Building a flexible and Effective Skills Ecosystem to fuel Job Creation
India has witnessed a strong economic growth in recent years,though poverty still remains a key challenge.Coupled with this is the ever increasing global talent crunch or the imminent skilled labor shortage affecting both developed and developing economies, while
outstripping job creation. By 2030, the world will face a talent deficit of 85.2 million workers resulting in $8.5 trillion in unrealized annual revenue (Korn Ferry survey,2016). And India would see a labour skills shortage of 47 million and unrealized output of $4.1 trillion.
While some countries in the Asia-Pacific region are dealing with rapidly ageing populations, others have a rising number of working-age citizens. Hong Kong and Japan face particularly stark deficits and in contrast,India stands out as the only country that will have a talent surplus, expected to reach 245 million workers by 2030. But in the face of the changing world of work the perceived problems in the economy can become opportunities.
As a result, the global leaders have invested in technology for future growth. Aligning automation, AI, and other technological advances with skills training will contribute to the growing talent deficits. This is especially important in the context of India’s demographic transition that has also produced a youth bulge in the working age population While the world has focus on building the skills ecosystem, there is also a need for the creation of jobs that meet the future needs. About 83% of India’s labour.force works in the unorganised sector. Most of these are low-productivity, low-income jobs. Not enough decent and productive jobs have been created. In addition,there are persistent and notable disparities in the labour force participation rates of men and women. India’s Economic Survey (2017) indicates that creating jobs is the country’s “central challenge”.
The World Bank reports that India needs to create 8 million jobs per year in order to maintain constant employment rates (Jobless Growth, WB Report, 2017),with the unemployment rate hovering around 3.4% in 2017 (Trading Economics). Also the process of transition of labour from low- to high-productivity activities has been much slower in India than in other Asian countries like China
India’s Struggle For Jobs
- Casual labour forms 1/3rd of the employed wordforce
- Only 17% of the workforce are salaried
- 71% of the workers don’t get social security benefits
- 2 out of 3 households earn less than Rs.10,000/month
Talent supply and demand by sector According to an IndiaSpend report, between July 2014 and December 2016, the eight major sectors of manufacturing, trade, construction, education, health,information technology, transport, and hospitality created only 1.35 lakh jobs
Job creation is not the only challenge that the country faces, the nature of employment opportunities is equally a cause of concern. In 2016, one third of the workforce was employed as casual labour while just 17% of the people were working in the organized sector as salary earners (5th Annual Employment-Unemployment Survey). This implies that more people are employed on a contractual basis and, hence, ineligible for any social security benefits Key recommendations to fuel job creation In order to reduce the skills deficit while increasing employability, a range of policies and strategies are implemented. These include enhancement in workrelevant education systems, career guidance, lifeskills, and technical, vocational education and training schemes, and on-the-job training in both formal and
• Job creation would surge with a greater focus on entrepreneurship-based skill development programmes
• Cluster development that supports job creation in micro, small and medium enterprises (MSMEs) would surge job creation. The MSMEs, concentrated in specific geographic locations, houses most of the unorganised sector employment. Promoting capacity building, re-skilling and self-employment in these areas would create more jobs
• Ensure that employment and skills policies are adapted to regions where employer skills demands are low
• Ensure that people are matched to jobs that are commensurate with their skills and qualifications and avoid “work first” approaches where jobs are of low quality and “labour market churn” is high
• Provide technical assistance and training to improve work organisation so that worker skills are more effectively harnessed and technology fully utilized
• Leverage the public sector’s role as an employer and purchaser
• Serve as a role model – support the development of a quality driven supply chain
• Promote flexible lifelong learning systems that develop local training systems and allow people to undertake training throughout their lives
• Tailor entrepreneurship training programmes at the local level to meet the needs of the clients and the local area
• New age sectors like defence and aerospace,education and healthcare, and the green sectors like solar energy and wind, present another massive opportunity to identify ‘upcoming jobs’ and prepare talent accordingly
In conclusion, to boost productivity and local job creation, policy makers need to consider how skills are produced locally and how they are harnessed by local employers. This requires thinking more broadly about skills policy and its contribution to local productivity and economic development. It also requires better understanding of the overall balance between skills supply and demand in the labour market