Dilip Chenoy, MD and CEO, NSDC.

Both the BJP and Congress manifestoes for this general election had flagged job opportunities as their primary challenge.

The government data from the NSSO 66th round also shows only a quarter of those who are skilled have received any form of formal training i.e. 2.2 million. More workers have learnt on the job or have taught themselves.

The NSDC claims it has begun to make some dent in this direction. In FY14, the government-run company has trained over 10 lakh or 1 million youth. It is also confident of meeting its ambitious 150 million target on schedule, ahead of its target for 2022.

But arguing that skill development unlike instant coffee requires time, Rituparna Chakraborty, co-founder and senior vice president at TeamLease argued that skill deficit is a genuine problem in the country and often skills attract jobs.

“Even if jobs are not available in the country, a skilled worker can move abroad or will settle for a lower skill level. A lot of times jobs are vacant or get lost because the requisite skill level is not available,” she said.

Chakraborty, who also heads the Indian Staffing Federation stressed that with over 12 million people joining the country’s workforce every year but unable to find jobs often because they are unskilled this is a serious problem.

A recent report by Kotak Institutional Equities Research points out that India requires an investment of over 36 per cent of GDP to get a 1 per cent growth in employment. As India’s labor force grows at close to 2.8 per cent a year, at the current ratios it will require an investment rate that is unsustainable. The country will have to triple its investment rate or capital employed to generate jobs for this growing labour force.

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