Skilling India

No Time To Lose

SUP P O RTE D BY
 Skilling India
No Time To Lose

“We have no time to lose, and having no time

we must scramble for a chance.”
—Rabindranath Tagore
 This NCAER Report has been made possible by a generous grant from the New Skills at Work
programme of J.P. Morgan.

About NCAER
NCAER, the National Council of Applied Economic Research, is India’s oldest and largest inde-
pendent economic think-tank, set up in 1956 to inform policy choices for both governments and
industry. For more than six decades, NCAER has served the nation with its rich offering of applied
policy research, unique data sets, evaluations and policy inputs to central and state governments,
corporate India, the media and informed citizens. It is one of a few think-tanks world-wide that
combine rigorous analysis and policy outreach with deep data collection capabilities, especially for
large-scale household surveys.

© 2018 National Council of Applied Economic Research/NCAER

This report was first published in October 2018.

This report is a product of the research staff of NCAER. The findings, interpretations and conclu-
sions expressed herein do not necessarily represent the views of NCAER or those of its Governing
Body.

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About the New Skills at Work–India Programme

The J.P. Morgan New Skills at Work–India programme seeks to focus on the three critical elements
of employment, employability and education; engage key stakeholders from government, industry
and skill training providers; and as a research programme meaningfully contribute both to policy
as well as practice pertaining to employability, labour markets and the skilling supply chain.

About JPMorgan Chase & Co.

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of
US 2.5 trillion and operations worldwide. The firm is a leader in investment banking, financial
services for consumers and small businesses, commercial banking, financial transaction process-
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& Co. serves millions of customers in the United States and many of the world’s most prominent
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information about JPMorgan Chase & Co., visit www.jpmorganchase.com.

While this report has been supported by J.P. Morgan, the content and opinions are those of authors
alone and do not reflect the views of J.P. Morgan, JPMorgan Chase & Co. or any of its affiliates.
ii
Contents
Forewordv
NCAER Skilling India working papers vi
Acknowledgmentsvii

Chapter 1
The urgency of skilling India’s workforce 1
India’s economy is on the move­— ­but its workforce has barely budged 1
More Indians of working age, with fewer young and old dependent on them­— ­a
demographic dividend or a curse? 1
High-growth sectors are not creating jobs in those sectors 2
Why does India have economic growth without jobs? 3
Escaping the vicious cycle 7

Chapter 2
Acquiring skills
How best to impart them 11
Simplifying skill definitions makes it easier to see what’s needed 11
The world’s largest school system is not producing enough literate and numerate workers 12
Technical and vocational education are too supply-driven and short term 13
Apprenticeships for learning-by-doing and learning-while-earning 18
Industry clusters for supplying skills to meet local demand conditions 19
Imparting skills on the job to make skilling more demand-driven 19
Turning the vicious cycle virtuous: acquiring skills and generating good jobs 20
Focus and consolidate technical and vocational education 26
Reach special groups 26
Ensure that skills are portable across other jobs and sectors 29
Appendix A2.1 A glossary of skills 30
Appendix A2.2 Explanations for ratings in table 2.1  32

Chapter 3
Matching skills
How best to adjust them 39
The supply of skills doesn’t match the demand 41
An army of educated unemployed­— ­a nd acute shortages of skilled workers 45
Fixing the mismatches requires more than vocational skill training 46
Connecting women to work 49
Increasing the mobility of labour 50
Unleashing opportunity entrepreneurs 51
Formalising informal workers by recognising prior learning 52
India’s new knowledge economy requires new skills 54

Chapter 4
Anticipating skills
How best to adapt them 61
Exchanging life-time employment for life-time employability 61
Adapting to structural and technological change 62
Anticipating the skills of the future 65

iii
 Policy recommendations for adapting and anticipating skills 73

Boxes
2.1 “Learn and Earn” at Boeing and Saint Gobain 17
2.2 Demand-driven interventions for on-the-job training in large firms 20
2.3 The Wheebox Employability Skills Test: India Skills Report 2017 and 201826
2.4 Boosting entrepreneurial skills 27
3.1 In search of the public-sector job 48
3.2 The knowledge economy and skills 54
4.1 Entrepreneurial initiatives to improve farm productivity 67
4.2 Young women in plastics 69
4.3 Digital villages 72
4.4 Indian weaver micro-entrepreneurs connect to startup digital aggregators 73

Figures
1.1 More workers mean fewer dependents 2
1.2 More regular employees in smaller firms—more contract workers in larger firms 4
1.3 India’s 468 million jobs: From baskets to bytes 5
1.4 Ratio of wages/rental price of capital in organised Indian manufacturing 6
1.5 The vicious cycle of low skills and few good jobs—a low skilling trap 7
2.1 How skills interact 12
2.2 Lagging behind other BRICS nations, more than 30% of India’s workers have only a
primary education and only 18% have a secondary education 13
2.3 Big numbers for India’s education and skilling ecosystem 14
2.4 India’s vicious cycle of low skills and few good jobs—a low skilling trap 21
2.5 Moving to a virtuous circle of higher skills and many good jobs—escaping the low
skilling trap 21
3.1 Most workers have little education 41
3.2 Rural–urban wage gaps 51
4.1 Low-productivity sectors employ higher proportions of the workforce and vice versa 62
4.2 Venture capitalists identify why Indian startups fail 66
4.3 Smaller firms are far from ready to use information and communications technology 69
4.4 Digital literacy is required for managers and permanent workers 70
4.5 Small and medium-size enterprises are not digitally engaged 70
4.6 Computer literacy is low for those 15 and above­— ­a nd even lower in rural areas, 2014 71
4.7 Working together to skill India: governments, providers, employers and workers 74

Tables
2.1 Rating India’s largest skilling schemes (see also Annex 2.2) 23
3.1 Where are the 468 million jobs? 40
3.2 Demand for skills across occupational roles 42
3.3 Mismatches between supply and demand 46
3.4 Education and employment of Indian youth 48
3.5 Male–female distribution of managers by sector 50
4.1 Sectoral output and employment 63
4.2 What skills are most transferable? 64
4.3 Transitioning from skills to jobs in 21st century India  66

iv
Foreword
India’s future holds great hope for its millions. framework for policymakers and practitioners
Its working-age population is growing faster to use to design, execute and evaluate skilling
than its population of young and old depend- pathways that can help break the cycle of poor
ents. This demographic dividend comes once in skilling and slow creation of good jobs­ —­the
a nation’s life. If the majority of Indian workers low-skilling trap that India is caught in. The
in this transition are productively employed in Report argues that the three-part framework of
good jobs, and earn and save well, India can acquiring, matching, and anticipating skills provides
see a sustained long-term growth spurt that it a way of designing, executing, and evaluating
badly needs to rise to its potential as an eco- policies and programmes to accelerate skilling
nomic powerhouse. India can then become rich India, and to move from its current vicious
before it becomes old. Otherwise, it will forfeit cycle to a virtuous cycle of better skilling and
its demographic dividend. faster creation of good jobs.
For the majority of Indians to be in good jobs All stakeholders in the skilling space
requires them to have the skills that employers must work together to acquire and impart,
and entrepreneurs need. India’s skilling para- to match and adjust, and to anticipate and
dox is that the labour market is characterised adapt the skills that India will need in the
by dwindling opportunities in agriculture, next three decades to generate good jobs for
there is much potential for jobs in manufactur- its rapidly expanding workforce. This impera-
ing and services, but there are not enough peo- tive calls for distinct roles and responsibilities
ple with the right skills, even for today’s jobs. for employers, for governments, for skill pro-
While IBM has more employees in India than viders and for workers. And it calls for mutu-
in the US, ever more Indians are struggling to ally reinforcing policies, actions, incentives
find work. And while India grapples with the and understanding among and between these
legacy of its existing skills–jobs mismatch, it four key stakeholders to successfully impart,
must pay attention to anticipating the skills of match and anticipate skills for India in the
tomorrow, when it sometimes is not even clear 21st century.
what those skills might be. We need a 15-year, 2020–35 perspective
This NCAER Report on Skilling India has the plan focused on transferable skills that can
subtitle No Time to Lose. Indeed, much time has meet the demand from industries now and in
already been lost. Policymakers face the triple the future. To prepare such a plan, the govern-
challenge of incentivising the creation of more ment should establish a Commission for 21st
well-paying jobs, creating efficient pathways Century Skills. This NCAER Report could pro-
to skill acquisition and job matching to ensure vide a framework for the terms of reference for
workers have the right skills, and protecting such a Commission.
low-paid, low-skilled workers with social secu- This Report starts with a quotation on its
rity benefits. An additional challenge comes opening page from Rabindranath Tagore’s
from the massive number of workers aged Gitanjali, “We have no time to lose, and hav-
30–59 who are in the workforce but have to be ing no time we must scramble for a chance.”
reskilled or upskilled. Though not included on the opening page,
After suggesting simple ways of thinking Tagore’s next line written in 1912 reads, “We
about the three types of skills that are are too poor to be late.” India has achieved
fundamental­—­foundational, employability much since Tagore wrote those words, yet it
and entrepreneurial­ —­
this Report offers a cannot afford to be late.

Shekhar Shah
Director-General

v
 NCAER Skilling India working papers
1. Where are the Jobs? Skill-based Input-Output Employment Linkages by Sector for India
Tulika Bhattacharya and Bornali Bhandari

2. Is India’s Education System providing 21st Century Basic and Employability Skills?
Mousumi Das

3. India’s Employment Challenges and the Demand for Skills

Pallavi Choudhuri

4. The 3–E Challenge in India: Education, Employability, and Employment

Bornali Bhandari

5. Providing the Full Range of Employability Skills in India

Bornali Bhandari

6. The Role of Pedagogy in Developing Life Skills in India

Renu Gupta

7. How do Technical Education and Vocational Training Impact Labour Productivity in India?
Seema Sangita

8. An Exploratory, State-wise Education-Employability-Employment Index for India

Saurabh Bandyopadhyay, Bornali Bhandari, Ajaya K Sahu and Praveen Rawat

9. Viewing Skilling India from the ground up: Project case studies

Available from http://www.ncaer.org/skillingindia/workingpapers.

vi
Acknowledgments
This Report has been prepared by a team at Ghosh, Mukesh Gulati, Abhishek Gupta,
NCAER led by Bornali Bhandari and com- Mukesh Gupta, Raj Gupta, Lisa Heydlauff,
prising Pallavi Choudhuri, Mousumi Das, Frank Hoffmann, Renana Jhabvala, Aruna-
Tulika Bhattacharya, Soumya Bhadury and chalam Karthikeyan, Antara Lahiri, Jürgen
Girish Bahal, with additional contributions Männicke, Jancy Mathews, Abhiroop Muk-
by ­Saurabh Bandyopadhyay, Renu Gupta and hopadhyay, Sheeja Nair, Arun Nalavadi, Kedar
Seema Sangita. The team was assisted for data Panda, Matthias Pilz, J. V. Rao, Biswajit Saha,
analysis and literature work by Ajaya K. Sahu, Alekh Sanghera, Ratna Silroja, Bikrama Dau-
Praveen Rawat, Mridula Duggal, Rohini Sany- let Singh, Deepti Singh, Lokesh Singh, Anup
al, Jahnavi Prabhakar, Heena Bhatia, Aishwar- K. Srivastava, Johannes Strittmatter, Vandana
ya Agarwal, Aarti Garg, Sanskriti Goel, Upend- Thallur, Shamik Trehan, Aditya Tyagi, Mahesh
er Kataria, Anjali Parashar, Sudhir Swarup and Venkateshwaran, Sher Verick, Wilima Wadh-
Sumit Aggarwal. Bruce Ross-Larson was the wa and Jürgen Wuttke.
principal editor. The team would like to thank Early versions of the research papers on
Rajesh Chadha and D. B. Gupta for their con- which this Report is based were presented at a
stant advice and support. The work was car- conference in New Delhi in October 2016. We
ried out under the general direction of Shekhar thank the participants at the conference for
Shah, with assistance from Akansha Dubey, their valuable comments.
and subsequently Anwesha Pandey. Sudesh Bala served as executive assistant to
The team was guided by a panel of experts the project, Sangita Chaudhary as team assis-
comprising Dilip Chenoy, Rukmini ­Banerji, R. tant, and Praveen Sachdeva as technical support.
C. Bhargava, Pramod Bhasin, Rajesh Chakra- Rabi Narayan Panda provided financial manage-
barti, S. Ramadorai, R. C. M. Reddy, and ment services, Anupma Mehta editing support,
Manish Sabharwal. We thank them for their and Jagbir Singh Punia publication support.
valuable insights and guidance. Arup Mitra, Report design, editing and production were
B. N. Goldar, and Anil K. Sharma provided coordinated by a team at Communications
valuable comments on early drafts of several Development Inc. led by Bruce Ross-Larson
working papers. and including Joe Caponio, Mike Crumplar,
The team undertook a range of interviews Debra Naylor and Elaine Wilson.
for this Report. For their valuable time and the This work was generously supported by a
many insights they shared, we thank our inter- grant from the New Skills at Work programme
viewees, including Karen Adams, Aradhna of J.P. Morgan. We would particularly like to
Aggarwal, Ishwarya Balasubramanian, Rama- thank Maneesha Chadha, Diana Tsui, and
ni Balasubramanian, Jagmohan Bhogal, Rabin Chauncy Lennon for their patience and under-
Bose, Sujoy Chatterjee, Sandhya Chintala, standing as this Report went through sever-
Neeta Pradhan Das, Sonalde Desai, Ravi Dha- al incarnations and for their partnership with
nuka, Ambarish Dutta, Judith Evers, Arindam NCAER.

vii
 Highlights
India has a skilling India’s 468 million
paradox workers have to move
from baskets to bytes
India accounted for 25% of the world’s estimat-
ed 7.5 million bachelors in science and engi- The transition of India’s labour force from
neering in 2014. No wonder the world’s leading small, unregistered firms in the informal sec-
tech companies have their largest operations tors to small, medium and large formal firms
in India. Yet, as the Economist notes, even as has been slow. Rigid labour laws and poor
“India’s labour force will soon overtake China’s infrastructure impede the pace of transi-
as the world’s largest … the country is strug- tion from informal to formal jobs. So, what’s
gling to generate opportunities for a workforce needed?
with the wrong skills.” The 2015 policy of the Conceptually the answer is clear: skill exist-
Ministry of Skill Development and Entrepre- ing informal workers (many of them female)
neurship notes, “Our country presently faces and new workers based on industry require-
a dual challenge of paucity of highly trained ments and deploy them in a rapidly growing
workforce, as well as non-employability of formal sector. Efficiency is higher in the formal
large sections of the conventionally educated sector, costs are lower and profit margins are
youth, who possess little or no job skills.” This bigger, all translating into greater job-gener-
is India’s skilling paradox: Dwindling oppor- ating potential. Formalisation increases firms’
tunities in agriculture, much potential for jobs incentives to invest in upskilling their work-
in manufacturing and services, but not enough ers. It also increases the workers’ own incen-
people with the right skills. tives to remain skilled, besides providing them
with better working conditions and health and
social security benefits.
BYTES
High skill
IBM Now Has More
Employees in India 15% in Manufactu
ring
Than in the U.S.
27%
IBM has shifted its center in S
of gravity halfway around 10 er v
ices
the world to India. %
in
The New York Times, Co
49%

28 September 2017 ns
tr
uc
tio
n
in A

al
rm
gri

Ever More Indians

cul

fo
tur

Are Struggling to
%
l/8
e

Find Work a
rm
The country is missing fo
out on its “demographic
in
%
dividend” 92
The Economist,
14 September 2017

BASKETS From page 5.

Low skill

From back cover. ix

 But India is trapped in a Moving to a virtuous circle
vicious cycle of low skills of better skilling and more
and few good jobs good jobs is imperative
The combination of inadequately skilled work- Policymakers need to consider a three-pronged
ers, out-of-date labour laws, a rising ratio approach. First, completely clear the Central and
of wages to the price of capital and persis- State underbrush of policy distortions embed-
tent informality are feeding on each other­— ­a ded in dysfunctional and out-of-date labour and
self-perpetuating vicious cycle that results in industrial laws and regulations, many of them
fewer good, formal jobs than India is capable hangovers from India’s famous licence raj and
of and badly needs. Greater informality drives from earlier colonial times. Also ensure that
poor skilling, employers choose machinery laws and regulations no longer impede convert-
over men, and few good jobs are created, driv- ing informal to formal jobs. Formalisation will
ing India’s burgeoning labour force further into increase firms’ incentives to invest in upskilling
informality. their workers. It will also increase the workers’
incentives to remain skilled, besides providing
them with better working conditions and health
and social security benefits. Second, promote
public and private investments in sectors identi-
fied as most promising in generating jobs direct-
ly within that sector and indirectly across sec-
tors. Third, skill the workforce, covering both
existing and new workers, to match employers’
needs and promote formal jobs. After suggest-
ing a simple way for thinking about the types
of skills required, this report offers a frame-
work for skilling India—acquiring, matching
and anticipating skills—that can help break
the cycle of poor skilling and low job creation.
There is no time to lose.

Slower Faster
growth growth
of good, of good,
formal jobs formal jobs

Higher cost Lower cost

of skilled Greater of skilled Less
workers workforce workers workforce
relative to informality relative to informality
capital costs capital costs

More Fewer
Lower poorly-skilled Greater
poorly-skilled
incentives to and more incentives to
and fewer
acquire or well-skilled acquire or
well-skilled
impart skills workers impart skills
workers

From page 21.

x
Simplifying skill A three-part framework
definitions makes it for thinking about how
easier to see what’s to make India’s skilling
needed ecosystem work better—
acquiring, matching,
Cognitive skills are basic skills of literacy and anticipating skills
numeracy, applied knowledge and problem-­
solving aptitudes and higher cognitive skills Acquiring, imparting and assessing skills—requires
such as experimentation, reasoning and crea- change in K-12 education, vocational and tech-
tivity. Technical and vocational skills are the nical education and on-the-job training. Match-
physical and mental ability to perform specif- ing and adjusting skills—how best can job seekers
ic tasks using tools and methods in any occu- with low or high skills find productive work
pation. Social and behavioural skills include and how can firms find workers with gener-
working well with others, communicating well al and specialised skills. Anticipating and adapt-
with others, listening well to others and gen- ing skills—the continuously evolving landscape
erally being agreeable and outgoing. Everyone of jobs and shorter technology cycles require
has these skills to varying degrees. Combin- development of core skills that are transferable
ing these types of skills gives foundational skills, across roles. India can successfully create the
employability skills and entrepreneurial skills. self-reinforcing virtuous circle of acquiring–
matching–anticipating skills as suggested in this
Report, and in parallel create the economic and
Foundational skills social conditions for rapid, sustained economic
growth. If it can do this in the next five years,
there is no reason why its aspirations to provide
Technical
Basic and and opportunity and well-being to millions of its
higher vocational citizens across the country cannot be realised.
cognitive
Otherwise, with every passing year and each
new generation that is not adequately skilled,
Social and the backlog of wasted opportunity and unmet
behavioural skill needs can only become larger, making
catch-up increasingly difficult.

Employability skills
MATCH
&
Basic and Technical
higher and ADJUST
cognitive vocational

Social and
behavioural

Entrepreneurial skills

Basic and Technical

higher and
cognitive vocational
ACQUIRE ANTICIPATE
& &
Social and IMPART ADAPT
behavioural

From page 12.

xi
 Acquiring skills—how best to impart them
Required on the supply side of workers pro- demands. On-the-job training has to extend
viding skills are essential changes in India’s beyond large firms and be offered to workers
schooling and skilling system—the world’s in smaller firms and to informal workers. Indi-
largest—in vocational education and in on-the- an workers need to shift from lifetime employ-
job training. This also requires recognising and ment to lifetime employability.
certifying the skills and prior learning of those How best to turn India’s many disadvan-
in the informal workforce. Not only does the tages into advantages? By making sure that all
overall quality of schooling and training have children are literate and numerate. By having
to rise, but the content has to address the work- the demand for skills from employers drive the
places of today—and tomorrow. General edu- supply of skills by workers. By providing the
cation should impart social and behavioural full range of skills for becoming employed. By
skills as well as basic and higher cognitive ensuring that skills are transferable to other
skills, problem solving and systems thinking. jobs and sectors. And by ramping up assess-
Vocational education should develop and revise ments to know whether and what skills are
programmes nimbly to keep up with workplace being successfully imparted.

FIGURE 2.3
Big numbers for India’s education and skilling ecosystem

2,000,000 Indian institutions imparting skills

300,000,000 Indians currently getting educated or 468,000,000 Indians now in jobs may
skilled and will be looking for work (or may not) be acquiring skills on the job

ACADEMIC TECHNICAL VOCATIONAL ON THE JOB EXAMPLES OF JOBS

Ages 24+ DOCTORATE DOCTORATE IN ENGINEERING MEDICAL RESIDENTS SCIENTISTS

126,500 enrolled 30,600 enrolled JUNIOR RESEARCH ECONOMIC ADVISERS
FELLOWS UNIVERSITY FACULTY
ASTRONOMERS
POLICY EXPERTS

Ages 22+ MASTER’S MASTER’S IN ENGINEERING ADVANCED TRAINING MASTER’S OF ENGINEERS

MANAGERS
3,900,000 enrolled 257,000 enrolled 28 institutions VOCATIONAL EDUCATION
DATA ANALYSTS
350,000 have Launched 2015, TEACHERS
enrolled since 2007 no data available as yet STOCK BROKERS
JOURNALISTS
ARCHITECTS
LAWYERS

Ages 19–21 BACHELOR’S ENGINEERING COLLEGES INDUSTRIAL TRAINING BACHELOR’S OF APPRENTICESHIP JUNIOR ENGINEERS
TECHNICIANS
800 universities 3,200 colleges AT ITIs VOCATIONAL EDUCATION AND INTERNSHIPS
CONSTRUCTION
27,400,000 students 4,200,000 enrolled 13,550 institutions 162 institutions (2–4 year certificate) SUPERVISORS
POLYTECHNIC 3-YEAR DIPLOMA 1,200,000 enrolled 10,200 students 2,400,000 OFFICE WORKERS
TV CAMERA
3,900 institutes COMMUNITY COLLEGES apprentices and OPERATORS
1,500,000 enrolled 157 colleges interns

Ages 17–18 HIGHER SECONDARY (Grades 11–12) VOCATIONAL HIGHER PLUMBERS

ELECTRICIANS
112,600 institutions SECONDARY
CONSTRUCTION
24,700,000 students 7,400 schools provide WORKERS
472,000 students

Ages 15–16 SECONDARY (Grades 9–10) VOCATIONAL SECONDARY TEXTILE WORKERS

108 schools provide RETAIL CLERKS
239,100 schools HOSPITALITY
39,100,000 students WORKERS
BEAUTY THERAPISTS

Ages 6–14 ELEMENTARY (Grades 1–8) LOW-SKILLED

WORKERS
1,450,000 schools
196,716,500 students

From page 14.

xii
Matching skills—how best to adjust them
Required on the demand side of employers look- and vocational systems are imparting knowl-
ing for skills is having job seekers know how edge through oral and rote learning, but not the
they can find productive work with the skills broad range of foundational, employability and
they have or should obtain, and having firms entrepreneurial skills needed for jobs. Along
know how they can find workers with the right with job-specific knowledge and skills, firms
skills. Educational attainment may be increas- seek innovation, complex social and emotion-
ing, but high unemployment rates among the al, and psychomotor skills that the education
educated signal significant problems for their system does not easily supply. Educational and
employability. Even if workers read market sig- skilling institutions need to work more closely
nals better and understood the skills needed of with industry, through apprenticeships, train-
them better, the problem is that the education ing on the job and recognising prior learning.

TABLE 3.3 Mismatches between supply and demand

SUPPLY OF SKILLS DEMAND FOR SKILLS

HIRED WORKERS ENTREPRENEURS AND SELF-EMPLOYED PERSONNEL

Medium-high- CEO/director/
Medium-skilled skilled worker/ High-skilled worker/ Self-employed High-skilled, opportunity
Low-skilled operative/trade associate specialist trainer/ High-skilled livelihood/necessity self-employed entrepreneur/
Skills Educational attainment casual worker worker professional professional manager entrepreneur professional employer

Routine cognitive skills Primary and middle school education

● ● ● ● ● ● ● ●
Routine cognitive skills, ICT skills Secondary education
and language skills ● ● ● ● ● ● ● ●
Routine cognitive skills, ICT and Higher secondary education
language skills, financial literacy ● ● ● ● ● ● ● ●
Routine cognitive, nonroutine cognitive College education and above
skills, core socioemotional skills, ICT
skills, language skills, financial literacy ● ● ● ● ● ● ● ●
and knowledge and ability to apply

Routine cognitive skills, nonroutine Technical education

cognitive skills, ICT skills, financial
literacy and knowledge and ability to ● ● ● ● ● ● ● ●
apply, sector and job-specific skills

Job-specific skills, one ICT skill, English Short-term skilling programmes

language skills and some financial literacy ● ● ● ● ● ● ● ●
Routine cognitive skills, knowledge and Long-term skilling programmes
ability to apply and job-specific skills ● ● ● ● ● ● ● ●
● Worker cannot supply the skills that the job demands.
● Worker can perhaps supply the skills that the job demands with varying success ranging from barely to mostly.
● Worker can fully supply the skills that the job demands.
Note: Red implies that there is demand for this but supply is limited, indicating a mismatch. Green indicates that there is a reasonable degree of match.
Yellow indicates that there is only a partial match. Black indicates that workers’ skills exceed what the job needs.
Source: NCAER, based on stakeholder consultations and literature reviews.

From page 46.

xiii
 Anticipating skills—how best to adapt them
Understanding how structural and technological individuals—large firms need formal business
changes in this 21st century are radically alter- and accounting skills and high technological
ing today’s workplace and the nature of work is skills, and smaller firms need multitasking and
imperative. While India must deal with its large adaptability to business practices. The 21st cen-
and persistent backlog of unskilled informal tury Indian worker also needs transferable skills.
workers, it must also provide for its future to sus- Above all India needs to create an agile work-
tain rapid progress. Firms of different sizes are force that can anticipate and adapt to changes in
already placing different skill requirements on technology, automation and digitisation.

The Internet has Technological 21st century jobs

changed how cycles are shorter will no longer
people connect than ever, and be confined to
to work, with digital disruption task-specific
more workers is likely to recur roles. Instead,
using cloud with greater the demand for
computing, video frequency. multi­dimensional
conferencing and skills will
other means to increasingly grow.
work anywhere,
anytime.

Transferable Customer- The e-commerce

skills relevant facing jobs with sector could
to multiple non‑routine create 14 million
workplaces are the interactive tasks jobs in logistics
key to promoting that depend on and delivery,
workforce agility. soft skills can and 6 million in
be expected to customer care,
grow. So can information
jobs depending technology and
on higher management.
cognitive skills.

From chapter 4.

xiv
India must get rich before it gets old
India’s working-age population is growing fast- and save well. India then becomes rich before it
er than its population of young and old depend- becomes old; otherwise it will forfeit its demo-
ents. The growing share of the workforce in the graphic dividend.
population can be a “demographic dividend” The Indian policymaker’s first and foremost
that can improve both social and economic challenge, given this demographic opportu-
outcomes, if the higher numbers of workers are nity, is to spur economic growth that creates
productively employed. good jobs for new entrants to the job market
The growing population share of the work- and, at the same time, to ensure that these new
force is a demographic dividend that comes workers have the right skills. A second, larg-
once in a nation’s life. This should raise the rate er challenge comes from the massive number
of economic growth if the higher numbers of of workers aged 30–59 who are already in the
workers are productively employed and earn workforce but have to be reskilled or upskilled.

80 dependents 1950

per 20 workers
1955
Working
age (15–64) 1960
55.4%
1965
POPULATION
1965 65 and over 1970
3.2%
1975
Under 15
41.4% 1980

1985

50 dependents 1990
per 50 workers Dependent
population 1995
Working
age (15–64)
66.9% 2000

2005
POPULATION
2020 2010
65 and over
6.6% 2015
Under 15
26.6%
2020

2025

46 dependents 2030
per 54 workers
Working 2035
age (15–64)
68.4% 2040

2045
POPULATION
2040
Working-age 2050
population
Under 15 65 and over 2055
21.0% 10.6%
2060

2065

69 dependents 2070
per 31 workers
Working 2075
age (15–64)
59.2% 2080

POPULATION 2085
2100
2090

65 & over Under 15 2095

15.0% 25.9%
2100
0 10 20 30 40 50 60 70 80 90 100
Percent of population
From page 2.
xv
 Get all stakeholders to work together…
Given the time it takes to skill both existing between these four key stakeholders to suc-
and new workers, all stakeholders in the skill- cessfully impart, match and anticipate skills for
ing space must work together to acquire, match India in the 21st century. India needs a 15-year,
and anticipate skills that India will need in the 2020–35 perspective plan focused on transfera-
next two or three decades to generate good ble skills that can meet demand from industries
jobs for its rapidly expanding workforce. This now and in the future. To prepare the plan the
imperative calls for distinct roles and respon- government should establish a Commission for
sibilities for employers, for governments, for 21st Century Skills. This NCAER Report could
training providers and for workers. And it provide a framework for the terms of reference
calls for mutually reinforcing policies, actions, for such a Commission.
incentives and understanding among and

Establish a Commission on 21st Century Skills

to prepare a 15-year perspective plan for
2020–35

Improve the investment climate and the ease

Shift from necessity to of doing business
opportunity entrepreneurs
Connect private and public stakeholders
Scale up to reap economies of scale
better
Provide in-service training for fresh
trainees, reskilling and upskilling for Deregulate labour markets while
experienced workers simultaneously providing social security

Adopt modern labour and Focus on quality and inclusion

human resource practices
Go Prepare for the new face of
s ve
Ensure corporate er r manufacturing
social responsibility oy n
pl

Commission ongoing,
m
Em

Support employees
en

regular, skill-related
when employers have
ts

labour market research

to retrench them

Focus on employability—
knowledge plus advanced
W

s
id l
er

ke cognitive, non-cognitive and/or

il

Sk
or

rs technical and vocational skills

ov
pr Sharpen academic–industry mutual
interaction
Ensure flexibility in education and training
Acquire transferable skills Train students for a knowledge economy, with social
Learn to learn awareness

Pursue flexible employment,

not just lifetime careers From page 74.

…there’s no time to lose

xvi
India’s skilling challenge in numbers

◆◆ Nearly 1.25 million new ◆◆ Out of the more than

workers aged 15–29 are projected 500 thousand final year
to join the workforce every month bachelors students aged 18–29
through 2022. who were surveyed, 54% were
found to be unemployable.
◆◆ By 2022, India will have about
47 million more people ◆◆ 2 million Indian institutions are
between the working ages of imparting skills.
19 to 59 than younger or older
people. This demographic ◆◆ 300 million Indians are
dividend will peak in about 2040. currently in educational
institutions or acquiring vocational
◆◆ The roughly 70 million workers skills and will be eventually
entering the workforce between looking for work.
2018 and 2022 will need to be
skilled for a 21st century economy ◆◆ Women’s labour force
if India is to keep pace with participation was 21% in urban
technological change. areas and 36% in rural.

◆◆ Many of the roughly ◆◆ Of rural and urban women aged

468 million now in the 15–29, 49% are neither part of
workforce could be upskilled and the labour force nor pursuing
reskilled­—­not easy because 92% education, general or vocational.
are in the informal sector. ◆◆ Between 2005 and 2012,
◆◆ Slightly more than half of India’s 15 million women dropped out
workers have school attainment of India’s labour force.
below secondary school with no ◆◆ The share of female managers was
vocational training. 6% in computer manufacturing
◆◆ Of India’s current workforce, 31% and 12% in computer
are illiterate, 13% have a primary programming.
education, and 6% are college ◆◆ The rural–urban male migration
graduates. rates in India have been low at
◆◆ About 2% of the workforce has around 4% in recent decades.
formal vocational training, and ◆◆ 68% of Indian SME businesses
9% have non-formal, vocational are offline, and another 15% are
training. digitally connected but not using
◆◆ There were approximately digital services. Only 2% marketed
48 million workers in products or services online.
construction and 16 million ◆◆ Technology cycles are shorter than
in textiles and apparel with no ever, and digital disruption could
vocational training. hit Indian workers hard: globally
◆◆ The unemployment rate for 75% of businesses expect that
graduates aged 20–24 was 29%, automation will require workers to
for those 25–29, 12%, and for develop new skills.
those 30–34, 4%. Retrospective numbers are from NSSO 68th Round
2014 (with data for 2011–12). Prospective numbers
are from Ministry of Skills and Development 2015.
xvii
 MATCH
&
ADJUST

ACQUIRE ANTICIPATE
& &
IMPART ADAPT
 1

The urgency of skilling India’s workforce

India’s economy is on the move­—­but its challenge is all the more difficult because tech-
workforce has barely budged nology is changing the nature of work every-
where, eroding the low-wage advantage that
India has surpassed China as the world’s fast- India could hope to enjoy in meeting domes-
est growing large economy. It has also moved tic and global demand. India’s aspirations to
toward a knowledge economy, and more become an economic superpower providing
broadly from agriculture to manufacturing and opportunity to millions of its citizens cannot be
services, but for the most part the Indian work- realised at this rate. Indeed, given India’s scale,
force has not changed. Indeed, policymakers, just the frustrated aspirations of its youth can
educators, trainers and firms face daunting cause social unrest and strife.
challenges in skilling India’s workforce to meet
the economy’s current and changing needs.
• Many of the roughly 468 million now in the More Indians of working age, with fewer
workforce need to be upskilled and reskilled­ young and old dependent on them­—­a
—­not easy because 92% are in the informal1 demographic dividend or a curse?
sector, mostly outside the reach of formal
skilling.2 India’s working-age population is growing fast-
• Of today’s workforce 31% are illiterate, 13% er than its population of young and old depend-
have only a primary education and only 6% ents. The growing share of the workforce in the
are college graduates. Further, only about population can be a “demographic dividend”
2% of the workforce have received formal that can improve both social and economic
vocational training while only 9% have outcomes, if the higher numbers of workers are
nonformal vocational training.3 productively employed.
• The roughly 70 million new workers enter- Not only is the ratio of young and old
ing the workforce between 2018 and 2022 dependents to the working-age population
need to be skilled for a 21st century econ- dropping in India, but the trough in the trend
omy.4 They may have completed second- is projected to last longer than it did in other
ary education, but many are not employ- countries (figure 1.1). By 2022, India will
able because their cognitive and technical have about 47 million more people between
skills are not up to par, and their social and the working ages of 19 to 59, who are likely to
behavioural skills are lacking. be skilled with no jobs within the country. In
Between 2004 and 2011, data from the addition nearly 1.25 million new workers­ —­
National Sample Surveys show, the Indian aged 15–29­ —­ are projected to join the work-
economy created only some 18.6 million jobs, force every month through 2022.7 By the mid-
or about 2.7 million jobs a year, far too few for dle of this century, India will have a larger
the almost 15 million young adults projected working age population than China. This is a
to enter the workforce each year over the next vast potential, and the scale of economic activ-
five years.5 After 2011–12, various estimates ity that these workers can generate if they are
suggest weak job growth.6 India’s economic productively employed has been rarely seen in
growth over the past decade has for that reason human history.
been called “jobless growth.” But India can ill But if there are too few jobs, or not enough
afford to waste this vast human and econom- good jobs,8 the dividend becomes a curse.
ic potential. With every passing year and each As the young who form the population bulge
new generation that is not adequately skilled, today get older in five to six decades, India will
the backlog of wasted opportunity and unmet then have an aging population that has not
skill needs can only become larger, making accumulated enough wealth and well-being to
catch-up increasingly difficult. Meeting the be able to afford costly old-age care and medical

1
As India’s birth rate falls, its working-age population grows faster than its population of young
and old dependents
The growing population share of the workforce is a demographic dividend that comes once in a nation’s life. This should
raise the rate of economic growth if the higher numbers of workers are productively employed and earn and save well.
India then becomes rich before it becomes old; otherwise it will forfeit its demographic dividend.

FIGURE 1.1 More workers mean fewer dependents

Share of population

Working age (15–64) Working age (15–64) Working age (15–64) Working age (15–64)
55.4% 66.9% 68.4% 59.2%

POPULATION POPULATION POPULATION POPULATION

1965 2020 2040 2100
65 and over
3.2%
65 and over
6.6%
Under 15 Under 15 Under 15 65 and over 65 & over Under 15
41.4% 26.6% 21.0% 10.6% 15.0% 25.9%

80 dependents 50 dependents 46 dependents 69 dependents

per 20 workers per 50 workers per 54 workers per 31 workers
Percent
100

90

80
Working-age
population
70

60

50

40

30 Dependent
population
20

10

0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090 2095 2100

Source: United Nations, Department of Economic and Social Affairs, Population Division, 2017 Revision of World Population Prospects, data acquired at website.

Spur economic
expenditures. To put it simply, to attain its India’s recent rapid GDP growth. But their share
growth that rightful place and realise its aspirations, India in overall employment is less than 2%. They
creates good must become rich before it gets old. produce more with less labour (their labour pro-
The Indian policymaker’s first and foremost ductivity is about 5–10 times higher than in the
jobs for new
challenge, given this demographic opportu- overall economy), and they are generating jobs
entrants to the nity, is to spur economic growth that creates mostly for high-skill workers. In general these
job market good jobs for new entrants to the job market services are more skill-demanding than manu-
and, at the same time, to ensure that these new facturing and have high labour productivity, and
and ensure workers have the right skills. A second, larg- therefore services are an unlikely destination for
that these new er challenge comes from the massive number low-skill job seekers.10
of workers aged 30–59 who are already in the India has a range of other service and man-
workers have
workforce but have to be reskilled or upskilled.9 ufacturing industries that can generate a lot
the right skills of good jobs, both directly and through ripple
effects in related industries, but these have not
High-growth sectors are not creating jobs been growing fast enough. Every sector in an
in those sectors economy has consumption and production
linkages with other sectors and therefore has
A key challenge is that India’s high growth sec- the potential to generate jobs not just directly
tors are not generating direct jobs. Sectors such but also indirectly— in other sectors and among
as business services and information technology– firms of different sizes. Even within services
enabled services are contributing substantially to some sectors have high job-generating potential

2
not only for high-skill workers but also for sector, good jobs. Further complicating policy
medium-skill workers. For example in servic- responses to these challenges are geograph-
es, as NCAER’s research done for this report ic differences that make centralised solutions
shows, trade, hotels, restaurants, financing, difficult.
communication, real estate and business activi-
ties are creating substantial numbers of jobs for Inadequately skilled workers
high- and medium-skill workers both within
and outside their sectors.11 In manufacturing, Possibly the most important explanation for
textiles, wood and wood products and furni- low job creation in India is the lack of ade-
ture and fixtures have the highest job-gener- quately skilled workers. India is among the
ating potential for low and medium-skill work- top five countries with the highest skill short-
ers, both within their own sector and across ages, with nearly two-thirds of firms (with 10
other sectors of the economy. Manufacturing or more employees) surveyed recently by the
sectors such as food processing, beverages and Organisation for Economic Co-operation and
tobacco, leather products, nonmetallic miner- Development (OECD) reporting difficulty find-
al products and textiles can create direct and ing qualified employees.15 Another survey had
indirect low-, medium- and high-skill jobs. The nearly half of all employers reporting unfilled
challenge facing policymakers is to create the job vacancies due to talent shortages.16 The scale India is among
investment climate and the supporting infra- and impact of formal post-school education and the top five
structure and regulations that can allow these training remains modest, with less than 3% of
countries with
sectors to grow more rapidly. the workforce undergoing formal skill training,
India accounted for 25% of the world’s esti- and only about 9% acquiring skills through the highest
mated 7.5 million bachelors in science and informal modes (apprenticeships and on-the-job skill shortages
engineering in 2014.12 No wonder the world’s training). A small share of workers get on-the-
leading tech companies have their largest oper- job training in-house while the vast majority of
ations in India. Yet, as the Economist magazine informal sector workers have no access to for-
notes, even as “India’s labour force will soon mal training. Over the years the government
overtake China’s as the world’s largest...the has introduced several schemes to deliver and
country is struggling to generate opportunities upgrade skills through a formal technical and
for a workforce with the wrong skills.”13 The vocational education and training system. And
2015 Policy of the Ministry of Skill Develop- efforts have been stepped up through such initi-
ment and Entrepreneurship notes, “our coun- atives as Skill India and Make in India.
try presently faces a dual challenge of paucity
of highly trained workforce, as well as non-em- Rigid labour laws
ployability of large sections of the convention-
ally educated youth, who possess little or no job India’s employment protection legislation is
skills.”14 This is India’s skilling paradox: dwin- among the world’s most rigid.17 An example is
dling opportunities in agriculture and lots of the prohibition of layoffs under the Industrial
potential for jobs in manufacturing and servic- Disputes Act, 1947, which requires a company
es, but not enough people with the right skills. with more than 100 employees to get approv-
al from the appropriate government authority
for laying off even a single employee. Small
Why does India have economic growth wonder that manufacturing industries in India
without jobs? use more capital-intensive technologies than
industries in other countries at comparable lev-
India’s unusual pattern of “jobless” economic els of development.18
growth, remarkable in a country destined to be Highly capital-intensive production meth-
the world’s most populous, is the result of both ods may be one response to India’s rigid
supply and demand factors. On the supply side labour market regulations that make labour
there is an inadequate supply of skilled work- expensive (when adjusted for its productivity)
ers. On the demand side three key factors­—­ and prompt firms to substitute machinery for
India’s inflexible and archaic labour laws, the labour. Another response may be the grow-
low relative cost of capital compared to labour ing incidence of contracting in the Indian
and the overwhelming level of informality in labour market and the consequent decline in
manufacturing and services­ —­constrain the labour intensity in organised manufacturing,
rapid creation of jobs, particularly of formal since contract labour does not show up in the

3
 muster roll meant for a company’s permanent in the real interest rate. The low relative price
employees. In manufacturing both capital-in- of capital is exacerbated by improvements in
tensive production methods and contracting technology and automation, which are displac-
can be blamed for slow employment growth ing labour as firms try to stay competitive.
in large-scale, labour-intensive manufacturing
industries. Mostly informal jobs even outside agriculture,
Illustrating the prevalence of contracting, poor working conditions for women, and a slow
the concentration of regularly employed work- shift from informal to formal jobs
ers is highest (27%) in small firms with 50 or
fewer workers, and the concentration of con- The informal employment share in nonagri-
tract workers is highest (21%) in large firms cultural activities is exceedingly large in India.
with 1,000 or more workers and in firms with Furthermore, sectors that have high informal-
201 to 500 workers (figure 1.2). For small and ity employ a sizable portion of female infor-
medium firms with 200 or fewer workers, the mal workers with low wages and poor working
concentration of regularly employed workers conditions. The informal employment share
is 55%, but for medium and large firms with in nonagricultural activities is as high as 84%,
more than 200 workers, the concentration of and the share of female informal employment
Firms contract workers is 55%. Contracting is thus close to 85%. Among individual nonagricultur-
have been more prevalent in larger firms reflecting the al activities­— ­such as transportation, construc-
employers’ response wanting to circumvent tion, trade, manufacturing and services other
substituting
rigid labour laws. than trade or transportation­ —­ the numbers
machinery for look similar. For example the informal employ-
labour due Low cost of capital relative to labour ment shares in construction and trade are the
highest at a little over 97%. In construction the
to the lower For organised Indian manufacturing the ratio female informal employment share is 99%, and
relative cost of the real wage to the real rental price of cap- in trade 98%. Similarly in manufacturing 87%
ital has been steadily increasing over the past of employment is informal, with the female
of capital few decades, more steeply since the late 1990s informal employment share at 94%.20
(figure 1.4).19 This increase can explain the Most new jobs in the economy’s informal
declining labour intensity in organised man- sectors have extremely low productivity. And
ufacturing in India: firms have been substi- the transition of India’s labour force from
tuting machinery for labour due to the lower small, unregistered firms in the informal sec-
relative price of capital. The drop in the rela- tors to small, medium and large formal firms
tive effective cost of capital can be attributed to has been slow (see figure 1.3). Rigid labour
an increase in real wages and a decline in the laws and poor infrastructure impede the pace
rental price of capital (due to the fall in the rel- of transition from informal to formal jobs. So,
ative price of capital goods), rather than a fall what’s needed?

FIGURE 1.2 More regular employees in smaller firms—more contract workers in larger firms

Regular employees Contract workers

50 or less
1,001 or more
18% 50 or less
1,001 or more 16%
27% 21%
501–1,000 51–100
10% 501–1,000 14%
51–100
13%
201–500 13% 101–200
17% 201–500 15%
101–200
15% 21%

Note: Left side: Employee distribution by factory size of regular employees. Right side: Employee distribution by factory size of
contract workers. Data are for 2012–13.
Source: Economic Outlook, Centre for Monitoring Indian Economy.
4
FIGURE 1.3
India’s 468 million jobs: From baskets to bytes

BYTES
High skill

15% in Manufact
u ring

27%
in S
10 er v
ices
%
in
Co
49%

ns
tr
uc
tio
n
in A

al
rm
gri
cul

fo
tur

%
l/8
e

a
rm
fo
in
%
92

BASKETS
Low skill

5
 FIGURE 1.4 Ratio of wages/rental price of capital in organised Indian manufacturing

25,000

Labour-intensive
sectors only
20,000

15,000

All industries

10,000

5,000

Formalisation 0
1980– 1982– 1984– 1986– 1988– 1990– 1992– 1994– 1996– 1998– 2000– 2002– 2004– 2006– 2008–
increases firms’ 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09

Note: The figure plots the ratio of real wages to the rental price of capital, for all industries and only labour-intensive sectors in
incentives
organised Indian manufacturing.
to invest in Source: Sen and Das 2014.

upskilling their
Conceptually the answer is clear: free up Geographic differences
workers and informal workers (many of them female),
workers’ own skill them based on industry requirements Complicating these policy responses is India’s
and deploy them in a rapidly growing for- geographic and cultural diversity. Different
incentives to mal sector. Efficiency is higher in the formal states will realise the demographic dividend at
remain skilled sector, costs are lower and profit margins are different times, with India’s peninsular states
bigger, all translating into greater job-gener- peaking sooner than its hinterland states.21
ating potential. Formalisation increases firms’ The proportion of the workforce to be skilled
incentives to invest in upskilling their work- and to be reskilled is also unevenly distributed
ers. It also increases the workers’ own incen- across peninsular and hinterland states. And
tives to remain skilled, besides providing them the starting points vary across states­— ­i n school
with better working conditions and health and infrastructure, student-teacher ratios, general
social security benefits. and vocational education levels, school dropout
Putting this into practise and staying the rates and workforce participation in formal and
course is surely one of the most important informal jobs and in industry and services.
and difficult policymaking and political econ- The more advanced peninsular states­— ­such
omy challenges facing India (see figure 1.3). as Andhra Pradesh, Kerala, Maharashtra and
Again, simply put, in these circumstances pol- Tamil Nadu­—­need policies for upskilling and
icymakers need to consider a three-pronged reskilling those already in the prime working
approach. First, completely clear the central- ages 30–59 and for matching them with the
and state-level underbrush of policy distortions industries that are growing fast and undergo-
that are embedded in dysfunctional and out-of- ing structural and technological changes. They
date labour and industrial laws and regulations, must also of course cater to new workers enter-
many of them hangovers from India’s famous ing the workforce. And they need to anticipate
licence raj and from earlier colonial times. Also the skills needed later in this 21st century.
ensure that laws and regulations no longer The less advanced hinterland states­ —­ such
impede converting informal to formal jobs. Sec- as Bihar, Chhattisgarh, Jharkhand and Uttar
ond, promote public and private investments in Pradesh­ —­need policies to ensure effective
sectors identified as most promising in generat- absorption of new entrants (15–29) to the
ing jobs directly within that sector and indirect- labour force.22 The key in those states is skilling
ly across sectors. Third, skill the workforce, cov- the new entrants and setting sectoral priorities
ering both existing and new workers, to match that ensure young workers’ absorption in the
employers’ needs and promote formal jobs. workforce. This will not be easy. In Bihar the

6
share of the school-age population in school is result is fewer formal jobs than India is capable
slipping. One report estimates that Bihar alone of and badly needs (figure 1.5).
has around 1.2  million out-of-school 6–13 This report addresses the key challenge of
year-old children, some 20% of the total out- how India can break out of this vicious cycle
of-school children in India.23 and move to a virtuous cycle in which good
Policymakers should thus adopt a decen- jobs can lead to better skilled workers who can This report
tralised approach for skilling and job creation be employed in more and better jobs. addresses the
and for coordinating and monitoring state, dis-
key challenge
trict and block initiatives. For this they should Creating a virtuous cycle of acquiring, matching
annually map skills and sectoral priorities and anticipating skills of how India
across all Indian states, a task requiring new can break out
synergies and cooperative efforts between poli- Simply put India can break the cycle of poor
cymakers and executing agencies at the Centre skilling and low job creation by ensuring that from a low
and their state counterparts. adequate job growth accompanies economic skilling vicious
growth and ensuring that the workforce has
the necessary skills to be employable in the
cycle and move
Escaping the vicious cycle jobs thus created. This requires acknowledging to a virtuous
the following underlying mismatches and mar-
circle in which
So why has more progress not been made in ket distortions that constrain creating jobs and
dealing with India’s skills and jobs challenge? skilling the workforce: good jobs can
The combination of inadequately skilled work- • The broken link between industry and the lead to better
ers, out-of-date labour laws, the rising ratio of education and training systems.
wages to the cost of capital and persistent infor- • Inefficient or missing markets for skills. skilled workers
mality are feeding on each other and result- • The lack of on-the-job-training, especially in who can be
ing in a self-perpetuating vicious cycle whose smaller firms but also in many large firms.
employed
in more and
FIGURE 1.5 better jobs
The vicious cycle of low skills and few good jobs—a low skilling trap

Slower
growth
of good,
formal jobs

Higher cost
of skilled Greater
workers workforce
relative to informality
capital costs

More
Lower
poorly-skilled
incentives to
and fewer
acquire or
well-skilled
impart skills
workers

7
 • The failure to recognise and certify the prior from low-skill jobs towards high-skill digital
learning and skills of those in the informal and management jobs.
sector.
This report investigates these challenges Anticipating and adapting skills requires under-
in greater detail and, in the process, devel- standing how structural and technological
ops a deeper understanding of what’s need- changes in this 21st century are radically alter-
ed to skill India’s workforce. The three chap- ing today’s workplace and the nature of work
ters that follow analyse what’s required to (chapter 4). While India must deal with its back-
skill, upskill and reskill India’s workforce in log of unskilled, informal workers, it must also
the short, medium and long run. They focus not forget to provide for its future if rapid pro-
on how skills are being acquired and impart- gress is to be sustained. Firms of different sizes
ed, how they are being matched and adjusted are already placing different skill requirements
to jobs and, looking to the future, how they on individuals­—­large firms need formal business
are being anticipated and adapted. Acquiring, and accounting skills and high technological
matching and anticipating are the three central skills, and smaller firms need multitasking and
themes of this skills report, with each chapter adaptability to business practises. The 21st cen-
If in the next recommending a set of policies or actions for tury Indian worker will need transferable skills.
five years India policymakers, workers and enterprises to come Above all India needs to create an agile work-
together effectively to realise India’s tremen- force that can anticipate and adapt to changes in
can create a
dous jobs and skilling potential. technology, automation and digitisation.
self-reinforcing If in the next five years India can successful-
virtuous circle Acquiring, imparting and assessing skills­ —­on ly create the self-reinforcing virtuous circle of
the supply side of workers providing skills­ —­ acquiring-matching-anticipating skills as suggested
of acquiring– requires changing general education, vocational in the report, and in parallel create the econom-
matching– education and on-the-job training (chapter 2). ic and social conditions for rapid, sustained eco-
It also requires recognising and certifying the nomic growth, there is no reason why India’s
anticipating skills and prior learning of those in the informal aspirations to become an economic superpower
skills and the workforce. Not only does the overall quality of cannot be realised, providing opportunity and
schooling and training have to rise to interna- well-being to millions of its citizens across the
conditions for
tional standards, but the content has to address country, men and women, young and old.
rapid economic the workplaces of today­— ­and tomorrow. Gen-
growth, there eral education should impart social and behav-
ioural skills as well as elementary and advanced Notes
is no reason cognitive skills, problem solving and systems
why India’s thinking. Vocational education should develop 1. Informal workers in this report are defined
and revise programmes nimbly to keep up with as workers without social security benefits.
aspirations
workplace demands. On-the-job training has to See also note 20 below.
to become be extended beyond large firms and offered to 2. NSSO 68th Round (2014). All data in this
an economic workers in smaller firms and to informal work- report refer to population aged 15 and
ers. Indian workers need to shift from lifetime above for the year 2011–12.
superpower employment to lifetime employability. 3. NSSO 2014. Data are for 2011–12.
cannot be 4. This number is estimated based on MSDE
Matching and adjusting skills­— on the demand
­ 2015.
realised side of employers looking for skills­—­requires 5. Ministry of Skill Development and Entre-
knowing how job seekers with low skills or preneurship 2015.
high skills can find productive work and how 6. Abraham 2017.
firms can find workers with the general and 7. NSSO 61st and 68th Rounds (2014 and pre-
specialised skills they need to prosper and grow vious rounds) and Ministry of Skill Devel-
(chapter 3). Education and skilling systems opment and Entrepreneurship 2015.
should emphasise transferable foundational 8. Good jobs are defined here as those with
and life skills, because seasonal industries and social security benefits.
ever-changing work require skill sets that will 9. Ministry of Skill Development and Entre-
empower workers over the life of their careers preneurship 2015.
and enable them to multitask within industries 10. Ramaswamy and Agrawal 2012.
and to switch across industries. Women need 11. Bhattacharya and Bhandari 2018.
to enter the workplace more widely and move 12. The Hindu 2018.
8
13. The Economist 2017. Ministry of Skill Development and Entrepreneur-
14. Ministry of Skill Development and Entre- ship (MSDE). 2015. National Policy for Skill
preneurship 2015. Development and Entrepreneurship 2015.
15. OECD 2016. http://www.msde.gov.in/National-Policy
16. ManpowerGroup n.d. -2015.html.
17. OECD 2007. National Institute for Transforming India. 2015.
18. Hasan, Mitra and Sundaram 2013a, 2013b. Skill India: Report of the Sub-group of Chief Minis-
19. Sen and Das 2014. ters on Skill Development. New Delhi. September.
20. ILO 2012. The data are as of 2009–10. ILO http://niti.gov.in/writereaddata/files/Final
defines informal employment as a job- %20report%20%20of%20Sub-Group%20
based concept, which encompasses those Report%20on%20Skill%20Development.pdf.
persons whose main jobs lack basic social NSSO (National Sample Survey Office, Minis-
or legal protections or employment ben- try of Statistics and Programme Implemen-
efits and may be found in the formal sec- tation). 2014 and previous rounds. Status of
tor, informal sector or households. Using Education and Vocational Training in India.
the NSSO (2014) and NCAER definition of NSS Report No. 566 (68/10/6): July 2011–
informal employment, the percentage was June 2012, 68th Round. http://mospi.nic.in/
98% in 2011–12 in the construction sector. sites/default/files/publication_reports/nss_
21. Ministry of Finance 2017. report_no_566_21sep15_0.pdf. September.
22. National Institute for Transforming India OECD (Organisation for Economic Co-­operation
2015. and Development). 2007. “Improving the
23. Social and Rural Research Institute 2014. Performance of the Labour Market.” In Eco-
nomic Survey of India. Paris: OECD.
———. 2016. “Getting Skills Right: Assessing and
References Anticipating Changing Skill Needs.” http://
dx.doi.org/10.1787/9789264252073-en.
Abraham, V. 2017. “Stagnant Employment Ramaswamy, K. V., and T. Agrawal. 2012. “Ser-
Growth: Last Three Years May Have Been vices-led Growth, Employment and Job
the Worst.” Economic and Political Weekly 52 Quality: A Study of Manufacturing and Ser-
(38): 13–17. September 23. vice-sector in Urban India.” Working Paper.
Bhattacharya, T., and B. Bhandari. 2018. “Skill- Indira Gandhi Institute of Development
ing India: Where are the Jobs? Skill-based Research (IGIDR), Mumbai.
Input-Output Employment Linkages by Sec- Sen, K., and D. Kusum Das. 2014. “Where Have
tor for India.” NCAER Working Paper, NCAER, the Workers Gone? The Puzzle of Declining
New Delhi. Labour Intensity in Organised Indian Man-
Hasan, R., D. Mitra and A. Sundaram. 2013a. ufacturing.” Development Economics and Pub-
“The Determinants of Capital Intensity in Man- lic Policy Working Paper No. 36. Institute for
ufacturing: The Role of Factor Market Imper- Development Policy and Management, Uni-
fections.” World Development 51: 91–103. versity of Manchester, UK.
———. 2013b. “What Explains the High Capital Social and Rural Research Institute. 2014.
Intensity of Indian Manufacturing?” Indian National Sample Survey of Estimation of Out-of-
Growth and Development Review 6(2): 212–241. School Children in the Age 6–13 in India. Social
ILO. 2012. “Statistical update on employ- and Rural Research Institute, New Delhi.
ment in the informal economy.” ILO­ —­ http://www.educationforallinindia.com/
Department of Statistics. June. http:// out_of_shool_survey_2014_india_mhrd_tsg_
laborsta.ilo.org/applv8/data/INFORMAL_ july_2015.pdf.
ECONOMY/2012-06-Statistical%20update The Economist. 2017. “Ever more Indians are strug-
%20-%20v2.pdf. gling to find work.” https://www.economist.
ManpowerGroup. n.d. ManpowerGroup Tal- com/asia/2017/09/14/ever-more-indians
ent Shortage Survey 2016/17. Retrieved from -are-struggling-to-find-work.
http://www.manpowergroup.com/talent The Hindu. 2018. “India tops in producing bache-
-shortage-explorer/#.WeSizmiCw2x. lors in science and engineering: report.” http://
Ministry of Finance. 2017. Economic Survey www.thehindu.com/news/international/
2016–17. http://indiabudget.nic.in/es2016 india-tops-in-producing-bachelors-in-science
-17/echapter.pdf. -engineering-report/article22470361.ece.

9
 MATCH
ACQUIRE &
& ADJUST
IMPART

ACQUIRE ANTICIPATE
ANTICIPATE & MATCH &
& IMPART & ADAPT
ADAPT ADJUST
 2

Acquiring skills
How best to impart them

The 21st century workplace demands a wide come up with a taxonomy of workplace skills,
range of cognitive, technical and behavioural but such attempts usually do more to confuse
skills. But for India’s children, adolescents and than to clarify. For example, thinking of foun-
adults, the education and training systems have dational, employability, and entrepreneurial
for too long failed to deliver, not even recognis- skills can lead to identifying such categories as
ing the need for many skills. The too-frequent routine and nonroutine skills, cognitive and
result: school dropouts and unemployable noncognitive skills, job and life skills­— ­a nd in
graduates. Vocational and technical educa- such concoctions as job-relevant routine-cogni-
tion has been below international standards, tive skills and learning-to-learn skills. It’s pos-
and imparting vocational skills in secondary sible to infer what each of these skills involves,
schools, though promising, is still in its begin- but to keep the use of terms simple and con-
ning stages. sistent, this chapter will stick with basic and
For adults already in India’s workforce, higher cognitive skills, technical and vocation-
on-the-job training, including apprenticeships, al skills and social and behavioural skills (see
could improve their productivity. But the vast appendix A2.1).
majority of Indian firms are tiny and need Cognitive skills start with literacy and numer-
support to see the benefits of improving their acy, continue through applying knowledge and
workers’ skills. Entrepreneurs with planning, solving problems, and advance to higher cogni-
finance and inventory management skills are tive skills such as experimentation, reasoning
more likely to sustain and expand their enter- and creativity. Children have cognitive skills.
prises, and risk takers and creative thinkers Secondary leavers have them. Academics with
in new parts of the economy can launch ideas PhDs have them.
and products. Pilots are under way to build Technical and vocational skills include the
such entrepreneurial skills, but a much broad- physical and mental ability to perform specif-
er effort is needed to scale up programmes that ic tasks using tools and methods in any occu-
work. pation. Farmers have them. Architects have
How best to turn India’s many disadvan- them. Computer scientists have them.
tages into advantages? By making sure that all Social and behavioural skills include working
children are literate and numerate. By having well with others, communicating well to oth-
the demand for skills from employers drive the ers, listening well to others and generally being
supply of skills by workers. By providing the agreeable and outgoing. Everyone has these
full range of skills for becoming employed. By skills to varying degree: children in families
ensuring that skills are transferable to other and communities, teachers in classrooms, job
jobs and sectors. And by ramping up assess- seekers in interviews and supervisors on facto-
ments to know whether and what skills are ry shop floors.
being successfully imparted. By sticking to these three broad categories,
the chapter clarifies that foundational skills are
the basic cognitive, technical and social and
Simplifying skill definitions makes it easier behavioural skills that children acquire to aug-
to see what’s needed ment and amplify their full skill sets through-
out their lives. It clarifies that employability skills
Workplace skills for the 21st century range are the cognitive, technical and vocational, and
from the cognitive to the technical and to the social and behavioural skills that make peo-
social and behavioural. It’s tempting to try to ple attractive to employers and get them hired.

11
 And it clarifies that entrepreneurial skills are the education than those in other BRICS countries
cognitive, technical and vocational, and social (figure 2.2), reflected in literacy rates 20 per-
and behavioural skills that allow entrepreneurs centage points lower than in the other BRICS
to sustain and expand their enterprises. Cogni- countries. The gaps are attributable to poor
tive, technical and vocational, and social and learning outcomes and high dropout rates­ —­
behavioural skills interact with each other in approximately 92% of school-age children are
different combinations to provide the foun- in primary school, but just 63% in secondary
dational, employability, and entrepreneurial and higher secondary school.1
skills that a workforce needs (figure 2.1). Schooling should have a positive impact
on developing both cognitive and noncogni-
tive skills and on later labour outcomes such
The world’s largest school system is not as wages and productivity.2 Social and behav-
producing enough literate and numerate ioural skills like motivation and positive per-
workers sonality traits are required for improving cog-
nitive scores.3 The education system should
Indian schools recognise and assess many also help children develop these skills through
Cognitive, cognitive skills needed in the 21st century extracurricular activities, but co-scholastic
technical and workplace­ —­reading, writing, numeracy, dig- areas­—­though recognised for building stu-
ital literacy­— ­but not technical and vocation- dents‘ self-confidence, self-control, sportsman-
vocational,
al or social and behavioural skills. And they ship, solidarity, teamwork, competitiveness
and social and supply even the recognised cognitive skills and health­— ­are not emphasised in the school
behavioural skills inadequately. India’s workers have much less curriculum.4

interact with each FIGURE 2.1 How skills interact

other in different Programming, monitoring, designing,
trouble-shooting, quality control skills
combinations
to provide the
foundational,
Basic and Technical
employability, and higher and
cognitive vocational
entrepreneurial Vision, resilience, leadership,
motivational skills
skills that a
workforce needs
Grit, self-control, Social and Problem-solving,
decisionmaking, behavioural organisational
communication skills skills

Foundational skills Employability skills Entrepreneurial skills

Technical
and
Basic and
Technical vocational
higher
Basic and and Basic and Technical
cognitive
higher vocational higher and
cognitive cognitive vocational

Social and Social and

behavioural Social and behavioural
behavioural

Note: See appendix A2.1 for a glossary of skills and examples of cognitive, technical and vocational, and social and behavioural
skills.
Source: NCAER.

12
FIGURE 2.2 Lagging behind other BRICS nations, more than 30% of India’s workers have only a
primary education and only 18% have a secondary education
Percent of labour force

60
India
Brazil
Russian Federation
South Africa

40

20

The TVET
system in India
0 is still evolving
Primary Secondary Tertiary
Note: Percentage share of labour force, by highest education level attained in 2010. The BRICS are Brazil, Russia, India, China and
and inadequate
South Africa. Data for China are unavailable. to cater to the
Source: World Bank, World Development Indicators 2010.
growing needs
The pre-vocational curricula is only partial- vocational secondary education but also engi- of industry
ly followed, with the focus more on discipline neering colleges, polytechnics, industrial train-
and less on situation and personality.5 And ing institutes (ITIs) and apprenticeships (see
the pre-vocational curricula of India’s Cen- figure 2.3).
tral Board of Secondary Education (CBSE) is The TVET system in India is still evolving
focused primarily on teaching “trades” rather and is inadequate to cater to the growing needs
than developing good attitudes towards work. of industry.8 The key ministries involved in the
Complicating the problem of inadequate lit- TVET system are the Ministry of Skill Devel-
eracy and numeracy are rapid changes in tech- opment and Entrepreneurship, the Ministry
nology.6 The demand for skills is shifting from of Human Resource Development (principally
people with manual skills to those with higher the Department of School Education and Liter-
cognitive skills and analytical and interaction acy for TVET programmes in senior secondary
skills. Digital initiatives, such as computer-aided schools and the Department of Higher Edu-
learning, are complementing rather than substi- cation for technical education), the Ministry
tuting for current teaching methods in schools, of Micro, Small and Medium Enterprises, the
seeking to overcome some of the handicaps of Ministry of Rural Development and the Min-
classroom teaching to the curriculum and to istry of Housing and Urban Poverty Allevia-
tests.7 The scale of India’s education and skilling tion. At the state level the main providers are
ecosystem in academic, vocational and techni- the Directorate of Technical Education, the pri-
cal education is vast (figure 2.3). The key is to vate sector and nongovernmental organisations
manage it well to generate the equally massive (NGOs). Despite the many agencies involved,
skill acquisition that can meet the market test of only 2.2% of all persons aged 15–59 received
employability in a rapidly changing social and formal vocational training and 8.6% received
technological environment. nonformal vocational training.9
Recent developments in vocational training
include:
Technical and vocational education are too • Creating the new Ministry of Skill Devel-
supply-driven and short term opment and Entrepreneurship (MSDE),
which is devoted to the needs of vocation-
India’s technical and vocational education al education and training. Agencies previ-
and training (TVET) system includes not only ously spread over various ministries have

13
FIGURE 2.3
Big numbers for India’s education and skilling ecosystem

2,000,000 Indian institutions imparting skills

300,000,000 Indians currently getting educated or
skilled and will be looking for work

ACADEMIC TECHNICAL

Ages 24+  DOCTORATE DOCTORATE IN ENGINEERING

126,500 enrolled 30,600 enrolled

Ages 22+ MASTER’S MASTER’S IN ENGINEERING

3,900,000 enrolled 257,000 enrolled

Ages 19–21 BACHELOR’S ENGINEERING COLLEGES

800 universities 3,200 colleges
27,400,000 students 4,200,000 enrolled
POLYTECHNIC 3-YEAR DIPLOMA
3,900 institutes
1,500,000 enrolled
Ages 17–18 HIGHER SECONDARY (Grades 11–12)
112,600 institutions
24,700,000 students

Ages 15–16 SECONDARY (Grades 9–10)

239,100 schools
39,100,000 students

Ages 6–14 ELEMENTARY ( Grades 1–8)

1,450,000 schools
196,716,500 students

Source: NCAER compilation from District Information System for Education (DISE) Flash Statistics, All-India Survey on Higher Education, AICTE and Ministry of Skills
Development and Entrepreneurship Annual Report. All data are for 2015–16 except data for ITI enrollees, which are for 2016–17. Enrolment in Bachelor’s programmes
was higher than in higher secondary since the former may include school leavers from previous years who did not go on to college directly after school.
14
468,000,000 Indians now in jobs may
(or may not) be acquiring skills on the job

VOCATIONAL ON THE JOB EXAMPLES OF JOBS

MEDICAL RESIDENTS SCIENTISTS

JUNIOR RESEARCH ECONOMIC ADVISERS
FELLOWS UNIVERSITY FACULTY
ASTRONOMERS
POLICY EXPERTS

ADVANCED TRAINING MASTER’S OF ENGINEERS

MANAGERS
28 institutions VOCATIONAL EDUCATION
DATA ANALYSTS
350,000 have Launched 2015, TEACHERS
enrolled since 2007 no data available as yet STOCK BROKERS
JOURNALISTS
ARCHITECTS
LAWYERS

INDUSTRIAL TRAINING BACHELOR’S OF APPRENTICESHIP JUNIOR ENGINEERS

TECHNICIANS
AT ITIs VOCATIONAL EDUCATION AND INTERNSHIPS
CONSTRUCTION
13,550 institutions 162 institutions (2–4 year certificate) SUPERVISORS
1,200,000 enrolled 10,200 students 2,400,000 OFFICE WORKERS
TV CAMERA
COMMUNITY COLLEGES apprentices and OPERATORS
157 colleges interns

VOCATIONAL HIGHER PLUMBERS

SECONDARY ELECTRICIANS
CONSTRUCTION
7,400 schools provide WORKERS
472,000 students

VOCATIONAL SECONDARY TEXTILE WORKERS

108 schools provide RETAIL CLERKS
HOSPITALITY
WORKERS
BEAUTY THERAPISTS

LOW-SKILLED
WORKERS

Note: Apprenticeships are also open to vocational secondary and higher secondary graduates
and graduates of polytechnics, engineering colleges and industrial training institutes.

15
 been brought under one aegis, including developed qualification packs up to level 6
the Directorate General of Training (pre- out of 10 levels. Many VET courses offered
viously under the Ministry of Labour and by myriad ministries are being synched with
Employment), which ran the oldest TVET the NSQF qualification packs, standardising
program in the country. New agencies like VET around the country, but the NSQF level
the National Skill Development Corporation descriptors lack clarity and objectivity.
(NSDC), National Skill Development Agency • A plethora of TVET schemes, both short-
(NSDA), National Skill Development Fund term and medium-term at various levels of
(NSDF) and Sector Skill Councils (SSCs) education starting from 9th class to under-
were created. graduate, are provided by both public and
• The NSDC is the key agency of the gov- private providers, with 17 Central Ministries
ernment TVET. It is a public–private part- offering skilling programmes other than
nership between the government and the MSDE.
private sector aimed at promoting skill Technical education is primarily provided
development. The Sharda Prasad Committee in postsecondary courses and includes practi-
Report released in 2016 has recommended a cal training for technicians who will be hired
Poor comprehensive review of the Memorandum as supervisors. It spans engineering, technol-
perceptions of of Association of the NSDC.10 ogy, management, architecture, town plan-
• Adapting the German model of vocation- ning, pharmacy, hotel management, catering
the relevance,
al skilling, SSCs have been established in technology and applied arts and crafts. Tech-
quality, job India, with 40 SSCs approved.11 The SSCs nical educational institutes in India can be
placement are autonomous not-for-profit organisations categorised as Central Government–funded,
guided by industry leaders in their respective State Government–funded and self-funded.
impact, sectors. They bridge the gap between what The institutes include the Indian Institutes of
and links the industry wants and the skilling curricu- Technology, Indian Institutes of Management,
lum. Their key roles involve developing cur- Indian Institute of Science, Bangalore, Indi-
with higher riculum and courseware (of which very lit- an Institutes of Science and Research, Nation-
education have tle existed before), developing qualification al Institutes of Technology, Indian Institutes
packs for each job role in their sector, train- of Information Technology, National Institute
discouraged
ing trainees and trainers, affiliating voca- of Technical Teachers Training and Research,
enrolments tional training partners, developing assess- among others. In 2011–12 only 2.4% of the
in vocational ment guides and strategies, recommending Indian population had technical degrees or
infrastructure and assessing and certifying diplomas or certificates, 1.1% in rural areas
education trainers. The Prasad Committee has suggest- and 5.5% in urban.
in schools ed that SSCs should be based on the National Formal vocational education begins as
Industry Classification 2008, and therefore early as grade 9 for sector-specific and occu-
limited to the 21 SSCs pertaining to items in pation-specific skills with hands-on training.
the classification (pared down from the cur- Vocational training may also be informally
rent 40).12 Further, that the creation of SSCs attained through family or other means. Tech-
should be transferred from the NSDC to the nical education can provide sector-specific
NSDA. And that SSCs should be re-created skills below or above the graduate level in a
with sector employers as members, rather range of fields.
than remain industry associations that are Poor perceptions of the relevance, quality,
making standards and testing and certifying job placement impact, and links with high-
them at the same time, since this could cre- er education have discouraged enrolments in
ate conflicts of interest. vocational education in schools, and the cur-
• The National Skills Quality Framework riculum is far below international standards.
(NSQF), developed in 2013, is a competency-­ Other obstacles include difficult school sched-
based framework that organises qualifica- ules, inadequate facilities for practical train-
tions by levels from one to ten relating to ing, students’ poor foundational skills from
knowledge, skills and aptitude. The levels primary school and students’ having to choose
are defined as learning outcomes that the the vocational stream in Class 9, which is per-
learner must possess regardless of whether haps too early for India, leading students and
they are obtained through formal, nonfor- parents to choose the “safer bet” of general
mal or informal learning. Many SSCs have education.13

16
 Industrial training institutes are India’s better aligned with industry needs and the
foremost vocational training platform out- training of trainers.17
side schools. More than 13,550 ITIs teach 126 Short-term skilling programmes of a few
trades to about 1.2 million trainees each year, months like the Pradhan Mantri Kaushal
while seat capacity is 2.9 million. They are run Vikas Yojana (PMKVY) offer occupational and
by both government and private parties. job-specific vocational skills, focusing on infor-
The ITIs provide long-term vocational train- mation and communications technology, liter-
ing in both engineering and non-engineering acy and spoken English, and such noncognitive
trades, but their instructors, curriculum and skills as anger management. But their quality
infrastructure have been less than satisfacto- remains uncertain, and dropout rates from
ry. A study in Karnataka comparing ITI, sec- the programmes and turnover rates from job
ondary and higher secondary graduates found placements are generally high. Short vocational
that after three years all three categories training programmes of 150–300 hours dura-
showed poor labour market outcomes, with tion neither make the youth easily employable
60% unemployed. Students who followed the nor meet the needs of industry. Having about
traditional general education-oriented school 10,000 short-term training standards for pro-
system were likely to go farther than the ITI grammes of a few months is too many. The Short
graduates, whose education options were lim- focus should instead be on strengthening read- vocational
ited.14 And the firms hiring ITI graduates found ing, writing and arithmetic skills and providing
training
their training inadequate. In October 2017, no more than 450 vocational training courses
about 400 ITIs were de-affiliated.15 And a Par- with a minimum duration of one year. Short- programmes
liamentary panel found that ITIs were certified term training should be limited to recognising neither make
despite poor infrastructure, and it reprimanded and certifying prior learning.
the certifying agency.16 Over the last few years One-year vocational skilling programmes the youth easily
the unemployability of graduates has led sev- may prove more effective but are still in their employable nor
eral ITIs and other TVET institutions to sign early stages. The programmes offered by the
agreements with large industrial houses (box Tata Institute of Social Sciences, and the Deen meet the needs
2.1). These collaborations aim at a curriculum Dayal Upadhyaya–Grameen Kaushalya Yojana of industry

BOX 2.1 “Learn and Earn” at Boeing and Saint Gobain

In 2016 two multinationals launched vocational beginning. Training consists of a day of classes
training projects to skill their workforces. followed by five days on the shop floor, where
Boeing, as part of an effort to develop sup- trainees operate along with their coaches. The
pliers for its global supply chain, combines vo- training is for three years, after which trainees
cational training with on-the-job training for are awarded a diploma in the field they stud-
frontline factory workers at its industrial part- ied. Students receive a stipend, with part sent
ners. The first 30 students, trained for aerospace to their families to persuade them to send the
interconnect solutions, were hired by Rossell students for training rather than into unskilled
Techsys, the technology and engineering wing work.
of Rossell India Limited. The second group went Both initiatives were collaborations with the
to Tata Advanced Materials Limited, which fo- Indo-Swiss Nettur Technical Training Foundation
cuses on advanced composites for high-tech (NTTF), which worked with the NSDC on Learn
and industrial sectors, including spacecraft and and Earn. The programme, aimed at underpriv-
aircraft. ileged youth from economically backward rural
Saint Gobain India, part of the French multi- and industrially underdeveloped regions, was
national Saint Gobain, offers a programme in developed under the National Employability
modern manufacturing skills in the glass mak- Enhancement Mission. Learn and Earn Training
ing industry. In these programmes, modelled runs for two years, and the NTTF adds a third
after German vocational education, trainees year to offer the diploma. The partnering indus-
are associated with a factory right from the try bears the entire cost of the programme.

Source: Boeing (2016) and Dubey (2016).

17
 (DDU-GKY) programmes offered by the Minis- need to be based on assessments of the demand
try of Rural Development, tend to be more sus- for such skills.
tainable, but are also in their early stages. The Indo-German Chamber of Commerce
Private providers also offer vocational train- (IGCC) in Pune launched VETnet19 in 2014
ing based on industry needs. For example, under its DUALpro programme to help industry
SkillSonics offers fee-based training modules meet needs for quality VET services and well-
to both large and small companies. Dual-track trained potential employees.20 VETnet estab-
Swiss apprenticeship modules­— ­practical train- lished a VET Council and specialised working
ing combined with classroom training­—­r un 2 groups in 2014, after which the IGCC con-
to 3 years for multiskilled production techni- ducted a pilot course in metal working in 2015
cians, or 6 to 12 months for specialised produc- in collaboration with the Don Bosco Private
tion technicians, equipping workers to perform Industrial Training Institute in Pune and sev-
tasks with international skill sets. SkillSonics eral companies.21 The training yielded positive
also offers both shorter and longer courses of 4 learning outcomes for the trainees, prompting
to 52 weeks for NSDC and SSC candidates. the IGCC to extend the course and develop a
Government–industry partnerships have one-year course for industry mechanics. Train-
Curricula been launched under the National Skill Devel- ees split their work week between develop-
and teaching opment Mission, and the MSDE was estab- ing technical skills based on classroom train-
lished, not only for training unemployable ing and shop floor experience across different
practices of
youth, but also for upskilling workers. NSDC departments of the respective company, along
vocational provides industry-specific job role training. with guidance on social, behavioural and prob-
training require But it may not be sufficient to bridge the many lem-solving skills.
skill gaps facing small and medium-size enter-
a relook prises (SMEs). Training for micro, small and
to prepare medium enterprises also needs to account for Apprenticeships for learning-by-doing and
the multiskilling and multitasking demands on learning-while-earning
candidates workers.
with industry- Curricula and teaching practices of voca- One of the key reasons Germany has the high-
tional training both at the technical institutes est youth employment rate among European
relevant skills
and industrial training institutes and secondary countries is that students have to compulsori-
schools require a relook to prepare candidates ly enrol for three years in part-time vocation-
with industry-relevant skills. Supply-driven al education if they are not enrolled in school.22
TVET has performed poorly in this respect, and India’s training institutes are gradually adapt-
to match trainee career aspirations requires ing the dual training model in collaboration
greater engagement from industry practition- with industry. For example, the ITI in Pusa,
ers and relevant stakeholders to develop and New Delhi has dual TVET programmes in col-
continually update the curricula in response to laboration with Maruti Suzuki and Siemens.
local realities, and to train trainers­— ­including The learning-by-doing and learning-while-­
teacher-industry interface, trainee-industry earning models make apprenticeships attractive
interface for developing practical job-relevant as trainees gain not only theoretical knowledge
technical skills, and soft (noncognitive) skill but also practical on-the-job training on a fac-
development for job interviews.18 tory floor, along with exposure to a real work
The MSDE is planning to recruit retir- environment, not just a simulated workshop
ees from industry and the army as trainers. in a training institute. Degrees and apprentice-
But initiatives need to go beyond such moves, ships tend to complement each other­—­w ith the
and existing trainers need to be continually former enabling signalling of knowledge gained
upskilled in new technologies being adopted at a formal educational institution, and the lat-
across industries, in addition to updating infra- ter signalling a candidate’s job readiness.23
structure and technologies at ITIs. Training Launched in 2016, the National Apprentice-
practices could adopt a European dual-train- ship Promotion Scheme (NAPS) offers incen-
ing approach, combining classroom theoretical tives to employers by sharing 25% of the cost
training with simultaneous applications on the of stipends paid to the apprentices and by reim-
factory shop floor. Such models require exten- bursing the cost of training at basic training pro-
sive industry–academia collaborations and viders. Its objective is to increase the number of
apprenticeships to 50 million a year by 2020.24

18
Industry clusters for supplying skills to short-term training in noncognitive skills,
meet local demand conditions training in cognitive skills such as functional
language and communication skills, and longer
While MSDE skill development initiatives fol- term training in technical skills and domain
low the unified guidelines under the NSQF, knowledge or apprenticeship training. Typical-
any such training should factor in skill needs, ly, the large firms provide such training.
capabilities and attitudes based on local In well-functioning labour markets, firms
socio-cultural settings and local labour mar- are unlikely to invest in training for generic
ket conditions.25 The training also needs to be skills, because a trained worker is more likely
tuned to local industry-specific and firm-spe- to leave.28 So a firm is likely to invest only in
cific requirements and address the skills gap firm-specific (technical or nontechnical) skills
within the socioeconomic context in which that will improve worker productivity largely
workers operate.26 Industry clusters tend to in the current job. However, firms in India such
share several commonalities of sector concen- as Infosys, through its Campus Connect Pro-
tration and socioeconomic and demographic gramme, also impart generic skills for freshly
characteristics, and this builds the case for clus- recruited engineering graduates, who are more
ter-based skill initiatives in collaboration with likely to have technical skills but fall short of With 95%
knowledge partners and training hubs. communication skills and other soft skills. Fur- of firms
In August 2016 the MSDE partnered with ther, the work experience in itself is of value.
employing
the German Corporation for International It imbues social and behavioural skills (such as
Cooperation GmbH (GIZ) to implement ele- teamwork, initiative, attitude towards work and fewer than
ments of German dual training in automobile, working under pressure), and enhances indus- five workers,
electronics and construction clusters in India. try knowledge and commercial awareness.
The project was planned to run for three years diseconomies
to improve vocational training in India’s indus- Large companies­— ­training on the job of scale
trial clusters­— ­including the automobile com-
ponent cluster in Aurangabad, Maharashtra, Of Indian companies in the organised sector, 16%
discourage
the electronics cluster in Bangalore, Karnata- were providing on-the-job training in 2007, but on-the-job
ka, and the construction cluster in Bhiwadi, that rose to 36% in 2014, given the shortages of
training
Rajasthan. Implementation of cluster-­ based skilled workers.29 Investment in training on the
VET programmes involves coordinating with job is clearly more prevalent among large firms,
multiple stakeholders at central, state and local which can bear the cost. In 2014, 60% of large
level, including the NSDC, the NSDA, SSCs, firms were willing to train their full-time perma-
State Skill Development Missions, as well as nent employees (box 2.2), but only 25% of small
regional and local business membership organ- companies and 39% of medium companies.
isations. The project also aims to incorporate With technologies disrupting the workspace,
gender-sensitive approaches for a more inclu- IT service companies such as Wipro, Infos-
sive skilling framework, considering the needs ys and Tata Consultancy Services have pro-
of both men and women.27 grammes to reskill and upskill their workers.
More home-grown initiatives such as the For example, Wipro started Newton’s Cradle
IL&FS Cluster Development Initiative Ltd. to reskill its employees.30 In the programme,
(IL&FS Clusters) work with the manufac- employees with more than five years’ experi-
turing sector, particularly SMEs, in enabling ence are retrained and redeployed in higher
their access to quality industrial infrastructure value projects. The National Association of Soft-
through the cluster format. The Tripura Bamboo ware and Services Companies (­NASSCOM), the
Cluster is a public–private partnership in which industry association, is working with its mem-
villagers have formed incense stick, handicraft bers to launch a comprehensive digital skilling
and furniture and plantation clusters. platform, with the goal of reskilling 1.5–2 mil-
lion workers in the IT–BPO sector over the next
4–5 years.31
Imparting skills on the job to make skilling
more demand-driven Smaller companies­— ­not training on the job

On-the-job training to plug skill gaps and With 95% of firms employing fewer than
improve employability can involve typically five workers, and another 3% employing

19
 BOX 2.2 Demand-driven interventions for on-the-job training in large firms

• Bosch India started a “Learn by doing” apprenticeship programme for full-time engineering
graduates—a 12-month course of on-the-job and classroom training in technical skills and non-
cognitive skills such as decisionmaking.

• Infosys soft-skills training, running 3–4 months, is intended for fresh graduates recruited from
campus placements and involves language, business and communication skills.

• GE Global Research has a multiyear Edison Engineering Development Programme that exposes
university graduates with a master’s degree to real-world practical applications in addition to
advanced engineering courses and project assignments.

Source: Company websites.

Small firms are

more willing 6–9 workers, diseconomies of scale discour- workers and fuel this vicious cycle. Better pub-
age on-the-job training at such firms. So does lic policies and programmes can break this in a
to invest in
contract work, especially when contracts are number of ways (figures 2.4 and 2.5).
training if the short or irregular. Compared with larger firms,
government smaller ones are even less likely to invest in Make sure all children are literate and numerate
generic skills because a trained worker is more
covers some likely to leave a smaller firm with fewer growth What can be done to increase literacy and
of the cost prospects, and even firm-specific training is numeracy? First, volunteer teachers and reme-
deterred when similar technologies are used dial teaching can fix some problems in the sys-
across an industry.32 The result is underinvest- tem. However, remedial teaching does what
ment in training existing workers. Small firms should happen in the formal school system­—­
are, however, more willing to invest in training individual attention and instructional material
if the government covers some of the cost.33 that is suited to the ability of the learner. Reme-
Although SMEs see little advantage in hir- dial teaching has its own problem­—­volunteers
ing apprentices, a 2014 International Labour may teach as they were taught. For instance,
Organization (ILO) case study found positive remedial courses in English at university still
returns on investment for SMEs the first year teach formal rather than functional grammar
after a completed apprenticeship, with bene- in the belief that this will improve students’
fits accruing in most cases during the appren- language proficiency.
ticeship itself. The NAPS, mentioned earlier, Second, use technology.34 But schools and
was launched precisely to incentivise industry, teachers seem to have a limited view of what
including SMEs, to hire apprentices and pro- technology offers, merely displaying supple-
vide on-the-job training. mentary lessons or PowerPoint presentations,
and universities preparing videos of profes-
sors lecturing. The range of options for using
Turning the vicious cycle virtuous: acquiring technology for education is wide. At one end
skills and generating good jobs of the spectrum are small learning objects and
simulations. For instance, the Tata Institute of
Chapter 1 showed how the combination of Fundamental Research creates simulations for
inadequately educated and skilled workers, science and mathematics that allow students to
out-of-date labour laws, the rising ratio of manipulate variables to understand the under-
wages to the cost of capital and persistent infor- lying concepts and relationships. At the other
mality are feeding on each other and resulting end of the spectrum is learner-driven educa-
in a self-reinforcing vicious cycle of not enough tion though technology that is proposed in
good jobs, far less than India is capable of and minimally invasive education and self-organ-
badly needs. This chapter has explored the ised learning environments,35 though it still
problems in acquiring, imparting and assessing needs to be driven by a curriculum. Between
skills that result in the poor supply of skills by the two extremes, simple technology using

20
FIGURE 2.4 India’s vicious cycle of low skills and few good jobs—a low skilling trap

Slower
growth
of good,
formal jobs

Higher cost
of skilled Greater
workers workforce
relative to informality
capital costs

More
Lower
poorly-skilled
incentives to
and fewer
acquire or
well-skilled
impart skills
workers

FIGURE 2.5 Moving to a virtuous circle of higher skills and many good jobs—escaping the low skilling trap

Faster
growth
of good,
formal jobs

Lower cost
of skilled Less
workers workforce
relative to informality
capital costs

Fewer
Greater
poorly-skilled
incentives to
and more
acquire or
well-skilled
impart skills
workers

21
 smartphones offers access to multiple sources and children attending the same grades with
of information on the Internet so that teachers different levels of learning.41 More than infra-
and students are not dependent on the text- structure, the focus needs to be on a more
book. Students can also use technology to cre- dynamic curriculum and teaching practices.
ate documents that combine text, graphics and The Shaala Siddhi or School Evaluation
video and use it to analyse data. Dashboard put out by the National University of
Third, address teacher professionalism. The Education Planning and Administration helps
education systems of the top-performing coun- each school provide consolidated self-evalua-
tries in OECD’s Programme for International Stu- tion reports on key performance domains and
dent Assessment get the right people to become core standards, including action for improve-
teachers.36 They also develop them into effec- ment. It can be used for viewing and analysing
tive instructors through teacher education pro- school evaluation reports and data, which can
grammes that provide support for effective teach- further be consolidated at the block, district
ing. High-performing school systems, such as and state level to extend appropriate support to
Singapore’s and Japan’s, use four broad approach- schools. It also allows schools to monitor their
es to support trainee teachers. They build prac- own progress and improvement.42
High- tical skills during initial training by moving the
performing lecture into the teacher’s classroom. They place Ramp up assessments to know whether and what
coaches in schools to help the novice teacher. skills are imparted with what success
school systems
They get the right teachers to become principals.
provide And they provide instructional leadership and Understanding India’s skilling ecosystem clearly
instructional enable teachers to learn from each other. requires new forms of analytical work, research
Recent curricula frameworks incorporate and assessments driven by the demands of
leadership and life skills by stressing the importance of inquiry India’s workplaces and new dashboards.
enable teachers and collaborative work in all school subjects.37 Schemes need to be assessed for their contri-
There is a similar emphasis in the Nation- bution to acquiring (this chapter), matching
to learn from al Curriculum Framework in India, but its (chapter 3) and anticipating (chapter 4) skills to
each other translation into textbooks remains weak, with better understand how they can work togeth-
learning objectives that are misaligned with er to break out of the gridlock embedded in the
the framework. This poses further challenges vicious cycle of low skilling and poor jobs.
to the effectiveness of teachers who are judged Though not definitive, table 2.1 is a first pass
by how well they follow the curriculum. at assessing the many skilling schemes in India
Since it is the teacher who handles class- for their performance on design, implementa-
room instruction, adequate teacher preparation tion and impact on the three themes of acquir-
is critical.38 This preparation cannot be han- ing, matching and anticipating skills. The estab-
dled through short training sessions for in-ser- lishment of a National Skills Research Division
vice teachers that do not allow time for reflec- in MSDE to serve as a think tank to provide evi-
tion, mentoring or practice. dence based policy inputs to government and to
collaborate with independent research organi-
Make changes in curricula and teaching practices sations such as NCAER is highly welcome.
based on evidence about what is working Programme assessments can be robust only
if they themselves are based on sound student
Rashtriya Avishkar Abhiyan was launched in and worker assessments. Traditional student
2015 to motivate kids aged 6–18 to study sci- assessments have focused on certification out-
ence, mathematics and technology. The cur- comes, such as board exams for individuals and
riculum is the starting point for devising or literacy and employment rates for institutions,
structuring pedagogical strategies, but there is but with little attention to employability and
little emphasis on teaching practices in India. the portability of skills (and as will be discussed
Revised curricula have not improved learn- in chapter 4, on being prepared for the future
ing outcomes much,39 even though interactive of work). And they have usually focused only
teaching methods are known to have a posi- on cognitive skills, whether subject mastery in
tive impact on learning outcomes.40 Even with school (again by rote) or technical understand-
innovative pedagogical methods, the impact ing in the workplace.
on learning outcomes is not significant due to Continuous and Comprehensive Evaluation
factors such as teacher and student absenteeism (CCE) was introduced by the CBSE to assess all

22
TABLE 2.1 Rating India’s largest skilling schemes (see also Annex 2.2)
SCHEME (ANNUAL SPENDING 2017–18, UNLESS PERFORMANCE ON
OTHERWISE NOTED) ACQUIRING MATCHING ANTICIPATING

General education
1. Mid-Day Meal Scheme DESIGN ✔ — —
Improving nutrition among primary school
IMPLEMENTATION ✔ — —
children to enhance enrolment, attendance,
cognitive achievement and retention. IMPACT ✔ — —
(Rs 10,000 crore; $1.5 billion)
2. Rashtriya Madhyamik Shiksha Abhiyan DESIGN ✔ — —
Universal secondary education with goal of
IMPLEMENTATION ✔ — —
universal retention by 2020. Subschemes
improve access for disabled students, IMPACT × — —
construct girls’ hostels in educationally
backward blocks for retaining girls in
secondary education and build information
and communications technology skills.
(Rs 3,914 crore; $602 million)
3. Rashtriya Uchchatar Shiksha Abhiyan DESIGN ✔ — —
Improving the quality of teaching–learning
IMPLEMENTATION ✔ — —
processes to produce employable and
competitive graduates, post-graduates and IMPACT × — —
PhDs. This scheme involves central government
funding for state higher educational
institutions. (Rs 1,300 crore; $200 million)
4. Saakshar Bharat DESIGN ✔ — —
Improving adult education: skill development;
IMPLEMENTATION ✔ — —
equivalency to formal education and functional
literacy and numeracy for nonliterates. IMPACT ✔ — —
Promoting a learning society through
continuing education. Between August 2010
and March 2017, 66.9 million adults passed
exams given by the National Institute of
Open Schooling and National Literacy Mission
Authority; the effective passing rate was 75.1%.
(Rs 320 crore; $49 million)
5. Sarva Shiksha Abhiyaan DESIGN ✔ — —
Universal enrolment and retention in primary
IMPLEMENTATION ✔ — —
education up to class 8. The scheme includes
reaching out to “hardest to reach” girls for IMPACT ✔ — —
upper primary level education; community
mobilisation and gender sensitisation; and
setting up upper primary level residential
schools for girls in the Scheduled Caste
(SC), Scheduled Tribe (ST), Other Backward
Classes (OBC) and minority communities.
(Rs 23,500 crore; $3.6 billion)
Technical and vocational education
6. Sub-mission on Polytechnics DESIGN ✔ ✔ —
Creating technically skilled manpower.
IMPLEMENTATION ✔ ✔ —
Students after class 10 are eligible to apply.
Polytechnics offer three-year diploma IMPACT ✔ × —
courses in civil, electrical and mechanical
engineering; electronics; computer
science; medical lab technology; hospital
engineering; architectural assistantship;
leather technology; sugar technology;
printing technology; garment technology;
beauty culture; textile design and other
areas. India had 3,867 polytechnics in
2017–18. (Rs 50 crore; $7.7 million)
✔ GOOD   ×  NEEDS IMPROVEMENT    ? UNKNOWN OR TOO NEW   — NOT APPLICABLE
23
 SCHEME (ANNUAL SPENDING 2017–18, UNLESS PERFORMANCE ON
OTHERWISE NOTED) ACQUIRING MATCHING ANTICIPATING

7. Apprenticeship training DESIGN ✔ × —

Enhancing technical skills for job absorption.
IMPLEMENTATION ✔ × —
The National Apprenticeship Training
Scheme (ATS) covers graduate, technician IMPACT ✔ ? —
and technical (vocational) apprentices. The
Apprenticeship Training Scheme covers
trade and optional trade apprentices. The
National Apprenticeship Promotion Scheme,
introduced in 2016 under the above ATS
promotes apprenticeship. The National
Employability through Apprenticeship
Program, a public–private partnership, helps
unemployed youth build skills through
learning and learning by doing while
earning. (Rs 556 crore; $86 million)
8. Deen Dayal Upadhaya Grameen Kaushalya DESIGN ✔ ✔ —
Yojana (DDU-GKY)
IMPLEMENTATION ✔ ✔ —
Skilling rural youth between the ages of 15
and 35 from poor families. DDU–GKY is part IMPACT ✔ ? —
of the National Rural Livelihoods Mission,
tasked with diversifying the incomes of rural
poor families and catering to the career
aspirations of rural youth. The programme
trained 162,586 students and placed 84,900
in 2016–17. Some 654 centres offer skills in
329 trades. (Rs 871 crore; $134 million)
9. Craftsman Training Scheme implemented DESIGN ✔ ✔ —
through Industrial Training Institutes (ITIs)
IMPLEMENTATION ✔ × —
ITIs have grown from 59 in 1956 to 13,550
up to December 2016 (2,150 in government IMPACT ✔ × —
and 11,200 private). Candidates at least 14
years old may be enrolled. ITI courses also
run in 500 polytechnics. The number of
people enrolled was 1.2 million in 2016–17.
(Rs 68.4 crore; $10.5 million, 2015–16)
10. National Urban Livelihoods Mission DESIGN ✔ ✔ —
Developing skills and providing credit
IMPLEMENTATION ✔ ✔ —
facilities for the urban poor. Skills training
covers market-based jobs and self- IMPACT ? ? —
employment. The scheme strives to facilitate
easy access to credit in district headquarter
towns and all other cities with a population
of 100,000. The scheme aims at universal
coverage. (Rs 349 crore; $54 million)
11. Bachelor of Vocation degree in universities DESIGN ✔ ✔ ✔
Enhancing employability of students via
IMPLEMENTATION ✔ ✔ ?
vocational courses in universities. The
courses have been mapped with National IMPACT ? ? ?
Skills Quality Framework levels 5 to 7.
There are 162 B.Voc. colleges/universities.
(Rs 10 crore; $2 million, 2016–17)
12. Community colleges DESIGN ✔ ✔ ✔
Providing low cost and high quality
IMPLEMENTATION ✔ ✔ ?
education that integrates skills in higher
education. The distribution of modules and IMPACT ? ? ?
credits between general and vocational
education is 40:60. In 2015–16, 89 trades
were identified. There are 157 community
colleges. (Rs 25 crore; $3.8 million)
✔ GOOD   ×  NEEDS IMPROVEMENT    ? UNKNOWN OR TOO NEW   — NOT APPLICABLE

24
 SCHEME (ANNUAL SPENDING 2017–18, UNLESS PERFORMANCE ON
OTHERWISE NOTED) ACQUIRING MATCHING ANTICIPATING

13. Jan Shikshan Sansthan (JSS) DESIGN ✔ ? —

Provide vocational training, literacy and life
IMPLEMENTATION × ? —
skills to nonliterate, neo-literate and school
dropouts in skills with a market in their IMPACT ? ? —
region. There were 221 JSS in India as of
2009–10. (Rs 40 crore; $6 million)
14. Pradhan Mantri Kaushal Vikas Yojana DESIGN ✔ ✔ —
(PMKVY): Recognition of prior learning
IMPLEMENTATION ✔ ✔ —
Assessing and certifying informally trained
vocational workers through recognition IMPACT ? ? —
of prior learning. This scheme started in
2016–17.
Pradhan Mantri Kaushal Vikas Yojana
(PMKVY): Short-term training
Short-term training in industry-relevant
skills for school or college dropouts or
unemployed youth that will help them secure According
a better livelihood. Student enrolment was
34,757 in 2016–17. to the only
(Rs 1776 crore; $273 million) PISA survey
16. Vocationalisation of secondary and higher DESIGN ✔ ✔ —
secondary education
conducted
IMPLEMENTATION × × —
The scheme has created 21,000 sections in in India in
9,619 schools with a capacity of about 10 IMPACT ? ? —
lakh students at the 10+2 level as of March two states
2016. The vocational education corresponds
to National Skills Quality Framework levels 1 in 2009, the
to 4. (No separate budget) Indian states
✔ GOOD   ×  NEEDS IMPROVEMENT    ? UNKNOWN OR TOO NEW   — NOT APPLICABLE
of Tamil Nadu
Note: See appendix A2.2 for fuller descriptions and comments. The three schemes, Sarva Shikhsa Abhiyaan, Rashtriya Madhyamik
Shiksha Abhiyaan and Teacher Education have been combined to form one scheme Samagra Shikhsa Abhiyaan, effective May and Himachal
2018.
Pradesh ranked
aspects of a student’s development on a contin- the same calculation in an academic form. This 72 out of the
uous basis throughout the year. The assessment is similar to what the Annual Status of Educa-
covered both scholastic subjects and co-scho- tion Report (ASER) 2017 report has done.43 74 countries
lastic areas such as performance in sports, art, The quality of skill acquisition in India’s or regions that
music, dance, drama and other cultural activi- post-secondary higher education is now being
participated
ties and social qualities. CCE gave more weight assessed by the India Skills Reports (box 2.3).
(40%) than in the past to formative evaluation The employability of final year students in var-
(class tests, homework, quizzes, projects and ious educational programmes between the ages
assignments directed throughout the year) of 18 to 29 remains below 50%, though there
than summative evaluation (60%, exami- has been some improvement.
nation/test conducted at the end of a term or
year) of student learning. It also determined Adopt international learning standards
that students should not face board exams
before class 8. However, the CCE came to an The Programme for International Student
end in 2016–17 with compulsory board exam- Assessment (PISA) is an international survey
inations for Class 10 from 2018, carrying 80% held every three years to test the performance
of the weightage. The impact of CCE on learn- of 15-year old students in science, mathemat-
ing outcomes remains open to debate. ics, reading, collaborative problem solving
The government needs to extend the National and financial literacy. According to the only
Assessment Survey for Classes 1 to 8 to Classes PISA survey conducted in India in two states
1 to 12 to test for learning outcomes. Further, it in 2009, the Indian states of Tamil Nadu and
needs to test for functional skills, such as telling Himachal Pradesh ranked 72 out of the 74
time, adding weights, or counting money, that a countries or regions that participated, lower
young person might have even if they can’t do than Kyrgyzstan. These states with presumably

25
 BOX 2.3 The Wheebox Employability Skills Test: India Skills Report 2017 and 2018

The Wheebox Employability Skills Test (WEST) 2016 to 40% in 2017, but the employability of
included all 29 states and 7 union territories and engineers, MBAs, BScs and MScs fell slightly. En-
3,000 educational campuses across India and as- gineering students were found most employa-
sessed about 560,000 candidates on parameters ble at 50%.
like domain knowledge, computer skills, numeri- The best performers in English as a second
cal and logical aptitude, critical thinking, and such language were West Bengal and Maharashtra;
behavioural traits as learning agility, adaptability, in numeracy, West Bengal and Delhi; in critical
interpersonal skills, emotional intelligence, con- thinking, Delhi and West Bengal; and in com-
flict resolution and self-determination. puter skills, Rajasthan and Delhi.
The employability of final year students The India Hiring Intent Survey 2017 shows
(between the ages of 18 and 29) was tested that skills required by employers include do-
using WEST, including those getting degrees main expertise, integrity and values, learning
in engineering, MBAs, BAs, BComs, BScs, MScs, agility, cultural fit, communication, numerical
Entrepreneurship BPharmas and including students at Industrial and logical agility, result orientation, adaptabil-
interweaves Training Institutes and Polytechnics. All those ity and interpersonal skills.
who scored more than 60% on WEST were con- The India Skills Report 2018 shows an im-
multiskilling and
sidered employable. Candidates overall showed provement in overall employability from 40% in
higher cognitive an improvement in employability from 33% in 2017 to 46% in 2018.
skills, such as
Source: Peoplestrong et al. 2017, 2018.
creativity and
critical thinking,
with technical the best education outcomes in India were low Reach special groups
skills and job- achievers when assessing problem solving skills
of 15-year-old students. China (Shanghai) and Skilling entrepreneurs
specific skills,
Singapore were the best performers.
including The Indian government has decided to Entrepreneurs take risks in uncertain envi-
sectoral participate in the OECD PISA Test in 2021. ronments, and the vast majority in India are
In preparation, students from Kendriya Vidy- necessity entrepreneurs, operating as own-ac-
knowledge alayas and Navodaya Vidyalayas will start par- count workers or micro-entrepreneurs. Oppor-
ticipating in the annual PISA tests from 2018 tunity entrepreneurs, by contrast, make up just
onwards. over 1% of the workforce.44
Both types of entrepreneurs need account-
ing and financial management skills, market-
Focus and consolidate technical and ing skills and inventory management skills.
vocational education Lacking numeracy, financial literacy and dig-
ital literacy can impede cash flow, invento-
As the Prasad Committee has recommended, ry management and access to formal sources
there is a strong need to limit short-term skill- of credit. Lacking adequate capital for future
ing programmes to recognition of prior learn- investment reduces the long-term viability of
ing and to focus on longer-term programmes. the enterprise. Entrepreneurship interweaves
Vocational education should be offered after multiskilling and higher cognitive skills, such
students have finished 10 years of school with as creativity and critical thinking, with techni-
strong foundational skills in reading, writing cal skills and job-specific skills, including sec-
and numeracy. The SSCs need to be revamped. toral knowledge.45
The NSQF needs to be strengthened and the Several institutions offer entrepreneurial
ITIs and polytechnics should be upgraded. skills and incubation support (box 2.4).
Demand-side vocational training models like Micro-enterprises also need linkages with
Dual VET need to be encouraged. The appren- markets and livelihood activities. Mentor-
tice system needs to be strengthened and linked ing support over the life cycle of the business,
with the NSQF system. especially to vulnerable low-income groups, is

26
 BOX 2.4 Boosting entrepreneurial skills

The central government established the Minis- coursework can help the practical applica-
try of Skill Development and Entrepreneurship tion of classroom learning and also serve as
(MSDE) to boost entrepreneurial skills, includ- launch pads for startups. Such opportunities
ing through the Indian Institute of Entrepre- are primarily restricted to top tier schools,
neurship, focusing on training, research and such as the Indian Institutes of Management
consultancy services for SMEs. It also launched and the Indian Institutes of Technology, and
the National Institute for Entrepreneurship and need to be broader based.
Small Business Development to promote entre-
preneurship training. • The NASSCOM “10,000 startups” initiative
launched in 2013 has the goal of aiding the
• StartUp India Learning Program (StartUp India) growth of 10,000 startups by 2023 through
is a free government-­supported online learn- funding, acceleration, mentoring and enter-
ing programme, following up on Startup India, prise connect.
promoting bank financing for startup ven- Far more is
tures. Developed by Invest India in collabora- • The MSDE has launched the Skills Strength- needed to
tion with UpGrad, it offers structured learning ening for Industrial Value Enhancement
train and
modules for aspiring and new entrepreneurs. (STRIVE) scheme with assistance from the
World Bank. MSDE has also launched the support the
• Deen Dayal Upadhyay Swaniyojan Yojana, Skills Acquisition and Knowledge Awareness vast number of
the rural avatar of StartUp India launched in for Livelihood Promotion (SANKALP) scheme
2016, promotes entrepreneurship especially with World Bank support. Both schemes are self-employed,
among self-help groups and women. It pro- aimed at institutional reforms and improving taking into
vides skills for self-employment and liveli- the quality and market relevance of skill de-
hood generation, with the potential for cred- velopment training programmes. They both
account
it access through government-backed loans. support the National Skills Development their level of
Mission of the Government of India.
schooling
• The Pradhan Mantri Kaushal Vikas Yojana
(PMKVY–II) ­requires training providers to in- • Friedrich-Naumann-Stiftung für die Freiheit,
clude financial literacy and digital literacy in Germany, in coordination with the Tamil
their curricula, along with core competencies Nadu Small and Tiny Industry Association,
for job roles across sectors prescribed by In- launched innovation vouchers in Tamil Nadu
dia’s National Skills Qualification Framework. in 2012. The voucher programme encour-
The goal is to ensure self-employment for aged local entrepreneurs to come forward
those unable to secure wage employment. with their ideas and business plans, an im-
provement over providing incubation sup-
• In schools of management and technology, port based on areas pre-determined by the
business plan competitions as part of regular funder.

Source: Literature reviews and agency websites.

also necessary. Women are encouraged to form competencies. The goal is to ensure self-em-
cooperatives as support networks and platforms ployment for those who are unable to secure
for developing life skills. wage employment. Such necessity-driven
Far more is needed to train and support entrepreneurs need to be further connected to
the vast number of self-employed, taking into labour networks for access to markets. Lifecy-
account their level of schooling.46 cle support through co-operatives and access to
The Pradhan Mantri Kaushal Vikas Yojana supply chain networks, as done by the Self-Em-
(PMKVY–II) programme has made it mandato- ployed Women’s Association of India (SEWA
ry for skill training providers to impart addi- Bharat) for women from marginalised back-
tional hours of training in financial literacy grounds, can creates pathways for entrepre-
and digital literacy, apart from training in core neurship under master networks. Peer-effects

27
 and training in business skills enhance the decision-making­ —­being willing to experi-
ability to launch businesses and/or expand ment, to be open to growth opportunities and
existing micro-enterprises and hire workers.47 to acquire new capabilities. Learning to learn
For existing livelihood entrepreneurs, formal thus enhances adaptability, supporting job
recognition and certification of skills can pro- security in labour markets that are much more
vide pathways for skill upgradation based on flexible.
industry needs, along with the potential for Initiatives such as open access massive open
connecting such entrepreneurs to digital plat- online courses (MOOCs), or app-based learn-
forms or industry value chains, tapping into ing modules such as those provided by Pratham
previously inaccessible markets. and through the EkStep Foundation, provide
access for upgrading skills. The government, on
Skilling informal workers its part, can offer grants/tax rebates to incen-
tivise uptake of formal skill upgrading courses
Recognition of prior learning can provide path- for lifelong learning, such that the workforce
ways for skill certification and further skill remains agile and adaptive to new trends in the
upgrading for informal workers without formal economy.
Recognition of vocational training. Skill certification can sig- Online learning courses are popular among
prior learning nal higher productivity to potential and exist- working professionals and students. Almost
ing employers and can thus pave the way for 98% of students reported receiving benefits
can provide
social recognition, job mobility and better wage in the pursuit of their educational courses.
pathways and compensation benefits. Once identified, According to a recent KPMG report, online
for skill upskilling these workers with digital skills and education in India is expected to grow eight-
basic financial literacy will increase access to fold by 2021, to USD 2 billion from 247 mil-
certification networks and markets and enhance livelihood lion in 2016. The paid user base is expected to
and further opportunities. Recognition of prior learning for grow at a compound annual rate of 43%, from
wage workers can be implemented at factory 1.6 million users in 2016 to 9.5 million in 2021.
skill upgrading sites, employer premises and industrial clusters. Demand is very high for supplementing prima-
for informal However, a vast majority of informal workers ry and secondary education, test preparation
are operating as self-employed necessity-driv- for engineering and government service cours-
workers
en micro-entrepreneurs. These self-employed es, reskilling and online certifications, higher
without formal workers can be certified via traditional clus- education, and language and casual learning.48
vocational ters (such as, for example, handloom clusters The Khan Academy is a popular online source
in the Northeast), networks of master artisans, offering practice exercises, instructional vid-
training by UWIN (Worker Index Number) cards, or by eos and personalised dashboards on subjects
Aadhaar biometric identification. The Ministry like math, science, computer programming
of Labour announced in January 2018 that it and history. It also has tie-ups with institutions
would issue UWIN cards to some 470 million like NASA, the California Academy of Sciences
informal workers to bring them under the and MIT.49 SWAYAM is a free online electronic
social security net. It proposes to complete education platform sponsored by the Govern-
this exercise before the end of FY2018–19. The ment of India.
UWIN card is to be seeded with the Aadhaar The EkStep Foundation’s platform, devel-
number of the informal worker. oped by Nandan and Rohini Nilekani and their
team, provides learning and content frame-
Skilling workers for lifelong learning works and tools, and increases access to learn-
ing opportunities by enabling and facilitating
There’s more to learning than memorising interaction between content creators, learning
facts or figures, or preparing for an examina- facilitators and learners across contexts and
tion, too often central to formal institutional content types. EkStep is thus both an open
learning in India. Cognitive learning, such as learning platform and a utility focusing on
learning to learn, includes acquiring knowl- improving basic literacy and numeracy, but is
edge, skills, attitudes and aptitudes that pre- also scalable through partner networking and
pare individuals for quick effective learning, co-creation of other learning content.
with the eventual goal of becoming independ- Notable government initiatives include:
ent learners for lifelong learning. That requires the National Repository of Open Educational
developing such skills as logical reasoning and Resources, with a collection of 20,000 resources

28
in 29 languages on both school and teacher to text; learner-centred teaching approaches;
education; e-Pathshala developed by NCERT emphasis on learning by doing; and experi-
for dissemination of educational resources; ential based learning, working in teams and
and Saransh, an online platform for improving mentoring programmes that link students and
interaction between schools and parents. trainees to professionals.50
The German Federal Institute for Vocational
Education and Training, for instance, develops
Ensure that skills are portable across other labour market research to identify core trans-
jobs and sectors ferable and vocational skills.51 Trends over the
last decade point towards placing more empha-
This chapter began by defining foundational, sis on multidisciplinary core skills that are
employability and entrepreneurial skills. Many portable, such as ICT skills, communication
of these skills, particularly the foundational and language skills, financial literacy skills,
and the employability ones, can be job specif- critical thinking and reasoning, learning to
ic or skills that stay with the worker and are learn and teamwork.
therefore portable. Portable skills that workers Of graduates from government-sponsored
can carry with them to any job require inno- ITIs or the ATS, 34% claimed that no jobs Portable skills
vative, good-quality primary and secondary were available in their area of training.52 So, such as critical
education and training, complemented with task-specific vocational skills and portable skills
thinking and
relevant vocational training and skills, along that can be applied across different work situa-
with ensuring that students complete their tions need to be given even more importance. problem
courses. Portable skills such as critical thinking This report has developed the triad of solving are
and problem solving are directly linked to deep acquiring-matching-anticipating skills that if
knowledge of the content and require inno- implemented well can help turn the vicious directly linked
vative teaching approaches. Some of the good cycle of low skilling and not enough jobs to a to deep
practices on imparting portable skills or core virtuous circle of good skilling and good jobs.
work skills involve interactive teaching prac- Skills that are portable across sectors and jobs
knowledge
tices where instructors facilitate enquiry, crit- are a vital element of this transition from the of content
ical thinking and creativity instead of teaching vicious to the virtuous.

29
 APPENDIX A2.1 A glossary of skills

Active learning­—­understanding the implica- alternative solutions, conclusions or approach-

tions of new information for both current and es to problems.
future problem-solving and decision-making.
Emotional intelligence­— ­the measure of an
Advanced digital skills­ — ­advanced techni- individual’s abilities to recognise and man-
cal skills like programming, quality control age their emotions and the emotions of other
analysis and technology design. It may fur- people, both individually and in groups. It
ther include advanced computer programming, includes:
applications development, big data analyt- • Self-awareness ­— ­
being aware of and under-
ics, ability to work on algorithms and neural standing emotions as they occur and as they
networks. evolve. It is wrong to think of emotions as
either positive or negative. Instead, think of
Applied mathematics­ —­using mathematics them as appropriate or inappropriate.
to solve problems at the workplace. • Self-management­— ­the emotions you are feel-
ing at any given time or in any given cir-
Attitude to work­ —­
i n the Indian context cumstance and how well you manage them.
includes working eight hours a day, being • Self-motivation­— ­
our personal drive to
punctual, and so on. It may also involve other improve and achieve, commitment to our
skills like listening and speaking in a socially goals, initiative, or readiness to act on
sensitive manner in the context of work. opportunities and optimism and resilience.
• Empathy­— ­ a n awareness of the needs and
Basic digital skills­—­mobile literacy, basic feelings of others both individually and in
computer literacy, responding to email/text groups and being able to see things from the
messaging. point of view of others.
• Social/interpersonal­— ­
developed capacities to
Cognitive flexibility­
—­
the ability to work with people, includes coordination,
switch between mental processes in order instructing, negotiation, persuasion, service
to adapt behaviour in response to changing orientation and social perceptiveness.
environment.
Financial literacy­— ­the ability to understand
Communication­— ­ providing information to how money works in day-to-day functions and
supervisors, co-workers and subordinates by how someone manages it, invests it and offers
telephone, in written form, e-mail or in person. it to others. More specifically, it refers to skills
and knowledge that allow an individual to
Complex communication skills­ — ­oral and make informed and effective decisions with all
written skills to transmit complicated ideas. of their financial resources.

Complex problem solving­— ­identifying com- Financial management­ — ­fi nancial account-
plex problems and reviewing related informa- ing, investment management and corporate
tion to develop and evaluate options and imple- finance.
ment solutions.
Functional digital skills­— ­planning events,
Complex technical problem solving­ —­ developing budgets, or managing projects using
abstract reasoning, analytical skills, critical digital technology/computers, digital market-
thinking to provide insightful job-relevant ing on websites and the ability to use social
solutions. media for information dissemination.

Creativity­— ­developing, designing, or creating Leadership skills­— ­a n amalgam of thinking

new applications, ideas, relationships, systems, strategically, planning and delivery skills, peo-
or products, including artistic contributions. ple management skills, change management
and innovation, communication and persua-
Critical thinking­ —­ using logic and reason- sion and influencing skills.
ing to identify the strengths and weaknesses of

30
Listening/active listening­ — ­paying full Social sensitivity­ —­sensitivity towards gen-
attention to what other people are saying, tak- der, caste and religious concerns.
ing time to understand the points being made,
asking questions as appropriate and not inter- Speaking­— ­talking to others to convey infor-
rupting at inappropriate times. mation effectively, using the appropriate lan-
guage at the workplace.
Mathematical reasoning­ —­the ability to
choose the right mathematical methods or for- System skills­ —­capacities to understand,
mulas to solve a problem. monitor and improve socio-technical systems,
include judgment and decisionmaking, systems
Numeracy­— ­a necessary skill for all occupa- analysis and systems evaluation.
tions, is basic mathematical literacy and indi-
cates a basic ability to work with numbers. Technical skills­ —­ developed capacities used
to design, set-up, operate and correct mal-
Problem-solving skills­ —­ solve novel, ill-de- functions involving application of machines
fined problems in complex, real-world settings. or technological systems, such as equipment
maintenance, equipment selection, installa-
Psychomotor skills­ —­areas that require tion, operation and control, operation monitor-
strength and dexterity and involve manual ing, operations analysis, programming, quality
skills. control analysis, repairing, technology design
and troubleshooting.
Reading comprehension­ —­understanding
written sentences and paragraphs in work-re- Writing­— ­communicating effectively in writ-
lated documents. ing as appropriate for the needs of the audience.

Skills illustrated
TECHNICAL AND
BASIC COGNITIVE HIGHER COGNITIVE SOCIO-EMOTIONAL SKILLS VOCATIONAL SKILLS

• Reading literacy • Learning strategies • Conscientiousness Technical skills

• Writing • Critical thinking (including attitude • Equipment
• Numeracy/ • Complex problem towards work) maintenance
mathematics solving • Social sensitivity • Equipment selection
• Communication • Complex • Openness to • Installation
• Language skills communication experiences • Operation and control
• ICT literacy to skills • Creativity • Extraversion • Operation monitoring
• Financial literacy • Independent research • Agreeableness • Operations analysis
• Self-learning to • Neuroticism/ • Programming
Systems skills
active (independent) emotional stability • Quality control
• Judgement and
learning • Instructing analysis
decision-making
• Active listening • Negotiation • Repairing
• Systems analysis
• Science • Persuasion • Technology design
• Systems evaluation
• Problem solving • Decision-making • Troubleshooting
Resource management • Coordination
Vocational trades
skills • Emotional intelligence
• Financial resources • Social perceptiveness
• Management • Service orientation
resources
• Personnel resources
• Time management
Source: O*Net, https://www.onetonline.org/

31
 APPENDIX A2.2 Explanations for ratings in table 2.1
Based on interviews with industry representatives and training providers and reviews of existing
assessments. Responsible ministry in parentheses.

Mid-Day Meal Scheme (MHRD). There is Apprenticeship training (MSDE). There is

evidence that the Scheme does have a positive ongoing assessment of the National Apprentice­
impact on overall cognitive ability of primary ship Training Scheme. A National Institute of
school children. Further, foundational cog- Labour Economics Research and Development
nitive ability also affects future learning out- report shows that in the National Apprentice-
comes. Even with implementation challenges, ship Training Scheme in the Western India
the Scheme is having an impact. region, apprentices gain from the training, but
due to low pay have little incentive to take it
Rashtriya Madhyamik Shiksa Abhiyan up. It is viewed as a last resort and not very
(MHRD). The evidence is limited but this aspirational. The programme is under­utilised.
scheme has the same challenges as Sarva Shik- The NAPS and National Employability through
sa Abhiyan with focus on general knowledge Apprenticeship Programme are too new to
and acquiring of a limited set of skills, if any. be evaluated, having been introduced in the
The recent ASER 2017: Beyond Basics report last two years. The India Skills Report 2018
points to a significant gap in skills in youth finds that only 54% of students were aware
aged 14–18 years. of the NAPS, while 93% were interested in an
apprentice opportunity.
Rashtriya Uchchatar Shiksa Abhiyan
(MHRD). The India Skills Reports indicate Deen Dayal Upadhaya–Grameen Kau-
improvement in employability over the years shalya Yojana (MoRD). This is a well-struc-
for people with higher education including gen- tured programme to match rural youth to
eral and technical. Employability has touched a employment by skilling them. However,
new high of 45.6% in 2018.53 NCAER interviews with MoRD officials had
suggested that turnover rates are very high.
Saakshar Bharat (MHRD). While pro- Nonetheless the programme is evolving to
gramme outcomes show improvement, the focus on one-year training instead of short-
scheme is only resulting in the acquisition of term ones. This is too new to assess impact. In
foundational literacy and numeracy skills. 2013, it was mandated that 25% of the NRLM
funds would be allocated to the DDU–GKY.
Sarva Shiksa Abhiyaan (MHRD). Of the
16 foundational cognitive and noncognitive Craftsman Training Scheme implemented
skills, the scheme impacts six­— ­reading, writ- via Industrial Training Institutes (MSDE).
ing, numeracy, language, ICT literacy, science This programme is one of the oldest pro-
and general knowledge. And even though grammes for vocational education and train-
there has been improvement in 2016, the qual- ing in India. While the ITIs have suffered from
ity remains poor, with emphasis on rote rather extensive quality issues, the programme is
than functional skills. Large firms will not hire undergoing changes in design and implementa-
middle school graduates, and demand from tion to improve quality. The India Skills Report
medium and small firms only partly matches 2018 shows that the employability of ITI gradu-
supply. ates, already quite low, worsened between 2017
and 2018. The day-to-day operations of the ITIs
Sub-mission on Polytechnics (MSDE). are done by the state governments. But central
Employability of polytechnics graduates is also funds are distributed to ITIs through other cen-
low but quality has improved between 2017 tral schemes, including the World Bank assisted
and 2018 as per the India Skills Report 2018. Vocational Training Improvement Programme
However, employability remains below 50%. (VTIP), “Upgradation of 1,396 Government
Their quality of education is variable and they ITIs through PPPs,” “Upgradation of Existing
are regarded by students as a stepping stone Government ITIs into Model ITIs,” “Enhancing
to engineering colleges as there is a quota for Skill Development Infrastructure in NE States
them. and Sikkim,” and “Skill Development in 47
Districts Affected by Left Wing Extremism.”

32
National Urban Livelihoods Mission Pradhan Mantri Kaushal Vikas Yoja-
(MoHUA). Underachievement of targets and na Short-term Training and Recognition
implementation are tough to analyse, but there of Prior Learning (MSDE). The intent is to
might be design flaws where skills informal- acquire and match skills or recognise prior skills,
ly acquired are not being recognised by the but this is too new a programme to assess impact.
programme.
Vocationalisation of Secondary and Higher
Bachelors of Vocational Education in col- Secondary Education (MHRD). There is not
leges and universities (MHRD). The intent enough data on the outcome or impact of this
of this scheme, which started in 2014, was to scheme. The CBSE has withdrawn compulsory
acquire and match skills better and provide vocational education in secondary education
increased flexibility. Media reports indicate because of implementation challenges. With
underuse. vocational education gained in schools, students
are more likely to find a match in the job mar-
Community colleges (MHRD). The intent is ket. The National Sample Survey Office (NSSO)
to acquire and match skills, but the programme 2011–12 data show that workers with secondary
is too new to assess impact. or higher secondary education and formal voca-
tional education receive higher average wages
Jan Shikshan Sansthan (MHRD). Jan Shik- than workers with only secondary or higher
shan Sansthans are established to provide secondary education. So, the matching of skills
vocational training to non-literate, neo-literate, between employees and employers is likely to
as well as school drop outs by identifying skills be better in this programme.
that should be locally in demand. But evalua-
tion of the Scheme suggests the need for better Notes
targeting, since enrollees may have much high-
er school education in some areas. JSSs suffer MHRD­— ­M inistry of Human Resource
from poor curriculum materials, inadequate Development
teaching material, long duration of training,
inadequate facilities, irregular attendance and MSDE­— ­ M inistry of Skill Development and
indifferent attitude of resource persons, inad- Entrepreneurship
equate and poor condition of tools and equip-
ment and poor follow-up. MoRD­— ­M inistry of Rural Development

MoHUA­— ­
M inistry of Housing and Urban
Affairs

33
 Notes 27. Indo-German Programme for Vocation-
al Education and Training. Retrieved from
1. This is for 2015–16. https://www.giz.de/projektdaten/projects
  Adjusted Net Enrolment Ratio measures .action;jsessionid=387D59670ABDD7283
number of pupils of primary school age C13E3BB94C094ED?request_locale=de_DE
group (6+ to 10+ years) enrolled either in &pn=201422948.
primary or upper primary grades expressed 28. Acemoglu and Pishke 1999.
as a percentage of the corresponding 29. Computed from World Bank Enterprise
population. Surveys.
  Adjusted Net Enrolment Ratio measures 30. Chandran 2016.
pupils that are of the official secondary age 31. NASSCOM 2017.
group who are in secondary and in higher 32. Acemoglu and Pishke 1999.
secondary level (NUEPA, 2016 and 2017). 33. Mehrotra et al. 2013.
2. Heckman, Stixrud and Urzua 2006. 34. Gupta 2018.
3. Brunello and Schlotter 2011. 35. See https://www.theschoolinthecloud.org.
4. EI and Wipro 2011. 36. McKinsey 2007.
5. Pilz et al. 2016. 37. Gupta 2018.
6. Levy and Murnane 2005. 38. Gupta 2018.
7. Linden 2008. 39. Chisholm and Leyendecker 2008.
8. Agrawal 2014. 40. Clarke 2003, NCERT 2011a, NCERT 2011b,
9. NSSO 2014. Sarangapani et al. 2013.
10. Prasad et al. 2016. 41. Banerji and Walton 2011.
11. MSDE Annual Report 2016–17. 42. NUEPA 2015.
12. Prasad et al. 2016. 43. ASER 2018.
13. OECD 2010. 44. NSSO 2014.
14. World Bank 2008. 45. Baron 2004.
15. Hindu 2017. 46. Ghani, Kerr and O’Connell 2011, Kolstad
16. Chatterji 2018. and Wiig 2013, Daymard 2015, Parker and
17. Joshi, Pandey and Sahoo 2014 and Tara, Praag 2006.
Kumar and Pilz 2016. 47. Field, Jayachandran and Pande 2016.
18. Mehrotra 2016; Tara, Kumar and Pilz 2016. 48. KPMG and Google 2017.
19. The VETnet promotes the German dual 49. https://www.khanacademy.org/about.
system of TVET in nine countries, includ- 50. Brewer 2013.
ing India. The programme is sponsored by 51. ILO 2017.
the German Federal Ministry of Research 52. Mehrotra 2014.
and Education (BMBF) and is coordinated 53. Wheebox et al. 2018.
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_school_systems_come_out_on_top.ashx. Towards Universalisation.” New Delhi, India.
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2016–2017%20-%20English.pdf. tistics 24 (4): 416–431.
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37
 MATCH
&
ADJUST

MATCH
&
ADJUST

ACQUIRE ANTICIPATE
& &
IMPART ADAPT

ACQUIRE ANTICIPATE
& &
IMPART ADAPT
 3

Matching skills
How best to adjust them

In the face of technological change, the labour (7.8 million) and financing, real estate and
skills required in all parts of the economy are business (4.6  million). Policymakers clear-
changing at all levels of employment, and the ly need to keep indirect jobs in mind, not just
educational system and vocational training direct jobs.
system are not matching those requirements. The Indian workforce is largely low-skilled.
Adjusting to match requirements and work- Slightly more than half of India’s workers have
ers requires providing workers not only with school attainment below middle school with no
job-specific technical skills but also with flex- vocational training (figure 3.1). This share rises
ible cognitive skills such as creative thinking above 60% for agriculture, construction, food,
and social and behavioural skills such as work beverages and tobacco, and other nonmetallic
effort and discipline. mineral products. In textiles, wood and wood
Agriculture employs about half of India’s products, furniture and fixtures, metals, other
468 million workers, industry about a quarter manufacturing and service sector of hotels
and services about a quarter (table 3.1). India’s and restaurants, more than 20% of workers
economic transformation from agriculture to have only middle education with no vocation-
services that drives employment and economic al training. Agriculture too absorbs mostly
growth has so far missed out on the manufac- low-skilled workers (with some in disguised
turing stage seen in most countries. Manufac- unemployment).
turing typically provides the high productivity Service sectors mainly create jobs for work-
boost that lifts incomes, increases the demand ers with educational attainments above 12th
for durable and consumer products, creates jobs grade, such as communication (51% of total
and propels a virtuous circle of higher incomes, workers within that sector), financing, real
rising demand for manufactured goods, even estate and business activities (58%), and other
higher productivity, even lower prices, and services (39%). So do such manufacturing sec-
thus rising disposable incomes. tors as transport equipment (48%), machinery
All sectors generate jobs directly in their sec- (46%), petroleum products (35%), pulp, paper,
tor but also indirect jobs in the rest of the econ- printing and publishing (34%) and chemicals
omy through inputs they buy and outputs they (32%).
sell. So, India’s manufacturing sectors indirect- Among the 12 Indian sectors generating the
ly generate jobs in other sectors, and NCAER most jobs, with the exception of the communi-
research1 for this report finds that in 2011–12 ty, social and personal services and financing,
wood and wood products generated another real estate and business activities, all other sec-
54.5 million jobs indirectly, in addition to the tors employ the most workers with less than a
6.1 million. Other leading indirect job genera- middle-school education.
tors making up the top five include food, bev- Sectors such as pulp, paper, printing and
erages and tobacco (33.3 million indirect jobs), publishing, rubber and plastics, transport,
leather and leather products (28.0 million), metals, and hotels and restaurants generate
textiles (26.2 million), and pulp, paper, print- employment for a spectrum of educational lev-
ing and publishing (14.7 million). The indirect els in India; in contrast, construction mainly
job generation in service subsectors is similar: generates employment for people whose school
hotels and restaurants (33.8 million indirect attainment is below middle school.2
jobs), community, social and personal servic- Only very small shares of workers in India
es (15.9 million), wholesale and retail trade have technical or vocational education. Trans-
plus vehicle repair (14.9 million), transport port and textiles employ more workers with

39
 TABLE 3.1 Where are the 468 million jobs?
MILLIONS OF EMPLOYMENT
SECTOR SUBSECTOR JOBS SHARE (%)

Agriculture 228.5 48.8

Industry 112.8 24.1
Mining & quarrying 2.5 0.5
Manufacturing
Total 58.9 12.6
Food, beverages & tobacco 11.0 2.4
Textiles & apparel 18.3 3.9
Wood & wood products, furniture & fixtures 6.1 1.3
Pulp, paper, printing & publishing 1.6 0.3
Leather products 1.2 0.3
Rubber & plastics 1.1 0.2
Policymakers
Petroleum products 0.1 0.0
face the triple
Chemicals 1.9 0.4
challenge of Other nonmetallic mineral products 4.9 1.0
incentivising Metals 4.4 0.9
the creation Machinery 2.4 0.5

of more Transport equipment 1.5 0.3

Other manufacturing 4.2 0.9
well-paying
Electricity, gas & water supply 1.6 0.3
jobs, creating
Construction 49.8 10.6
efficient Services Total 126.5 27.0
pathways to skill Wholesale & retail trade; repair of motor
vehicles and motorcycles 43.7 9.3
acquisition and
Hotel & restaurants 7.6 1.6
job matching,
Transport, storage & communication
and protecting Total 20.7 4.4
low-paid, Transport & storage 18.5 4.0
Communication 2.2 0.5
low-skilled
Financial services, real estate & business
workers with activities 12.3 2.6
social security Community, social & personal services, other
services 42.0 9.0
benefits
Total workforce 467.7 100
Note: The economic sectors are compatible with the World Input-Output Database. With minor discrepancies in a few sectors,
they are compatible with the sectors in the National Accounts Statistics of India. Workers include principal and subsidiary workers.
Source: NCAER computations from the 2014 National Sample Survey Office, with data for 2011–12.

below secondary schooling and vocational Capital-intensive sectors­

—­such as mining,
training. Services, by contrast, employ workers electricity, machinery and petroleum tend to
with above Class 12 and vocational and tech- pay a positive wage premium.3 So do skill-in-
nical education­— ­especially communication, tensive sectors, such as computer work and
financing, real estate and business activities financial intermediation. But less capital-in-
and community, social and personal services. tensive and skill-intensive sectors­ —­such as
The share of workers with higher secondary foodstuffs, tobacco, textiles, agriculture and
attainment compared with other categories is hotels­—­have below-average pay. Overall, the
curiously low. sectors that are hiring the most workers are

40
FIGURE 3.1 Most workers have little education
Percent of workers

100

75

50

25

Automation is
0
not necessarily
Agriculture Manufacturing Other industry Services
stealing jobs,
Below middle Secondary with vocational training but it can
Below middle with vocational training Higher secondary
Middle Higher secondary with vocational training transform jobs
Middle with vocational training Above higher secondary
Secondary Above higher secondary with technical/vocational training

Source: NCAER computations using National Sample Survey Office data (2011–12) and the employment-unemployment survey
(National Sample Survey Office 2013).

low skill-intensive sectors, and they are paying noncognitive, and job- and sector-specific
below-average wages. skills depending on the occupation and level of
Since the share of well-paying, skill-inten- responsibility (table 3.2). Seen against the poor
sive industries in the workforce remains low, skilling levels of most Indian workers in the
policymakers face the triple challenge of incen- sectors generating the most jobs, the large size
tivising the creation of more well-paying jobs, of India’s skilling demand-supply mismatch
the creating efficient pathways to skill acqui- becomes obvious.
sition and job matching, and protecting low- Technology and skilled labour complement
paid, low-skilled workers with social security each other, but technology can replace lower-­
benefits. skilled labour. It is especially likely to dis-
place routine cognitive skills in clerical work,
accounting and shop floor assembly­—­repetitive
The supply of skills doesn’t match the activities that follow clear guidelines.4 Jobs
demand that require higher-order cognitive skills such
as creativity and complex problem solving are
India’s economic structure clearly is not in sync likely to thrive with new technology.5 Self-mo-
with its labour markets, leading to mis­alloca­ tivated employees who upgrade their skills are
tions of labour resources. The demand for skills in demand.6 Paradoxically, however, many
is not matching the supply of skills. What sec- jobs requiring little education­ —­such as driv-
tors, and at what level, are creating the demand ing, child care and unskilled health care­— ­have
for which type of skilled and unskilled workers? resisted automation.
How can workers acquire skills more effectively So, automation is not necessarily stealing
and at lower cost to meet this demand, propel- jobs, but it can transform jobs. Infosys, the
ling firms and workers towards higher produc- global software technology giant, released
tivity and faster economic and job growth? 8,000–9,000 employees from their current
On the demand side, employers require assignments during 2016 by automating their
workers with many combinations of cognitive, low-end jobs, but it then trained them in more

41
TABLE 3.2 Demand for skills across occupational roles

HIRED WORKERS

Medium-high- High-skilled
SKILLS Low-skilled Medium-skilled skilled worker/ worker/specialist/
casual worker operative/trade worker associate professional trainer/professional

Semi-skilled construction Welding technician, Automotive service Economist, engineer, scientist,

worker/helper assistant beauty therapist, technician, shuttleless lawyer, surgeon, consultant,
power loom operator weaving machine operator, chartered accountant
junior accountant

Equivalent NSQF levels 1 or 2 3 or 4 5 or 6 7 and above

developed by NSDC

Routine Read & write short Read & write long sen- Reading comprehension Reading comprehension
cognitive sentences & numerical tences, numerical figures, (e.g. manuals/drawings/ (concepts in books, articles,
figures, understand understand drawings, per- graphs), write short technical manuals), writing
drawings, basic math, form basic math calcula- paragraphs, perform (policy notes, reports, articles),
communicate with team, tions, communicate with basic calculations, mathematical reasoning
supervisor clients/supervisor communicate with clients (for scientific assessment)

Nonroutine Active learning based Active learning latest Active learning (latest on- Cognitive flexibility (adapt
cognitive on assigned duties welding techniques (weld- demand trade skills), to unforeseen market trends),
(trade skills) ing technician), latest escalate anomalies/defects learning to learn, complex
wellness products to supervisor for prompt communication (gathering/
and safety measures redressal, problem processing/presenting
(beauty therapist) solving in different concepts at scientific
contexts conference), complex
(technical) problem solving
& critical thinking, creativity
(product, design, and
process innovation)

Language Local language skills for Local & regional Bilingual/multilingual Bilingual/multilingual skills
semi-skilled migrant language skills for client requirements as per work for independent learning,
COGNITIVE workers, daily wage servicing, conveying place duties for effective communicating, adapting
SKILLS earners messages communication

Information & Read/type on mobile Read/type on computer / Basic computing skills Advanced ICT/programming
communica- mobile, use e-wallet on (research assistant, junior skills in R/Stata/SAS (data
tions techno- phone accountant), perform scientist), Tally (Senior Account-
logy (ICT) computerised diagnostics ant), Python (senior consultant
(automotive service working on artificial intelli-
technician), use e-wallets. gence/neural networks)

Financial Basic financial literacy Basic financial literacy Financial literacy (know- Advanced financial literacy
literacy (operating savings bank (operating bank account, ledge of financial products, (managing own finances/
account, basic knowledge knowledge of financial manage own finances, retirement planning);
of financial products) products, calculate interest calculate interest rates); advanced financial manage-
from savings) basic financial manage- ment (financial economist,
ment (junior accountant) chartered accountant,
investment consultant)

Knowledge & Basic building & Knowledge of welding Knowledge of engines, trans- Medical knowledge (surgeon),
ability to mechanical knowledge techniques (welding tech- mission, braking, steering scientific knowledge (scientist),
apply it (semi-skilled construction nician); basics of beauty (automotive service tech- knowledge of GAAP (gener-
worker), ability to assist therapy, medical safety, nician), knowledge of fibre/ ally accepted accounting
supervisor (helper) hygiene, beauty products yarn, functioning of mill principles)—(chartered
(beauty therapist) (shuttle-less loom weaver) accountant)

Cognitive skills
Sector or job-specific technical skills
Noncognitive skills
NSQF = National Skills Qualification Framework. NSDC = National Skills Development Corporation.
Note: The colour gradations reflect different levels of complexity across three broad categories of skills, with darker shades indicating higher levels of complexity.
Source: NCAER conceptualisation.

42
 ENTREPRENEURS/SELF-EMPLOYED PERSONNEL

Self-employed livelihood/ High-skilled, self-employed CEO/director/opportunity
High-skilled manager necessity entrepreneur professional entrepreneur/employer

Operations manager, Hawker, one-person shop, Lawyer, doctor, consultant, stock CEO, MD, director-general, secretary
HR manager, finance handicraft/handloom weaver, broker, chartered accountant, to government, board member,
manager, research manager, cab driver freelance artist, content developer employer
team manager

8 and above 1 through 6 7 and above 8 and above

Reading comprehension Read, write short sentences, perform Reading comprehension (books, Reading comprehension (books,
(reports/compliance manuals), basic calculations, communicate articles), writing (reports, prescrip- articles, policy papers), writing
writing (reports), mathematical with clients tion) mathematical reasoning (stock (reports, articles), mathematical
reasoning (evaluating team trader, programmer) reasoning (for critical assessment of
submission) projects, products, markets)

Cognitive flexibility (steer team Active learning (trade skills), Cognitive flexibility (for adapting Cognitive flexibility (adapting across
to adapt to unforeseen trends), problem solving (while sourcing to sectoral trends), active (inde- business cycles/market trends),
active learning, complex products, interacting with clients), pendent) learning of trade skills, learning to learn, complex communi-
interpersonal communication creativity complex communication (gather- cation (processing/presenting
with team members/clients, ing/processing/conveying informa- information, interpersonal communi-
complex (technical) problem tion), complex technical problem cation), complex technical problem
solving & critical thinking, solving & critical thinking (finding solving (abstract reasoning, critical
resource management solution to ailments/trouble- thinking for company level
shooting), creativity (e.g. content problems), creativity, resource
development) management

Bilingual/multilingual skills for Skills in local & official (English, Skills in local & official languages Skills in local & official languages for
communicating with team Hindi) languages for communicating for communicating with clients/ outreach across multiple stakeholders
members/clients from different with clients across platforms stakeholders across platforms across geographical boundaries
regions/ countries

Advanced ICT skills in Stata/ ICT skills for sourcing product orders Advanced ICT skills in R/Python Advanced ICT skills across respective
SAS (research manager), Tally (garments) via e-commerce platforms (independent AI consultant), source tech-platforms based on company
(accounts manager), Neuroph/ (e.g. IndiaMart), operate e-wallets clients via e-commerce platforms structure/sector (IT/BPO, manufactur-
Python (tech manager) for for payments (e.g. UrbanClap), operate e-wallets ing, research, consulting, hospitality)
supervising team progress for payments

Advanced financial literacy Financial literacy to manage earnings/ Advanced financial literacy to Advanced financial management to
(HR manager, research mana- cash-flow/credit repayment (hand- manage earnings/profit (doctor/ understand earnings/cash-flow
ger; advanced financial loom weaver) basic financial manage- lawyer) financial management analysis/financial ratios/corporate
management (finance ment (one-person retail shop owner) (chartered accountant) investment restructuring
manager/accounts manager) management (stock broker)

Sector (e.g. breakfast food), Sector knowledge (handloom), Sector (ailments—doctor, legal Sector (consumer goods/agricultural
product knowledge (cereals, product knowledge (handloom knowledge—lawyer), product machinery), products (food, ag. tools),
probiotic yoghurt), managerial sarees), market knowledge (latest (medicines, laws), occupational market knowledge (regional, national,
ability (manage product trends) knowledge (ethical practices) international), managerial ability
development team) (manage firm, subsidiaries, clients—
e.g. CEO of FarMart, Amul, Dabur)

43
TABLE 3.2 Demand for skills across occupational roles (continued)

HIRED WORKERS

Medium-high- High-skilled
SKILLS Low-skilled Medium-skilled skilled worker/ worker/specialist/
casual worker operative/trade worker associate professional trainer/professional

SECTOR Cognitive, Follow instructions, assist Operating welding equip- Identify and repair mech- Manual dexterity, visuo-
OR JOB- noncognitive supervisor in designated ment, assist welding anical problems (automo- spatial awareness, surgery
SPECIFIC, & psychomotor tasks based on sector- engineer (welding tech- tive service technician), skills (surgeon), research &
TECHNICAL specific job duties. nician), perform depilation, run loom efficiently, motor technical skills, post-doctoral
SKILLS manicure, pedicure skills, visual skills (shuttle- competency (scientist)
(beauty therapist) less loom weaver)

Core Interpersonal skill (team Interpersonal skill (work Interpersonal skill (com- Interpersonal skill (congeniality
noncognitive effort), attitude to work with team), attitude to passionate responsiveness), thoughtfulness), attitude to
(discipline, follow instruc- work (discipline, commit- attitude to work (time work (self-discipline, prompt-
tions), social sensitivity ment to work), social management, promptness), ness, determination), social
sensitivity social sensitivity sensitivity (gender/racial)
NON-
COGNITIVE Other
Basic problem solving— Judgement and decision-
SKILLS noncognitive
assuaging difficulties making (project feasibility),
faced by customers/ problem solving (negotiating
clients/other team terms and conditions),
members emotional intelligence (cop-
ing with work related stress)

Cognitive skills
Sector or job-specific technical skills
Noncognitive skills
NSQF = National Skills Qualification Framework. NSDC = National Skills Development Corporation.
Note: The colour gradations reflect different levels of complexity across three broad categories of skills, with darker shades indicating higher levels of complexity.
Source: NCAER conceptualisation.

The growing advanced skills and assigned them to new Info- may replace textile workers in India.9 The tex-
disconnect sys projects.7 In contrast, the half of the Indian tile sector directly employed 15.6 million (15+
workforce with less than middle school attain- age group) workers and indirectly 26.2 million
between
ment and no vocational skills likely lacks the workers in 2009–10. And almost half of textile
industry and skills that even a casual worker should possess. workers have less than middle school attain-
education has A slight change in technology has the poten- ment and little or no vocational training.
tial to disrupt livelihoods of a vulnerable sec- On the supply side, while education-
led to acute tion of population with no other skillsets. This al attainment of the general population is
shortages was the case with incense stick production in increasing, high unemployment rates among
Tripura, a case study examined for this NCAER the educated signal significant challenges to
of skilled
report. The rapid transition from handmade to employability of the better educated. This
workers across semi-mechanised products meant that Tripu- problem is more acute for females. The edu-
all sectors ra lost its lead position in handmade incense cation and vocational systems are imparting
sticks, with the demand for Tripura’s sticks fall- knowledge through oral and rote learning
ing to one-fifth of its capacity, driven down by methods but not the broad range of founda-
imports from China and Vietnam.8 tional and advanced, general and specialised
Technology cycles are shorter than ever, and skills needed for jobs (table 3.3).
robots and digital disruption could hit Indian Along with sector-specific and job-specific
workers hard: globally 75% of businesses expect knowledge and skills, employers seek innova-
that automation will require workers to devel- tion skills and complex psychomotor skills. But
op new skills. Today’s workers and new labour the education system is not delivering them.
market entrants must thus prepare for jobs The growing disconnect between industry and
that do not yet exist. For example, “sewbots” education has led to acute shortages of skilled
using robotics and Artificial Intelligence (AI) workers across all sectors.

44
 ENTREPRENEURS/SELF-EMPLOYED PERSONNEL

Self-employed livelihood/ High-skilled, self-employed CEO/director/opportunity
High-skilled manager necessity entrepreneur professional entrepreneur/employer

Supervise research team Multi-tasking, weave garments Multi-tasking, application of trade Multi-tasking, launching of company/
(research manager), manage (handloom weaver), manage shop kills such as (a) accountancy (chart- programme, mergers/acquisitions;
accounts department in (kirana store vendor) ered accountant), (b) medicines product diversification, implementing
company (accounts manager), (general physician) lean management techniques
manage project related techni-
cal team (project manager)

Interpersonal skill (managing Interpersonal skill (respectful, helpful), Interpersonal skill (social responses), Self-confidence, Interpersonal skill
team, sociability), attitude attitude to work (time management, attitude to work (self-motivated, (responsiveness towards various
to work (determination, respect promptness), social sensitivity (gender/ time management), social sensitivity stakeholders), attitude to work (stress
for others), social sensitivity caste/racial differences) management), social sensitivity
(gender/racial/cultural sensitivity) (gender/racial/cultural sensitivity)

Judgment & decision making Problem solving (e.g. working through Judgement & decision-making Judgement & decision-making
(e.g. communication strategy), delivery mechanisms for buyers), basic (sourcing new contract), negotiating (e.g. expanding market share),
leadership & coordination with decision making (product offerings) payments, coordinating with clients, negotiating deals, leadership,
team members, problem solving troubleshooting client dissatisfaction, coordination, problem solving,
and negotiating with, clients, emotional intelligence (self- emotional intelligence (emotional
emotional intelligence (coping awareness, coping) stability, empathy, coping)
with stress/emotion)

An army of educated unemployed­—­and offered by private providers with government

Of both rural
acute shortages of skilled workers subsidies. and urban
Youth unemployment rates in were high
women aged
The central mismatch of the Indian economy: even for people with vocational education. The
an army of educated unemployed (and many unemployment rate of labour force participants 15–29, 49%
unemployable) persons and an acute shortage with formal vocational education was 11% for are neither
of skilled people. Educated youth unemploy- those 15–19, 21% for those 20–24, 8% for those
ment brings the challenges of employabili- 25–29 and 5% for those 30–34.12 The cause part of the
ty into sharp relief­— ­a nd the transition from likely lies not in the degrees and certificates labour force
school to work even more. The unemployment but in the workers’ skills, which both the TVET
nor pursuing
rate for graduates aged 20–24 was 29% in and general education systems fail to deliver.
2011–12, for those 25–29, 12%, and for those Women’s labour force participation rate education,
30–34, 4%.10 Even labour force participants (LFPR) was barely 21% in urban areas and 36% general or
with technical education above the graduate in rural areas in 2011–12. It was especially low
level show double-digit unemployment for for women with middle, secondary, and high- vocational
the same age groups, respectively 28%, 13% er secondary education. Himachal Pradesh,
and 5%. As mentioned in box 2.3, the India Sikkim, Chhattisgarh and Meghalaya have
Skills Reports continue to find a high degree of the highest women’s LFPR, and Bihar has the
unemployability for final year students in col- lowest. Of both rural and urban women aged
leges and universities across India.11 Why are 15–29, 49% are neither part of the labour force
so many people with degrees not in jobs? They nor pursuing education, general or vocational.
may be repeatedly trying to get a government Women’s unemployment rates are higher
job (box 3.1), and filling the time in between than men’s and, like men’s, tend to rise with
by enrolling for free vocational training higher education. Even so, graduate women’s

45
TABLE 3.3 Mismatches between supply and demand

SUPPLY OF SKILLS DEMAND FOR SKILLS

HIRED WORKERS

Medium-high-
Medium-skilled skilled worker/
Low-skilled operative/trade associate
Skills Educational attainment casual worker worker professional

Routine cognitive skills Primary and middle school education

● ● ●
Routine cognitive skills, ICT skills Secondary education
and language skills ● ● ●
Routine cognitive skills, ICT and Higher secondary education
language skills, financial literacy ● ● ●
Routine cognitive, nonroutine cognitive College education and above
skills, core socioemotional skills, ICT
skills, language skills, financial literacy ● ● ●
and knowledge and ability to apply

Routine cognitive skills, nonroutine Technical education

cognitive skills, ICT skills, financial
literacy and knowledge and ability to ● ● ●
apply, sector and job-specific skills

Job-specific skills, one ICT skill, English Short-term skilling programmes

language skills and some financial literacy ● ● ●
Routine cognitive skills, knowledge and Long-term skilling programmes
ability to apply and job-specific skills ● ● ●
● Worker cannot supply the skills that the job demands.
● Worker can perhaps supply the skills that the job demands with varying success ranging from barely to mostly.
● Worker can fully supply the skills that the job demands.
Note: Red implies that there is demand for this but supply is limited, indicating a mismatch. Green indicates that there is a reasonable degree of match.
Yellow indicates that there is only a partial match. Black indicates that workers’ skills exceed what the job needs.
Source: NCAER, based on stakeholder consultations and literature reviews.

unemployment rates fell between 2004–05 Fixing the mismatches requires more than
and 2011–12. The relationship between vocational skill training
labour force participation and educational
attainment appears to be U-shaped for urban The vocational skills taught through various
women aged 25–54: it is high among illiterate programmes meet current technological needs,
women, lowest for women with some school- rarely future ones. PMKVY­ —­I ndia’s flagship
ing or high school and highest among uni- skilling programme of the MSDE­—­focuses on
versity graduates (at 25%).13 While the aggre- short-term skilling, with uncertain quality, at
gate number shows that the urban female best teaching a worker just enough vocation-
unemployment rate is higher than the rural al skills to find a job immediately. The con-
one, urban female unemployment rates are tent and design of most skilling programmes
higher until secondary school, but after that, is below international standards, leaving grad-
rural female unemployment rates are higher uates vulnerable to technological shocks. Even
than urban. if placement rates are high, dropout rates can

46
 DEMAND FOR SKILLS

HIRED WORKERS ENTREPRENEURS AND SELF-EMPLOYED PERSONNEL

CEO/director/
High-skilled worker/ Self-employed High-skilled, opportunity
specialist trainer/ High-skilled livelihood/necessity self-employed entrepreneur/
professional manager entrepreneur professional employer

● ● ● ● ●

● ● ● ● ●
The hope is
● ● ● ● ●
that vocational
training in task-
● ● ● ● ● based skills
can provide
a temporary
solution for
● ● ● ● ●
industry’s acute
skill shortages,
● ● ● ● ● but fixing skill
supply-demand
● ● ● ● ● mismatches
will require
more than
such vocational
training

also be high, unless employers implement the Short-term skilling programmes also mis-
programmes directly. place their emphasis on school dropouts. Only
The NSDC, in response to the growing skill 3% of males aged 15–29 are neither pursuing
mismatch, formulated a framework for job-spe- education or training nor participating in the
cific training for a variety of industries based labour force (table 3.4). But 50% of women
on a state-level skill gap analysis. The training are in this category and the share increas-
is conducted by NSDC-certified training pro- es with age. In the 25–29 age group, 62% of
viders across India.14 The hope is that vocation- rural women and 71% of urban women fall in
al training in such task-based industry-specif- this category. With 50% of the current work-
ic job-related skills can provide a temporary force having attainments below middle school,
solution for the industry’s acute skill shortages. focusing a vocational skills programme exclu-
But turnover can be extremely high, with only sively on school dropouts will largely miss that
32% of NSDC-certified workers still employed group. More relevant are recognising prior
1–2 years after training.15 learning, training on-the-job, schooling adults,

47
 BOX 3.1 In search of the public-sector job

The educated youth in India spend years at- fraction falls for those 30–32 (the age limit for
tempting to get a public-sector job by taking entering many government jobs). The average
exams for any public-sector opening. The most successful applicant spends around four years
common job aspiration for young Indians is a preparing for and taking these exams. Since the
government job, and millions attempt to get ratio of applicants to positions exceeds 100:1,
one each year. Many of them spend several hundreds of thousands (if not millions) of youth
years unemployed or underemployed, sup- in their 20s are taking these exams.
ported by their families, enrolling in subsidised A plausible reason is that many youth pre-
training that pays them a stipend, and part-time fer to take entrance exams for government jobs
jobs, while making multiple attempts at passing rather than getting skilled in a chosen profession
exams to get a government job. and entering a competitive and uncertain labour
The large fraction (2%, or some 1.9 million market. This may be perfectly rational because
youth in 2011–12) of all males in their 20s who the returns to winning the “government job lot-
Education have education above middle school but with- tery” are so large­ —­with above-market wages,
and training out a bachelor’s degree and who are unem- pensions and benefits, lifetime job security, and
ployed is noteworthy. Also striking is how this the potential to make money on the side.
systems with
stronger Source: Adapted from Muralidharan 2015.

industry–
academia and bridge or remedial learning for cognitive bfw-Unternehmen für Bildung, offered a blend-
connections and noncognitive skills. ed learning module for upskilling nurses in
Workers with higher education find it eas- Dubai­ —­ beyond the core courses were class-
can nurture ier to adapt to changing labour markets than room seminars, extensive periods of self-learn-
both higher- those with less education.16 One way to avoid ing and practical internships at an industrial
the skill obsolescence brought by a major tech- unit.18
order cognitive
nological shock17 is to provide core competency Education and training systems with strong-
skills such skills that foster in higher-order cognitive skills er industry–academia connections can nurture
as creativity, such as self-learning, lifelong learning, and higher-order cognitive skills such as creativity,
learning to learn, thereby increasing adapt- critical thinking and lifelong learning and fos-
critical thinking ability. A leading German training provider, ter socio-emotional interactive skills.
and lifelong
learning
TABLE 3.4 Education and employment of Indian youth
and socio- % OF MALE % OF FEMALE % OF TOTAL
POPULATION POPULATION POPULATION
emotional AGES 15–29 AGES 15–29 AGES 15–29
skills such as Labour force 63.6 24.4 44.6
teamwork Workforce (principal + subsidiary workers) 59.8 22.8 41.9
Only employed 57.5 22.0 40.3
Employed plus currently pursuing either general or
vocational education 2.3 0.8 1.5
Only currently pursuing either general or vocational
education 33.7 25.6 29.8
Unemployed and currently pursuing neither general
nor technical education 3.6 1.5 2.6
Unemployed and currently pursuing general or
technical education 0.1 0.1 0.1
Neither pursuing general or technical education nor
in labour force 2.9 50.1 25.8
Source: NCAER computations from 2014 National Sample Survey Office, with data for 2011–12. This refers to age group 15–29.

48
Connecting women to work how small the average woman-owned business
is.25 Of these entrepreneurs 66% operate in
Between 2004–05 and 2011–12, 15 million nonagricultural sectors, with manufacturing
women dropped out of India’s labour force.19 taking up 30% and retail trade 18%.
Meanwhile, the percentage of working-age Increasing opportunities for part-time work
women enrolled in education fell from 12% to would bring more women into the labour force.
7% (though their number grew by 16 million). Digitised service aggregators, such as Urban
As younger women (aged 15–19) pulled out of Clap and e-commerce websites such as Flipkart
the labour force to attend educational institu- and IndiaMART, offer women more avenues
tions, fewer women aged 20–24 entered it. The for part-time work and flexible schedules. Of
loss is greater in rural than in urban areas. women willing to work but not in the labour
The drop in women’s labour force partici- force, 78% are available for part-time or occa-
pation could indicate inadequate opportuni- sional work.
ties for appropriate jobs,20 greater involvement Skill training for women should prepare
of women in unpaid household care work and them for working in male-dominated indus-
children’s education, or considerations of caste tries, rather than focus only on such industries
and culture or wealth and income.21 as beauty and wellness, food and beverages, Skill training for
The labour force participation rate among and textiles and apparels. The United Nations women should
women declines with increasing education Development Programme’s (UNDP) Disha ini-
prepare them
through the higher secondary or vocational tiative provides women with such training,
diploma, turning around after college gradu- entrepreneurial skill development and employ- for working
ation.22 But higher labour force participation ment.26 After young women in Haryana were in male-
among university graduates does not always given short vocational courses in plastic engi-
translate to higher workforce participation, and neering, they started work in industrial hubs dominated
a higher proportion of females with a graduate across the state. Another group was offered for- industries
degree and above were unemployed than their mal training in both technical and noncogni-
male counterparts in 2011–12. One reason for tive skills to work in the steel industry, largely
this is a perceived competence gap. Anoth- dominated by men.
er is the occupational segregation of men and Policymakers should develop ways to offer
women. life skills to women working in the informal
While quality education (beyond secondary sector and women who have dropped out of
level) is vital for improving job outcomes and the labour force. Self-help groups have had
labour market participation, access to quality an impact on rural women. One programme
employment remains a critical impediment.23 linked to the National Bank for Agriculture
The proportion of women is low in secure and Rural Development empowered families
high-productivity and high-income jobs. Most socially and economically. Participants learned
women are engaged in the agricultural and basic concepts of financial management, and
allied sectors, and in labour-intensive unorgan- leadership rotations developed managerial
ised manufacturing, where gender wage gaps skills such as decisionmaking, problem solving
are wide. As jobs become less labour intensive, and self-motivation.27 The UNICEF programme
men tend to occupy them­— ­as in manufactur- Kanyashree Prakalpa (girl child welfare)­ —­
ing machines and equipment. designed to eliminate child marriage through
The share of female managers in 2011–12 targeted cash transfers­ —­ promotes girls’ edu-
was 6% in computer manufacturing and 12% cational attainment and improves their socio­
in computer programming.24 Even in the sec- economic independence. 28
tors where women dominate, the propor- Mentoring and counselling can be key, as in
tions of women owners and women managers the SEWA Youth Connect, which pairs Delhi
remain low (table 3.5). And women directors University students as mentors with SEWA
and managers are concentrated in activities young adults aged 15–25 to motivate them to
where job roles are perceived to be primarily continue education and enhance their self-re-
low-skilled. liance and independence, including through
Entrepreneurship among women is also soft skills for job interviews. Career coun-
restricted. Only 14% of establishments are selling centres run by SEWA in Delhi were
owned by women, and those 8 million estab- set up under Disha to provide information to
lishments employ 13.5 million people, showing women on employment opportunities, foster

49
 TABLE 3.5 Male–female distribution of managers by sector
MALE MANAGERS FEMALE MANAGERS
SHARE IN SHARE IN GENDER
RANK SECTOR TOTAL SECTOR TOTAL RATIO*

1 Retail trade 35.9 Retail trade 33.7 12.0

2 Food and beverage service 7.8 Manufacture of wearing 10.6 30.8
apparel
3 Land transport and transport 6.1 Food and beverage service 8.2 13.4
via pipelines
4 Wholesale trade 5.2 Manufacture of textiles 7.2 37.9
5 Construction of buildings 4.1 Manufacture of food products 5.8 18.4
6 Food 3.7 Manufacture of tobacco 4.6 78.7
7 Manufacture of wearing 3.5 Other personal service 3.6 23.5
apparel activities
8 Wholesale and retail trade and 2.6 Accommodation 3.5 38.8
Indian rural- repair of motor vehicles and
to-urban motorcycles
9 Financial service 2.2 Manufacture of wood and 3.3 23.5
migration is products of wood
surprisingly 10 Manufacture of fabricated 1.8 Financial service 2.8 15.5
metal products
low, especially
Top ten sectors 72.9 Top ten sectors 83.1
given the *Gender ratio in sectors having a high concentration of women managers.
substantial Note: Only manufacturing and services have been considered for calculating sectoral concentration.
Source: NCAER computations from the 2014 National Sample Survey Office, with data for 2011–12.
rural–urban
wage self-confidence and impart digital skills for healthy level of labour mobility is a precondi-
greater connectivity. In another initiative tion for a well-functioning labour market, low
differential
linked to Disha, young women were intro- labour mobility may indicate misallocations of
duced to a female role model, Skill Sakhi resources. Indian rural-to-urban migration is
(skill friend), to bridge the information gap surprisingly low, especially given the substan-
on employment opportunities and improve tial rural-urban wage differential, much higher
socio-emotional skills.29 in India than in China and Indonesia (figure
Connecting women to work can be 3.2).31
enhanced physically and electronically to raise Notwithstanding the stark wage differential,
their workforce participation. Reducing the dis- the rural-urban male migration rates in India
tance to work, providing better transportation have been low at around 4% in the recent
and infrastructure, and enhancing workplace decades, significantly lower than Brazil, with
security and sanitation remain key concerns.30 a male migration rate of 14%.32 The absence
Digitised service aggregators such as UrbanClap of formal insurance markets together with
and e-commerce websites such as Flipkart and well-functioning informal caste–based insur-
IndiaMART allow women who want to work ance networks may explain India’s exception-
part-time and prefer flexible schedules to enter ally low migration rates.33 Moving from rural
the workforce as entrepreneurs, working inde- to urban areas severs the caste-based network
pendently or as contractors. Acquiring digital of the migrating rural household. India’s caste-
skills is vital to reap the benefits of the digital based networks are exceptionally effective at
dividend offered by such virtual marketplaces. consumption smoothing because of their large
size and scope. So, the gains from migration­—­
in income­— ­are outweighed by the cost of the
Increasing the mobility of labour loss in consumption smoothing through caste-
based networks.
Labour mobility ensures that the econo- To address this spatial skill mismatch­ —­
my’s human capital is efficiently distributed labour abundant in rural areas, jobs available
across its geography and sectors. Thus, while a in urban areas­— ­the government has started a

50
FIGURE 3.2 Rural–urban wage gaps allocation of labour and the acquisition and
Percent matching of skills.
50

Unleashing opportunity entrepreneurs

40
Entrepreneurship in India, as in other develop-
ing countries, combines two disparate groups:
necessity entrepreneurs (own-account work-
30
ers) and opportunity entrepreneurs. Necessi-
ty entrepreneurs work for themselves because
they face entry barriers to the formal labour
20
market. They are often low on productivity
and in accounting, managerial and marketing
skills, and they tend to leave entrepreneurship
10
for formal employment when the opportunity
arises.35 Entrepreneurs from scheduled castes Programmes
0
and scheduled tribes are more likely to be targeted at
China Indonesia India smaller own-account enterprises and located
necessity
Source: Munshi and Rosenzweig 2016.
in rural areas. Among scheduled caste–sched-
uled tribe enterprises a greater proportion are entrepreneurs
owned by women.36 to give them
skills programme for rural youth: Deen Dayal Skill development and enhanced access
Upadhyay-Grameen Kaushalya Yojana (see to markets and credit are crucial for necessi- digital and
appendix A2.2). Although it functions bet- ty entrepreneurs. A majority of own-account financial
ter than many other skilling programmes, the workers have mostly acquired skills through
scheme is characterised by high turnovers. informal learning, operating as independent
literacy skills
As India develops further, the share of agri- workers in the informal sector and involved could go a
cultural output as a percentage of GDP will in the entire production process. Often such
long way in
continue to shrink (as in other developing informal entrepreneurs acquire a wide range of
economies) with a corresponding decline in specialist skills outside the formal system, who converting
the share of workforce in the agriculture sec- are not only skilled in their own trade, but also them into
tor. While the proportion of the labour force have complex skills such as price setting and
involved in agriculture and allied activities is marketing.37 Formally recognising and vali- opportunity
currently still substantial relative to the size of dating the skills of such workers under Recog- entrepreneurs
the sector, a massive amount of labour will be nition of Prior Learning (RPL) and upgrading
released or not efficiently absorbed by the agri- and aligning their skills to the NSQF is impor-
culture sector. Low labour mobility can thus tant for them, as is connecting them to mar-
seriously exacerbate misallocation of labour. kets. Programmes targeted at them to give dig-
Temporary or seasonal migration can impede ital and financial literacy skills could go a long
skill development and employability. While sea- way in converting the necessity entrepreneurs
sonal migration in India has been increasing into opportunity ones.
over time, the principal limitation of the tem- Opportunity entrepreneurs tend to be driv-
porary migration is that it will not fill the large ers of innovation, keen to exploit new business
number of jobs which require firm-specific or opportunities and more likely to expand busi-
task-specific learning and where firms will ness and hire people. They are, however, few in
want to set permanent wage contracts.34 And number, with only 1.5% of the workforce serv-
seasonal migration discourages employers from ing as employers in 2011–12.38
investing in upgrading skills given the tempo- Entrepreneurs need system skills and
rary association with the worker. resource management skills. They also need
The recent Economic Survey of the Govern- advanced noncognitive skills such as instruct-
ment of India (2016–17) projects an optimistic ing and negotiating. India’s higher education
trend of increasing interstate and interdistrict system does not equip students with these
migration rates, which should improve the skills.39 But many entrepreneurs use these
skills tacitly without being aware of them.40

51
 Institutional training and entrepreneuri- GIZ, in co-ordination with MoMSME
al support are needed to encourage creation of experimented with innovation vouchers in
more opportunity entrepreneurs. Leading busi- the state of Tamil Nadu in 2012. The voucher
ness schools support entrepreneurial activities programme encouraged local entrepreneurs
and offer entrepreneurial courses.41 Besides to come forward with their ideas and business
entrepreneurial courses integrated in the cur- plan, instead of providing incubation support
riculum, innovation centres such as the Indian based on pre-determined areas. The entrepre-
Institute of Management’s (IIM) Calcutta Inno- neurs were linked up with knowledge provid-
vation Park,42 the Centre for Innovation, Incuba- ers to develop their business models.
tion and Entrepreneurship at IIM–Ahmedabad Top business schools (such as IIMs) and
and the NS Raghavan Centre for Entrepreneurial leading tech companies (such as Infosys) have
Learning at IIM–Bangalore provide an experi- innovation centres, offering mentorship and
ential learning-by-doing platform through men- incubation support, funding connections, con-
torship, incubation support, connections with necting with industry networks, along with
funding, industry networks and alumni entre- campus training for startup entrepreneurship
preneurs, campus training and a fellowship pro- development.
The potential gramme. But the lack of sufficient trainers and The government’s free Startup India Learn-
is enormous limitations with pedagogy are impediments in ing Program follows up on its Startup India
developing an entrepreneurial spirit.43 initiative. Developed by Invest India with
for connecting
The National Institute for Entrepreneurship UpGrad, the programme offers structured
micro- and Small Business Development under the learning modules to aid aspiring entrepreneurs
entrepreneurs MSDE was launched by the central government and those two to three years into their start-up
to promote entrepreneurship training. MSDE venture. The platform also provides mentoring
that have also boosts entrepreneurial skills through Indi- and incubation support to learn from experi-
certified skills an Institute of Entrepreneurship, focusing on enced entrepreneurs about protecting intellec-
training, research and consultancy services for tual property rights and approaching investors.
to service SMEs and on cluster development.44 The birth of service aggregators such as Ola,
aggregators The Entrepreneurship Development Insti- the cab aggregator, UrbanClap, the service
tute of India provides entrepreneurship train- aggregator and IndiaMART, the e-commerce
for increased
ing and education both for first-generation platform have given wing to entrepreneurial
access to entrepreneurs and for those transitioning from spirits across India. The potential is enormous
markets SMEs into growth-oriented enterprises. The for connecting micro-entrepreneurs with cer-
curriculum is designed so that students can tified skills to service aggregators for increased
develop their enterprise step by step while tak- access to markets.
ing entrepreneurial courses at the institution.
Local physical infrastructure, geographic
clusters of like-minded companies, and support- Formalising informal workers by
ing industrial structures for forward and back- recognising prior learning
ward linkages contribute to higher entry rates
of firms.45 An enabling environment for start- India’s labour force is still almost entirely infor-
ups includes eased business regulatory bottle- mal. Of the workforce 15 years and above, 92%
necks, and the government having taken steps did not have access to any social security or
in that direction. Some of these policies include healthcare benefits. A large proportion of new
Department of Industrial Policy and Promo- jobs remain informal. In manufacturing, while
tion’s state-level Business Reforms Action Plan the informal sector has been key to generating
intervention and the Ministry of Micro, Small employment opportunities, its average wages
& Medium Enterprises’ (MoMSME) launch are dramatically lower than the formal man-
of the Udyog Aadhaar scheme for streamlin- ufacturing sector’s. The formal manufacturing
ing registration for MSMEs. In addition, the sector hires only 20% of India’s manufacturing
Micro Units Development & Refinance Agency workers (in 1% of the manufacturing establish-
(MUDRA) Bank provides credit to young, edu- ments) even though it contributes more than
cated and skilled workers and entrepreneurs.46 80% of manufacturing output.
The Insolvency and Bankruptcy Code 2016 Providing incentives for greater registration
allows start-ups and small firms to exit within of firms, improving regulatory transparen-
three months, in case of failure. cy, and easing regulatory burdens (including

52
labour laws) for better compliance may help skills, including possible entry into the for-
expand the size of the formal sector. This could mal sector. The MSDE certified nearly 110,780
accelerate the creation of formal jobs and allow through the RPL programme after training
the formalisation of informal labour. However, 180,690 workers in 2015–16. For 2016–20, it
informal labour is not confined to the unor- has set a target of some 573,550 trainees for the
ganised sector: informal labour is increasingly RPL programme. In 2016–17, they had enrolled
hired even in the formal sector, a phenomenon just under 52,880 students.48
termed “flexibilisation,” raising concerns about A majority of workers in manufacturing
the quality of employment.47 The government of food products, wood products, textiles and
launched three social security schemes targeted apparel, construction and retail trade have no
at the informal sector­— ­two insurance schemes vocational training.49 There were approximately
(Pradhan Mantri Jeevan Jyoti Bima Yojana and 39 million workers in construction and 16 mil-
Pradhan Mantri Suraksha Bima Yojana) and lion workers in textiles and apparel with no
one pension scheme (Atal Pension Yojana). vocational skills in 2011–12.50 Including all sec-
Informal wage workers exist in both the tors, about 33% are illiterate, and another 45%
organised and unorganised sectors, and wage have a lower-than-secondary level of education.
inequality between the formal and informal RPL is also vital in the health sector. Up to Recognition of
workers is wide in both sectors. Formalising 75% of primary care visits in rural India are car- prior learning
the skills of informal workers by recognising ried out by informal providers and self-declared
assessments
skills they have gained outside regular edu- doctors, reflecting the dearth of trained health
cation and training institutions would bene- professionals in such areas. Identifying and train- can reduce
fit both the workers and their employers. One ing such workers can increase correct case man- regional
path to formalisation is RPL, which assesses agement and improved health care provision.51
and certifies those skills. The disparate geographic distribution, occu- mismatches
Some workers without formal education pational groups, and skills of informal workers of supply
or training have acquired knowledge through suggest two different groupings for RPL. First
“non-formal” sources, which are structured come wage workers at factory sites, employer
and demand
but outside educational institutions, such as premises and industrial clusters, including the for labour
community and hereditary sources. But most construction sector, apparel factories and tex-
by steering
learned primarily from “informal” sources, such tile mills employing large number of workers.
as daily activities or work experience. Many of Second are self-employed workers, micro-en- workers
these workers hail from less developed regions trepreneurs and livelihood entrepreneurs. They into new
and have been systematically left behind due are widely spread and hard to trace, making
to inadequate education facilities, while others RPL difficult. Some, however, may be traced employment
opted out of formal schooling in order to eke out to traditional clusters (such as handloom clus- through the
a living. Formally evaluating previously unrec- ters in the Northeast) and master artisan net-
visibility and
ognised skills, acquired outside formal educa- works, and others can be traced by UWIN cards
tional and vocational training, can lead to skill issued by state governments or Aadhaar num- accreditation
certification and further skill improvement. ber. When they are found, RPL may be imple- of their skills
Skill certification can signal higher productivity mented in collaboration with NSDA-recognised
to potential and existing employers­— ­and pave training partners.
the way for social recognition, job mobility and While the formal assessment of acquired
better wages and benefits. skills helps employers ensure the quality of
Employers benefit from a having a certi- their products, they often lack incentives to
fied skilled worker because certified skills can invest in RPL. Most construction work, for
improve firm competitiveness and productiv- instance, is subcontracted to small contractors
ity. They also benefit from providing on-the- with little long-term incentive for skilling their
job training once they learn workers’ skill gaps workers. The workforce’s migratory nature
through assessment and certification of existing adds to the problem, including in the textile
skills. And they benefit from the certification of sector, where the difficulty of tracing workers
that further training if assessed through RPL. prevents employers from reskilling or upskill-
RPL assessments can reduce regional mis- ing. Also, most of these workers are daily wage
matches of supply and demand for labour earners inclined to switch jobs for higher wages
by steering workers into new employment without any notice, also preventing firm- level
through the visibility and accreditation of their investment in training.

53
 BOX 3.2 The knowledge economy and skills

In a knowledge economy, knowledge propels economy’s complex and rapid interplay among
competitive growth­ —­it is acquired, created, education, knowledge, technology and skills re-
disseminated and used to enhance economic quires far-reaching adjustments to teaching and
development. The transition from a tradition- learning.
al economy to a knowledge economy thus re- These adjustments are essential to improv-
quires long-term investments in education, in- ing the skills, quality and flexibility of labour
novation and information and communications and management. They require not only tradi-
technology (ICT). It also requires an economic tional “hard” skills and ICT competencies, but
and institutional regime that mobilises and allo- also a new set of “soft skills,” such as the spirit
cates resources efficiently. of enquiry, adaptability, problem-solving, com-
Knowledge economies constantly modern- munication, self-learning, knowledge discovery,
ise their education system. Traditional econo- cultural sensitivity, social empathy and motiva-
mies, too, have relied on education to advance tion for work. A country’s teaching and learning
As India innovation and technology, but a knowledge environments must nurture these skills.
grapples with
Source: Adapted from UNESCO (2010).
the legacy
problems of its
existing skills– Under PMKVY 2 (Pradhan Mantri Kaushal noise (box 3.2). Employers want to hire peo-
Vikas Yojna), the MSDE in association with ple who can identify and solve problems­— ­a nd
jobs mismatch, the NSDC has launched an outcome-based RPL work in teams. These needs are at odds with
it must also for pre-assessing the industry-specific skills of the way India’s educational system teaches a
workers and recommending training based on body of immutable facts.
pay attention the assessments.52 The skill profile of the work- As India grapples with the legacy problems
to anticipating er to be mapped into the requisite qualification of its existing skills–jobs mismatch, it must
packs based on National Occupational Stand- also pay attention to anticipating the skills of
the skills of
ards formulated by the appropriate SSCs. tomorrow where it is not even clear what those
tomorrow Also under PMKVY–II, RPL has been skills might be.
where it is launched in industry sites and industrial clus-
ters for several sectors. LabourNet Services
not even clear India, a partner of NSDC, also launched RPL Notes
what those for tailors working in the apparel sector in
collaboration with Raymond, a leader in the 1. Bhattacharya and Bhandari 2018.
skills might be
men’s apparel segment. IL&FS Clusters—­ a 2. Kochhar et al. 2006.
joint initiative of IL&FS Education & NSDC—­ 3. Azam 2012.
has conducted the RPL programme for mul- 4. Autor 2015, Autor, Katz and Kearney 2006,
tiple sectors including, Agriculture, Appar- Goos, Manning and Salomons 2014.
el, Leather, Tourism & Hospitality, and street 5. Autor 2015.
vendors. PMKVY–II has also launched RPL for 6. Maclean and Pavlova 2013.
micro-entrepreneurs, such as street vendors 7. Das 2017.
near Rashtrapati Bhavan, and now should scale 8. Bhandari 2018.
up the programme. 9. Stacey and Nicolaou 2017.
10. NCAER computations from NSSO 68th
Round (2014).
India’s new knowledge economy requires 11. The Wheebox Employability Skills Test
new skills (WEST) included all 29 states and 7 union
territories and 3,000 educational cam-
India’s economy is transforming into a knowl- puses across India and assessed about 5.6
edge economy, with computers performing lakh candidates on parameters like domain
routine tasks while collaborative work takes knowledge, computer skills, numerical and
on greater importance, along with sifting vast logical aptitude, critical thinking, behav-
amounts of information to separate signal from ioural traits including learning agility,

54
 adaptability, interpersonal skills, emotional 29. The Skill Sakhi initiative is incubated by
intelligence, conflict resolution and self-de- Pratham Foundation under Disha. https://
termination. Employability of final year undp-india.exposure.co/disha-in-action.
students (between the ages 18–29) was 30. Desai 2017, Nathan, Saripalle and Guruna-
tested using the WEST including those get- than 2016.
ting degrees in engineering, MBAs, Bache- 31. Munshi and Rosenzweigh 2016.
lors of Arts (BAs), Bachelors of Commerce 32. Munshi and Rosenzweigh 2016.
(BComs), Bachelors of Science (BScs), Mas- 33. Munshi and Rosenzweigh 2016. Insurance
ters of Science (MScs), Bachelors of Phar- networks are organised around caste in
macy (BPharmas) and including students India. The empirical evidence indicates that
at Industrial Training Institutes and poly- there exists a trade-off between the insur-
technics. All those who scored more than ance provided by rural caste-based net-
60% were considered employable. Candi- works and the income gain from migration.
dates showed an improvement in employ- Those households that benefit less (more)
ability from 33.1% in 2016 to 40% in 2017 from the rural network are more (less) like-
(Wheebox et al. 2017). Latest available ly to have migrant members.
statistics from 2018, shows an even fur- 34. Morten 2013.
ther improvement in employability, at 45% 35. Daymard 2015, Mondragòn-Vélez and Peña
(PeopleStrong et al. 2018). 2008.
12. NCAER computations from the NSSO, 68th 36. Deshpande and Sharma 2013.
Round (2014). Data are for 2011–12. 37. Pilz, Uma and Venkatram 2015.
13. Klasen and Pieters 2015. 38. Estimated based on NSSO 68th round data
14. The NSQF (National Skill Qualification (2014). Data are for 2011–12.
Framework) is a competency-based frame- 39. Blom and Saeki 2011, PeopleStrong et al.
work anchored at the National Skill Devel- 2018.
opment Agency (NSDA), which charts outs 40. Pilz, Uma and Venkatram 2015, Pilz and
career progression of a worker in specific Wilmshöfer 2015.
job roles in respective sectors, mapping 41. Basu 2014.
task-based job roles over ten levels. 42. https://www.iimcal.ac.in/faculty/centers
15. World Bank 2015. -of-excellence/centre-for-entrepreneurship
16. Cortes et al. 2014. -innovation/iim-calcutta-innovation-park.
17. De Grip 2006. 43. Shankar 2012.
18. iMove 2015. 44. IIE has been particularly instrumental in
19. NCAER computations from the NSSO 68th implementing the Scheme of Fund for Regen-
Round and previous rounds (NSSO 2014). eration of Traditional Industries (SFURTI).
20. Chatterjee, Murgai and Rama 2015, Desai 45. Ghani, Kerr, and O’Connell 2011.
2017. 46. MUDRA is the regulatory body for
21. Eswaran, Ramaswami and Wadhwa 2013, Micro-Finance Institutions (MFIs).
Desai and Mehta 2017. 47. Saha, Sen and Maiti 2013; WTO 2009.
22. Desai et al. 2010. A similar trend was 48. Ministry of Skill Development and Entre-
observed for urban women aged 25–54 by preneurship 2016–17.
Klaasen and Peiters (2015). 49. All estimates are based on the portion of
23. Verick 2014. workforce (based on usual principal status)
24. NCAER computations from NSSO 68th with no college degree and no formal voca-
Round (2014). tional education. NSSO 68th round (2014).
25. Sixth economic census, carried out between Data are for 2011–12.
January 2013 and April 2014. 50. If one looks at both principal plus subsidi-
26. UNDP 2016. ary workers, the total workers in construc-
27. Sinha, Parida and Baruah 2012, Field et tion up to higher secondary education and
al. 2016. Peer effect is likely to enhance with no formal vocational skills increases to
the likelihood of running a viable business 48 million. The corresponding number for
for women subject to social and cultural textiles and apparel remains at 16 million.
restrictions. 51. Das et al. 2016.
28. UNICEF Kanyashree Prakalpa Annual 52. http://pmkvyofficial.org/App_Documents/
Report 2015–16 and NCAER research team News/RPLGuideline-Final21stSep-with
discussions with UNICEF. Addendum2.0.pdf.
55
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“The Micro and Macro of Disappearing Rou- Rigol. 2016. “Friendship at Work: Can Peer
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iMove. 2015. International Vocational and Edu- 2015%20Karthik%20Conference%20
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Morten, M. 2013. “Temporary Migration and Linkage Programme on poverty and empow-
Endogenous Risk Sharing in Village India.” erment in India.” Contemporary South Asia 20
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 MATCH
&
ADJUST
ANTICIPATE
&
ADAPT

ACQUIRE ANTICIPATE
& &
IMPART ADAPT
MATCH ACQUIRE
& &
ADJUST IMPART
 4

Anticipating skills
How best to adapt them

Imagine a ship sailing in unchartered waters. revolutionising the world of work, the work-
Given the risks and uncertainties, all hands place and the workforce.
need to work in concert: the officers steering
on the bridge, the navigators using sonar, the
crew stoking the engines, the rest of the crew Exchanging life-time employment for life-
performing other essential tasks­ —­a ll ready time employability
to quickly change course as new conditions
become known. Anticipating the future of Workforce skills must adapt. Workers must
skills is much the same: all hands need to work exchange lifetime employment, which is fast
in concert. The Central and State Governments disappearing, for lifetime employability. Skill-
will create the environment and set the incen- ing the Indian workforce in this fluid, rapidly
tives to foster flexibility in the labour market changing environment means training workers
and responsiveness in allocating resources and employers to recognise and enhance trans-
to the most promising and most productive ferable skills that can let workers move from
sectors. Firms will be the antennae navigat- job to job, firm to firm and industry to indus-
ing risky and uncertain global and domestic try over the course of their careers. Bolster-
markets, investing in skilling, upskilling and ing innovative entrepreneurs and upskilling
reskilling. Firms and training providers will women, who are greatly underrepresented in
come together in an integrated skilling ecosys- the workforce, will both encourage the entry of
tem to impart the higher-order cognitive, tech- workers and create new jobs.
nical and behavioural skills employees need Digitising India’s economy and formal-
for the 21st century workplace. With all that ising its informal economy will change the
in place, trainers and workers will have clear skills demanded of the labour force for many
incentives to invest in their own human cap- years. Anticipating precise numerical or sec-
ital so that they keep India’s skilling ship on toral demands, given accelerating technol-
a steady course. How might this happen? Per- ogy cycles, is impossible and likely to be
haps through a new Commission for 21st Cen- misleading. Since the demand for skills is vol-
tury Skills, pulling together all stakeholders. atile and uncertain, policy initiatives need to
India’s economy is slowly shifting from focus on aiding access to quality education
agriculture to manufacturing and services and vocational training programmes, along
and from labour-intensive to capital-intensive with labour market and business regulato-
production modes. Even though services are ry reforms to rapidly expand the scope of the
booming, only unorganised manufacturing organised sector. Programmes need to support
and construction are absorbing much labour adapting workforce skills for jobs that can be
released from agriculture. Meanwhile techno- foreseen, and higher-order transferable skills
logical changes are boosting the capital inten- for jobs unforeseen, along with emphasising
sity of manufacturing sectors, threatening their learning to learn and lifelong learning for
future demands for labour. Industrial Revo- an agile knowledge economy. In anticipating
lution 4.0­ —­w ith its burgeoning applications skills for India’s future, all policies and pro-
of such disruptive technologies as robotics, grammes of the government and the private
cloud computing, artificial intelligence and the sector should aim to make the Indian worker
Internet of things­—­w ill be game changers for able to exchange lifetime employment for life-
business growth over the next several decades, time employability.

61
 Adapting to structural and technological Employment growth in relation to output
change growth has been falling in agriculture and was
negative in the second half of the 2000s. It also
Skilled labour and technology are complemen- fell in manufacturing, though not as much. In
tary, but unskilled labour and technology are contrast, construction witnessed an upswing
substitutes. Technology is more likely to substi- (table 4.1). And even though services registered
tute for routine cognitive jobs such as clerical growth in labour productivity of 6.3% between
work, accounting and factory shop floor assem- 2000 and 2010, employment growth has not
bly-line work, repetitive activities that can be kept pace.3
performed within pre-defined guidelines.1 But A thriving e-commerce sector could change
jobs that require higher-order cognitive skills, that. A young population, digital disruption,
such as creativity and complex problem solv- rapid Internet penetration in cities below the
ing, are likely to thrive. top tier and widespread adoption of smart-
Skill-intensive industries in India’s total phone and digital payments could fuel the
workforce remain small, posing a challenging growth of e-commerce and create jobs through
scenario for policymakers­ —­ how to incentiv- forward and backward linkages. And as rural
The ise the creation of more well-paying jobs.2 In India gets more digitised and connected to
e-commerce India skill-biased and capital-biased technolog- markets through the Digital India initiative,
ical change has translated into declining labour e-commerce growth could also link village
sector could
intensity, even for labour-intensive firms in retailers and livelihood entrepreneurs and cre-
create organised manufacturing. ate job opportunities over the next decade.
14 million jobs In India’s changing economy as elsewhere, With growth in online purchases, the
labour is exiting the agricultural sector, but e-commerce sector could create 14  million
in logistics and is not moving to markedly better jobs. Most jobs in logistics and delivery, and 6 million in
delivery, and jobs created in the past 10 years have been in customer care, information technology (IT)
unregistered manufacturing and construction, and management.4 Although retail stores may
6 million in where labour productivity is not much high- suffer from the rise of e-commerce, the sector
customer care, er than in agriculture (figure 4.1). The formal could create 12 million net new jobs.
manufacturing and services sector are not gen- But technological change can be a dou-
information
erating the additional good jobs the country ble-edged sword, rendering technical advanc-
technology and needs. es overseas harmful to IT jobs in India. Such
management
FIGURE 4.1 Low-productivity sectors employ higher proportions of the workforce and vice versa
Sectoral labour productivity as a percentage of average labour productivity

800
Agriculture Transport and communication
Unregistered manufacturing Public administration
Construction Utilities
Other services Mining
Trade and hotels Registered manufacturing
600 Finance

400

200

0
0 10 20 30 40 50 60 70 80 90 100
Employment share (percent)
Note: Other services includes education, health and social work.
Source: Hasan et al. 2012, Bhandari and Srinivasan 2016; estimates based on Central Statistical Organisation and National Sample
Survey Office 2011–12.

62
TABLE 4.1 Sectoral output and employment
SECTORAL SECTORAL OUTPUT
GDP SHARE EMPLOYMENT SHARE ELASTICITY OF
(%) (%) EMPLOYMENT
1999–2000 2004–05
SECTORS 2004–05 2011–12 2004–05 2011–12 TO 2004–05 TO 2011–12

Agriculture, forestry & fishing 19.0 14.4 58.3 48.8 0.855 –0.460
Industry 27.9 28.2 18.1 24.2 0.805 0.556
Mining & quarrying 2.9 2.1 0.6 0.5 0.771 –0.053
Manufacturing 15.3 16.3 11.6 12.5 0.717 0.167
Electricity, gas & water supply 2.1 1.9 0.3 0.5 0.462 1.456
Construction 7.7 7.9 5.6 10.6 0.847 1.142
Services 53.0 57.4 23.6 27.0 0.451 0.261
Trade, hotels & restaurant 16.1 16.1 10.3 11.0 0.126 0.179
Transport, storage & communication 8.4 10.6 3.9 4.9 –0.795 0.317 Technology
Financing, insurance, real estate &
business services 14.7 18.0 1.6 1.1 1.426 –0.362
cycles are
Community, social & personal shorter than
services 13.8 12.7 7.8 10.0 0.323 0.587
ever, and digital
All sectors 100.0 100.0 100.0 100.0 0.426 0.068
disruption
Note: The output elasticity of employment is computed using the CAGR (compound annual growth rate) approach; the calculation
of unit-level employment data is from various National Sample Survey Office (NSSO) rounds. Misra and Suresh (2014) follow a
in India is
similar CAGR approach for calculating output elasticity of employment for various years. likely to recur
Source: NCAER estimates based on data from Central Statistical Office (CSO) and NSSO. Data on GDP in constant prices for
2004–05 and 2011–12 from CSO Employment data (usual principal and subsidiary status) are from the 61st and 68th Rounds of with greater
NSSO’s Employment–Unemployment Survey, respectively.
frequency,
changing the
a give-and-take appeared with a vengeance in commentator has said, “Most of those who
2017 in India’s IT industry, which faced high come out of our vocational programmes pack a job landscape
layoffs, expected to continue for several years single, terminal skill that resists upgrading. Not again and again
and potentially numbering in the hundreds of surprising then that 44% of those with comput-
thousands as western businesses explored auto- er training and 60% of those with textile relat-
mation, robotics and innovative technologies ed expertise are all dressed up, but sitting at
such as cloud computing to replace jobs for- home. Obviously there is no tie-in with indus-
merly subcontracted to Indian firms like Info- try, or else why should there be such a glut of
sys, Wipro and Tech Mahindra. This highlights vocationally trained workers? Worse, have the
the importance for workers and employers of skills they learnt now become obsolete?”5
nonroutine and higher-order cognitive skills Trainees just a couple of years after graduat-
that are difficult to automate­—­unlike routine, ing from ITIs face high unemployment. Indus-
repetitive, well-defined cognitive skills, even trial on-the-job training and public–private
at a high professional level, that can be easily training partnerships (PPPs) promise to match
automated. skills and work better, but they face high drop-
Simply training workers for existing jobs, as out rates. Among 2,000 trainees surveyed by
under Pradhan Mantri Kaushal Vikas Yojana Accenture from PPP programmes, one-third
skill development programmes or other voca- either declined jobs on offer or left jobs within a
tional and technical training initiatives, will month of starting them.6 And PPP programmes
not serve them in the long run, because change are found only in the organised sector, so they
is accelerating. As mentioned earlier, technolo- miss 95% of the workforce.
gy cycles are shorter than ever, and digital dis- Instead, training should also provide skills
ruption is likely to recur with greater frequen- to enhance worker mobility across occupations,
cy, changing the job landscape again and again. giving them the flexibility to meet changing
Even today’s training preparing workers employment demands.7 Occupational mobility
for existing jobs is not working well. As one has a variety of forms. It can take place within

63
 an organisation as a worker changes jobs, per- many different sectors in an economy.11 Other
haps through a promotion. It can be a trans- skills apply a trade’s basic principles and tech-
fer from one employer to another to do a sim- niques specific to an industry, so their transfer-
ilar job in the same industry. Or it can mean ability is limited to that industry.
a worker using the skills gained in one occu- Transferable skills also include higher-or-
pation to get a job in a very different occupa- der skills. An array of higher-order cognitive
tion that partly relies on existing skills.8 Key to and non-cognitive soft skills related to crea-
ensuring greater worker mobility are transfer- tivity, self-initiative and self-control, overlap-
able skills that can aid workers in adapting to ping with other foundational skills, are among
firms’ changing needs, and in achieving career the most valued transferable skills (table 4.2).
goals. While short-term skilling initiatives, such as
those offered under the PMKVY programme
Enhancing the transferability of skills and DDU-GKY, impart basic transferable skills
such as digital literacy and financial literacy,
Transferable skills relevant to multiple work- some higher-order transferable skills are harder
places are the key to promoting workforce agility to teach and tend to get left out­— ­they need a
Transferable (chapter 2 discussed how portable skills require longer-term approach.
skills relevant innovative teaching approaches). To begin with Human resource specialists catalogue trans-
transferable skills mean core or foundation- ferable skills as:
to multiple
al skills. Traditional social and communication • Speaking, writing, facilitating, negotiating,
workplaces skills include being punctual, communicat- persuading, listening, interviewing, editing
are the key ing with others and reading and writing (see • Forecasting, identifying problems, creating
appendix 2.1). And new foundational cognitive ideas, solving problems, setting goals, defin-
to promoting and personal skills emphasise learning and the ing needs, analysing
workforce ability to make judgements, solve problems and • Developing rapport, providing support,
acquire additional skills.9 Computer skills, Eng- expressing empathy, motivating others,
agility lish-speaking skills and civic knowledge will cooperating, representing others (being col-
enhance the employability of individuals from legial and all-inclusive)
rural and low-income locations.10 Such founda- • Initiating new ideas, coordinating tasks,
tional skills, relevant to all kinds of occupations managing groups, delegating, teaching,
at all levels, are highly transferable. coaching, counselling, selling ideas, deci-
General vocational and technical skills sion-making, managing conflict (especially
offered at ITIs and other technical institutes, important within consulting)
including those offered in collaboration with • Implementing decisions, cooperating,
the industry or in skilling programmes under enforcing policies, being punctual, manag-
the NAPS, may include operating or maintain- ing time, attending to detail, meeting goals,
ing industrial machines, developing software accepting responsibility, organising (on
and applying IT. Those skills can be applied in time/on budget)12

TABLE 4.2 What skills are most transferable?

HARD SKILLS SOFT SKILLS
Technical, job-specific skills Non–job specific skills, which
TYPE OF SKILL that are usually easily observed, are usually intangible, hard to
measured, trained and closely measure and closely connected
connected with knowledge with attitudes
GENERIC Generic hard skills Generic soft skills
Skills applicable in most Examples: Digital skills, Examples: Communication,
companies, occupations and language skills, financial literacy, attitude towards work, time
sectors numeracy, reading, writing management
SPECIFIC Specific hard skills Specific soft skills
Skills applicable in a few Examples: Cloud computing, Examples: Entrepreneurial spirit,
companies, occupations and mechanical engineering, copy- managerial decisionmaking,
sectors writing, singing customer orientation
Note: Hard skills are primarily technical, job-specific cognitive skills, whereas soft skills can combine higher-order cognitive and
non-cognitive skills. Generic skills, which can be both hard and soft skills, are more transferable in nature.
Source: Adapted from European Commission (2011).

64
 For workers to actually be able to make the technical skills, financial literacy and dig-
jump from one job to another­—­what the ILO ital literacy, noncognitive skills (such as
calls “portability”­—­employers have to recog- behavioural skills) and higher cognitive
nise transferable skills. For this the ILO calls skills (such as flexibility) set humans apart
for “certification and recognition of skills with- from machines. For instance, while medical
in national and international labour markets.”13 knowledge and corresponding skill certifica-
Some kinds of cognitive skills can be certified tion have been compulsory for doctors and
through tests or, in more complex areas, for- health workers, compassion and empathy
mal accreditation. Non-cognitive skills such as with the patient make a health worker indis-
insight, intuition, creativity and judgment are pensable in an increasingly automated health
hard to measure and have to be observed in industry. Many jobs with traditional required
operation.14 skills will add new ones in the 21st century
Exchanging lifetime employment for life- (table 4.3).
time employability,15 workers may not work
for the same company, but may instead be Promoting innovation-led entrepreneurship to
constantly reskilling, upskilling and identify- signal changing skill demands
ing and exercising transferable skills to have 21st century
a satisfying, profitable career through a suc- Entrepreneurs are the key to exploiting tech- jobs will no
cession of jobs. For example Denmark’s “flex- nology to generate new jobs at the cutting edge
longer be
icurity” offers a model in which firms have of technology. Their success or failure can be
great flexibility to hire and fire, and workers vital to signalling how skills need to change confined to
have generous unemployment benefits along as entrepreneurial success gets mainstreamed. task-specific
with a requirement that they retrain for new In the past decade India has seen a spurt in
employment and participate in job place- startups in services, primarily through e-com- roles. Instead,
ment programmes.16 Even in advanced econo- merce and technology platforms. In fact India the demand
mies, this is not simple: Questions were raised has become the third largest startup ecosystem
about the adequacy of practices like flexicurity after the United States and United Kingdom in
for multi­
when the 2008 financial crisis led to persistent the number of startups, though the entrepre- dimensional
unemployment in some European countries.17 neurial ecosystem lags behind in catalysing
skills will
successful innovation.
A recent study found that 90% of Indian increasingly
Anticipating the skills of the future startups collapse within the first five years, grow
with a lack of innovation a primary factor.18 Of
21st century jobs will no longer be confined the venture capitalists surveyed, 77% thought
to task-specific roles. Instead, the demand for Indian startups suffer from a lack of innovation
multidimensional skills will increasingly grow. based on new technologies or unique business
Unprecedented technological progress has ush- models (figure 4.2). Other factors that stymie
ered in an era where the future of work looks startups in India include a lack of skilled work-
very different from how people worked in the ers, difficulties in financing, inadequate men-
past. Drivers will compete with driverless cars, toring and poor business ethics.
and humans with robots. For the 21st centu- Most startups that failed attempted to emu-
ry worker to thrive in a world of automation, late pre-existing western prototypes, such as
acquiring foundational skills and deploying e-commerce and e-wallets. Such models took
strong non-cognitive and higher-order cog- off as new innovations in western countries,
nitive skills will be vital. It is no longer suffi- but were merely repackaged and relaunched in
cient for an Uber or Ola driver to have exper- the Indian market. Such startups are examples
tise in driving. It is equally important for her of structural innovations, and are not necessar-
to navigate the GPS on her smartphone (digi- ily examples of innovation-led entrepreneur-
tal literacy), use a payment wallet for rider fees ship. Required at this juncture are startups that
(financial literacy), and possess language skills innovate and provide solutions for challenges
for effective communication and congenial faced, for example, by Tier-1 and Tier-2 cities
interpersonal skills (non-cognitive skills) for a (such as in education, health and sanitation,
customer-­centric approach. transportation and energy) and by farming
While technical and vocational skill develop- communities­ —­adapting business models to
ment programmes tend to focus on job-specific local needs.

65
TABLE 4.3 Transitioning from skills to jobs in 21st century India
SKILLS JOBS
TRADITIONAL
REQUIREMENTS:
JOB-SPECIFIC SKILLS NEW REQUIREMENTS EXAMPLES

Business skills, Higher cognitive skills such as critical thinking, creativity, cognitive flexibility, Innovation-led
managerial skills, digital skills, research skills, technical problem-solving skills, digital skills, entrepreneur
product knowledge financial literacy
Noncognitive skills such as emotional intelligence, interpersonal skills
Ability to cater to and knowledge of local economy
Nursing, basic care Noncognitive skills such as empathy, compassion, patience, flexibility, Compassionate
services, literacy, teamwork health worker
numeracy
Driving, literacy Digital literacy (for accessing smartphone) and map reading for GPS Uber driver
Financial literacy (for operating payment wallet)
Language and communication skills­—­include both local and English language
skills (interacting with tourists and local customers)
Noncognitive skills such as empathy, politeness, time to report for 5-star rating
Computing skills Cognitive skills such as critical thinking, creativity, cognitive flexibility, Data scientist,
advanced analytical skills, technical problem-solving skills, business artificial
intelligence, advanced digital skills intelligence expert
Noncognitive skills (client and customer orientation, team work, leadership)
Advanced technical degree, consulting experience
Crafts skills Literacy and numeracy Rural handicraft
Digital literacy (for app-based sales) entrepreneur
Financial literacy (for operating payment wallet)
Language and communication skills­—­include both local and English language
skills (for connecting to markets across borders and connecting to digital
platforms such as Flipkart or Myntra where content is provided in English)
Awareness of latest market trends and customer pulse
Source: NCAER compilation based on literature review and stakeholder discussions.

FIGURE 4.2 Venture capitalists identify why Indian startups fail

Percent of venture capitalists responding

80

60

40

20

0
Inexperienced Inadequate Insufficient Unethical Lack of Undifferentiated
leadership mentoring funding business sufficient business
conduct skills models

Note: Survey includes responses from 100 venture capitalists.

Source: IBM 2017.

66
 With strategic vision and clarity of purpose, with sustainable technology. Common in such
success is possible in urban and rural India. The entrepreneurship models is the role of technol-
NASSCOM established a Centre of Excellence ogy in providing innovative solutions for local
for Internet of Things along with the Ministry challenges.
of Electronics and Information Technology of Many Indian government programmes
the Government of India (MeiTY) and ERNET for entrepreneurship, such as the Pradhan
(the Education and Research Network of the Mantri YUVA Yojana education and training
Government of India) to harness Indian start- scheme (see box 3.2) or Deen Dayal Upadhyay
up entrepreneurs’ creative capacity. ­Swaniyojan Yojana (DDU-SY), aim to upskill
One of the centre’s first incubated startups, people who are entrepreneurs by necessity in
IoT Pot, launched Klove Knob, a product that the unorganised sector, those with no access
aims to make cooking safer, smarter and more to formal jobs. These “necessity” micro-entre-
convenient for Indian households.19 farMart, preneurs, the vast majority of India’s entre-
launched in 2016, is an on-demand machin- preneurs, can then be readier to enter for-
ery renting platform for farmers from farm- mal employment as soon as they have the
ers. It allows small and marginal farmers to opportunity.
rent machinery and allows machinery own- Other programmes promote “opportunity” Many
ers to earn from underused assets (box 4.1). entrepreneurs, those led by the opportunity to government
Now scaling up its business model across other innovate. Examples of such programmes are
programmes
states, farMart has attracted angel investors. innovation centres at leading business schools,
Project Mooo is another example of a pioneer- the IIE, the Entrepreneurship Development aim to upskill
ing startup aiming to support dairy farmers Institute of India and the NASSCOM Centre people who are
entrepreneurs
BOX 4.1 Entrepreneurial initiatives to improve farm productivity by necessity
Nearly 70% of agricultural households own The low income-generating capacity of small
in the
less than a hectare of farmland, according to and marginal farmers also prompts farmers to unorganised
the 2012–13 NSSO survey. Small and margin- venture into dairy farming to supplement their
sector
al holdings preclude mechanisation and deny income. Project Mooo, launched by UDAY, a skill
productivity benefits from economies of scale. development initiative, aims to transform the
This also makes it unviable for small and mar- socioeconomic landscape of dairy farmers and
ginal farmers to own tractors and tillers solely boost the quality and production of dairies in
for their own farm. A survey of 1,500 farmers India.
in June 2015 across Uttar Pradesh, Uttarakhand Project Mooo seeks to create rural startup
and Punjab showed that 93% regularly face se- ventures headed by “village entrepreneurs,”
vere challenges in renting machinery. primarily rural youth and women. These village
A team of professionals­—­with backgrounds entrepreneurs travel to villages in a technolog-
in farming, digital payments and mechanical ically advanced dairy van and impart hands-on
engineering­—­joined to launch farMart in 2016. skills to dairy farmers, along with improving
farMart is an on-demand agro-machinery rent- connectivity for forward and backward linkag-
ing platform connecting large farmers who es. Project Mooo also has an app-based service
own machinery to farmers who don’t­—­booking that provides farmers with regular alerts during
is carried out on mobile apps or through call the entire lifecycle of the dairy animal using sus-
centres, with payments using Aadhaar biom- tainable dairy management practices to tackle
etric numbers. The business aims to augment dairy deficits, milk traceability and the lack of
the prevailing rental market for agro-machinery, agricultural extension.
which is highly fragmented due to information UDAY signed a contract with a large milk pro-
asymmetry, lack of standard pricing and poor ducer in Punjab to provide skill training for 10,000
rural information and communications technol- dairy farmers in 337 villages across three districts.
ogy infrastructure. The project aims to scale up further, connecting
one million farmers on the Mooo App by 2021.

Sources: NCAER interview with farMart entrepreneurs (November 2016); Kurian 2017.

67
 of Excellence for the Internet of Things (see earning almost 90% more in the rural sector
chapter 3). They teach knowledge and skills for and 37% more in the urban sector.21 Explain-
harnessing entrepreneurs’ creative ability and ing much of the gap is men’s higher education-
connect them with funding, networking oppor- al attainment, except for urban workers with
tunities, incubation support, research and con- jobs in the formal sector.
sultancy services, and cluster development. Higher education for women, training in
Some of the most famous innovation-led digital skills, greater allowance for part-time
industry clusters, such as Silicon Valley in work, skill training for working in male-dom-
California and Eindhoven in the Netherlands, inated industries (box 4.2) and infrastructure
have sprouted up around hi-tech university and education for entrepreneurship all require
campuses, with knowledge sharing between support (see chapter 3). Increasing women’s
startup enterprises and universities and tech- labour force participation, especially at higher
nical institutes. Such collaborations, along with levels of the economy, would support their live-
investments in infrastructure and research lihoods and open a vast source of productivity
and development, can lead to successful inno- for India.
vation-driven startups and spinoffs. India has
Customer- vast unexploited opportunities here. Responding to increasing digitisation
facing Entrepreneurs operate in uncertain envi-
ronments and must take risks, but sound tech- India’s economy will continue to change
jobs with
nical know-how and business skills provide through digitisation. Worldwide up to 45% of
non‑routine greater scope for a business’s sustainability and the tasks people do in the workplace could be
interactive tasks job creation. National Institute for Transform- automated­— ­though that does not mean 45%
ing India (NITI Aayog) recently launched Men- of jobs could be automated. In retail, for exam-
that depend on tor India to nurture an entrepreneurial mind- ple, packaging and stocking goods and keep-
soft skills can set among school students from class 6 to 12.20 ing sales records, customer information and
The programme aims to engage business lead- product information could all be automated,
be expected ers to mentor students across 900 Atal Tink- but advising customers, which requires judge-
to grow. So ering Labs established by the Atal Innovation ment and emotional intelligence, is much more
Mission in schools across India. The labs intro- demanding. In finance and insurance, about
can jobs
duce students to new-age technologies such as the same portion of a workforce’s time is spent
depending on robotics, sensors, 3D printers and the Internet on tasks that could be automated, such as pro-
higher-order of things, and guide them in developing inno- cessing customer records and product infor-
vation skills, acquiring technical knowledge mation, preparing contracts and verifying the
cognitive skills and imparting business entrepreneurship. accuracy of records.22
Of the jobs that Millennials will perform,
Upskilling women to increase labour force experts estimate that 65% do not exist yet.23
participation and future employability Customer-facing jobs with nonroutine inter-
active tasks that depend on soft skills can be
Women are at higher risk of structural expected to grow. So can jobs depending on
unemployment in India arising from techno- higher-order cognitive skills, such as creativ-
logical disruption because their employment ity and cognitive flexibility, including many
is concentrated in agriculture and unorgan- IT jobs.
ised manufacturing, where capital intensity India has vast room to expand digital
is increasing and labour intensity decreasing. employment. NCAER’s Business Expectations
Within manufacturing there have recently Survey attempted to capture the ICT readiness
been massive shifts away from labour-intensive of firms in September 2016, tracking more than
production in textiles, food and beverages and 500 Indian companies in the organised sector
machinery and equipment. across Bengaluru, Chennai, Delhi National
The share of female participation in the Capital Region (NCR), Kolkata, Mumbai and
technology sector is particularly low, and even Pune. Only 46% of the firms had an IT depart-
lower at the managerial level. The share of ment or a dedicated IT manager, while 34%
female managers in computer manufacturing provided ICT training to permanent workers
was 5.9% in 2011–12, and in computer pro- and 55% to managers (figure 4.3).
gramming 11.5%. And employed women face The NCAER survey also revealed that a
substantial wage discrimination, with men much higher proportion of firms in the sample

68
 BOX 4.2 Young women in plastics

A three-month training course for young sector. Half the trainees in the first batch were
women in plastic engineering took place in placed in companies in neighbouring industrial
Murthal, Haryana, which has one of the lowest hubs.
female workforce participation rates in India. The course was facilitated by the Central In-
The curriculum blends theory and soft skills, as stitute of Plastics Engineering and Technology,
well as practical hands-on training in operat- an autonomous institute under the Ministry of
ing machines used for injection moulding and Chemicals and Fertilizers. It was a pilot as part
plastic processing. It will enable young women of a three-year collaboration between the India
across the state to find employment on factory Development Foundation, the UNDP and Xyn-
floors in the plastic engineering and technology téo, supported by the IKEA Foundation.

Source: UNDP 2018.

A much higher
FIGURE 4.3 Smaller firms are far from ready A study by KPMG and Google found that the proportion
to use information and communications majority (68%) of Indian small and medium
of firms
technology businesses are completely offline, with anoth-
Percentage of firms with an IT department or manager er 15% connected to digital technologies but require digital
yet to use digital services for business purposes literacy as a
Less than
Rs 1 crore (figure 4.5).24 Only 2% marketed their business
online, yet such digitised firms experienced prerequisite
twice as much growth in revenue and custom- for hiring
er base as their offline counterparts. Increas-
ingly firms that remain offline, and those less
permanent
More than Rs1–10
Rs 500 crore crore likely to adopt and use digital services, will run and managerial
the risk of declining market share and suffer-
workers
ing from a greater disconnect with consumer
25
tastes and preferences.
50 Within the IT–business process outsourc-
75 ing BPO sector, the threat of automation has
100
made it imperative for firms to reinvent them-
Rs 100–500 Rs 10–100
crore crore selves, adopt the latest technologies and reskill
and upskill their workforces. NASSCOM esti-
Note: Figure shows percentage with an information mates show that 1.5–2 million people (both
technology (IT) department or IT manager across 500 firms
fresh entrants and existing employees) need to
of different sizes across Bengaluru, Chennai, Delhi National
Capital Region, Kolkata, Mumbai and Pune. Measured by
be reskilled and upskilled­— ­or 38–50% of the
annual turnover. workforce in a sector that employs 3.9 million
Source: National Council of Applied Economic Research workers.25 As interlinkages between the IT/
Business Expectations Survey, September 2016. ITES (IT enabled services) and manufacturing
and other service industries grow, the demand
required digital literacy as a prerequisite for hir- for workers with expertise in advanced ana-
ing permanent and managerial workers, com- lytics and computing skills, along with sub-
pared with temporary or unskilled workers (fig- ject matter expertise and higher non-cognitive
ure 4.4). In a similar vein firms are more likely skills, is expected to increase. NASSCOM noted
to upskill permanent and managerial workers the importance of subject matter expertise in
than unskilled or temporary workers, indicat- areas such as design, humanities, sociology,
ing the need for digital skills to increase the security, finance and payments.
likelihood of landing a permanent job. Firms Bringing informal workers into the formal
may not always have the resources to impart economy is likely to be increasingly driven
training to all their workers to make them by technological disruption. As own-account
ready for jobs so they are more likely to recruit workers become Uber and Ola drivers using
workers who are already digitally literate. smartphones to get directions and e-wallets

69
 FIGURE 4.4 Digital literacy is required for managers and permanent workers
Percent of SMEs

80
Computer literacy a pre-condition for hiring
Impart information and communications
technology training to employees

60

40

20

The Internet
has changed 0
how people Managerial Unskilled Temporary Permanent
Note: Figure shows percentage of 500 firms of different sizes across Delhi NCR, Mumbai, Pune, Kolkata, Bengaluru and Chennai.
connect to Source: National Council of Applied Economic Research Business Expectations Survey, September 2016.

work, with
FIGURE 4.5 Small and medium-size certified self-employed home and business ser-
more workers enterprises are not digitally engaged vice providers, offers the services of more than
using cloud Percent of SMEs 65,000 professionals, ranging from wedding
photographers to chartered accountants.27
computing, Engaged 2%
Seeing UrbanClap’s vast potential the NSDC
video signed an agreement with UrbanClap in 2016
Enabled to open the service portal to NSDC-certified
conferencing
15% workers. UrbanClap will verify and absorb
and other 300–500 candidates a month from NSDC’s
means to work Connected skilled workforce database, targeting plumb-
Offline
15% 68%
ers, electricians, carpenters and beauty sector
anywhere, workers. The database includes about 60,000
anytime candidates in these areas.
The Internet has changed how people con-
nect to work, with more workers using cloud
computing, video conferencing and other
means to work anywhere, anytime. Demo-
Note: Offline = no Internet connectivity, connected = use graphic changes along with technological
Internet for general information only, enabled = own website disruptions are gradually resulting in a shift
or social media for business purposes, engaged = active use of
towards a new work order, giving birth to free
digital technologies for business purposes.
Source: Analysis by KPMG and Google (2017), based on Kantar
agents or gig workers, independent workers
IMRB’s ITOPS Business 2015 and Business 2016 data. or micro-entrepreneurs, who contract with a
range of employers. The trend has picked up in
to get paid, their new economic position will India. Apart from cab and service aggregators
allow them to get a loan, buy a car and start such as Ola, Uber and UrbanClap, tech service
paying taxes.26 The e-commerce platform Indi- companies are also hiring workers on a project
aMart employs 3,600 workers and provides basis. The notion of a “job for life” is evolving
market linkages to the small and medium-size with surprising rapidity as freelancing spreads
enterprises sector. The cab aggregator Ola has across a spectrum of ages.
6,000 employees and more than 400,000 driv- Recent estimates from the Telecom Regu-
er-entrepreneurs, about the same number of latory Authority of India show that India had
drivers as Uber in India. The service aggregator 1.2 billion mobile subscriptions and 413 mil-
UrbanClap, which matches urban customers to lion broadband Internet subscriptions on 31

70
March, 2018 (including wired subscribers, to make 60 million rural households digitally
mobile device users and fixed wireless sub- literate.30 Such efforts to connect rural India
scribers). Broadband Internet subscriptions are supported by private participation, such as
registered 27% growth during the first half of ICICI Bank’s Digital Village initiative, which
2017,28 a number expected to grow.29 New jobs sought to digitise 600 villages by 2017 (box
are expected in Internet-related commerce, 4.3), in addition to supporting rural entrepre-
whether via broadband or via mobile phones. neurship networks.
But India has a big digital capability gap, affect- E-commerce has a greater urban footprint,
ed by the climate for business and the quality though digital startups are gradually penetrat-
of human capital. Mere digitising serves little ing rural space, connecting unorganised man-
purpose unless the workforce is equipped with ufacturing across geographical spaces. Small
digital skills and, more importantly, unless manufacturers and rural artisans have much
digital disruptions create jobs in traditional to gain from digital aggregators with greater
sectors. access to customers across wider geographic
networks. A majority of artisans live in regions
Providing for future skilling needs and far behind the pace of development in Tier-1 or
opportunities in rural areas Tier-2 cities in transport and communications Mere digitising
infrastructure, educational institutions (both serves little
The rural sector remains the most vulnerable mainstream and skill-based) and common civic
purpose unless
to digitisation and technological shocks. Inter- amenities.
net adoption has been low due to poor ICT Most of these workers come from communi- the workforce
infrastructure. More than 94% of 168.5 mil- ties with low digital literacy, limited proficiency is equipped
lion rural households do not have a comput- in English (most e-commerce websites require
er (figure 4.6), and most are digitally illiter- basic reading and writing skills in English), with digital
ate. The Digital India initiative aims to bridge poor Internet connectivity and low computer or skills and, more
the rural–urban digital gap and connect rural smartphone use. Overcoming these challenges
households with high-speed Internet net- requires sustained training and handholding of importantly,
works. As a follow-up to the National Digital artisans early in the transition from offline to unless digital
Literary Mission, the government launched the online (box 4.4). Modern digital technologies,
disruptions
Pradhan Mantri Gramin (Rural) Digital Sak- and digitally controlled logistics services, make
shatra Abhiyan (PMGDISHA) in February 2017 it possible to leapfrog from functional illiteracy create jobs
in traditional
FIGURE 4.6 Computer literacy is low for those 15 and above­—­and even lower in rural areas, 2014
Percent of people aged 15 and older
sectors

30
Rural
Urban

20

10

0
Use internet Use internet for Use computer for Operate
for sending email searching desired word processing/ a computer
information typing

Source: NCAER estimates based on National Sample Survey Office’s 71st Round survey data on Social Consumption in India:
Education.

71
 BOX 4.3 Digital villages

ICICI Bank launched the ICICI Digital Village ini- sustainable livelihood opportunities using dig-
tiative in November 2016 to digitise 100 villages ital technologies.
in 100 days across 17 states. The programme Under the programme ICICI Bank is provid-
intended to expand the network to another 500 ing bank credit linkages, offering doorstep ser-
villages by December 2017. It promotes rural vices using tablets for loan approval. With banks
entrepreneurship and women’s empowerment 5 kilometres away in most rural areas, such ser-
through end-to-end digitisation of transactions vices greatly reduce the distance to travel to a
and the payments system. nodal bank. The bank encourages forming self-
Under the ICICI Academy for Skills–Rural In- help groups and joint liability groups and of-
itiative, villagers receive short-term vocation- fers loans to group members. It also provides
al training. Courses are primarily designed to access to markets by linking to local and nearby
enhance rural entrepreneurship development, catchment areas to boost self-employment and
to impart practical job-specific skills based micro-entrepreneurship opportunities in the
Industrial on local economic demand and to provide villages.
Revolution 4.0
Source: ICICI Bank 2017.
implies that the
manufacturing
sector will
to digital literacy and overcome many of the that manufacturing, healthcare and travel and
increasingly infrastructure and other gaps in rural areas of transportation grew more than 8% driven by
shift towards India in ways unthinkable just a few years ago. new technologies, while increasingly “servici-
fication” of manufacturing is gaining pace.31
skill-intensive Responding to the need for new manufacturing skills Today’s youth will need to be trained in sec-
jobs as digital tor skills, tech skills and higher-order cognitive
No country has advanced without passing and non-cognitive soft skills to increase their
technologies
through the shift from agriculture through employability.
transform manufacturing to services, because high-pro- Tech services companies such as Infosys
production, ductivity manufacturing gives the biggest work with engineering colleges to update cur-
boost to incomes. Manufacturing output and riculum, train faculty and improve teacher–
requiring an employment increase domestic demand for industry and student–industry links to realign
amalgam of manufactured durables and luxury goods, courses with industrial realities. But similar
which increases productivity, which increases efforts are required from stakeholders in man-
specialised skills
incomes, and so on in a virtuous circle. India ufacturing industries and across both colleges
will find it difficult to advance by skipping and vocational and training institutions.
manufacturing and going straight to service Companies such as Mercedes-Benz India
jobs, whatever their productivity. At the same are trying to bridge the skill gaps, aligning
time manufacturing is changing at a pace not itself with the vision of Skill India. In 2016
known before with rapidly accelerating estab- Mercedes-Benz launched its Advanced Auto
lishment of global value chains, but India is Body Repair Training Centre in association
not yet central to such arrangements. The gov- with Don Bosco ITI, Chinchwad, near Pune,
ernment’s Make in India programme aims to to train youth with advanced technical skill
attract companies from across the globe and sets for a career in automotive services.32 In its
make India a high-end global manufacturing collaboration, Mercedes-Benz India is training
hub. But that requires a workforce with skills the trainers, planning and updating curricu-
and educational qualifications on par with la based on modern automotive technology,
international standards. and supplying cars, equipment, and advanced
Industrial Revolution 4.0 implies that the technical tools. Maruti Suzuki is doing similar
manufacturing sector will increasingly shift work.
towards skill-intensive jobs, as digital technol- In June 2017 the Ministry of Science & Tech-
ogies transform production, requiring an amal- nology launched Innovate in India (i3)33 to
gam of specialised skills. NASSCOM has noted promote entrepreneurship and accelerate

72
 BOX 4.4 Indian weaver micro-entrepreneurs connect to startup digital aggregators

Handloom weaving is one of the largest 7 August 2017, the company received recogni-
employment-­ generating sectors after agricul- tion from the Ministry of Textiles as the most
ture, employing 4.3 million weavers and allied promising handloom startup, with the highest
workers directly or indirectly.1 According to the sales figures in fiscal 2016.
Handloom Export Promotion Council, India ex- With more than 3,000 weavers, Weavesmart
ported handloom products worth $350 million operates across 10 clusters in five states, and
in fiscal 2015. Many weavers work independently caters to customers across India and in Austral-
and have limited access to markets and uncertain ia, Canada, the Middle East, UK and US. To help
demand. They also have low digital literacy and weavers be e-sellers, it conducts extensive edu-
remain vulnerable to mechanisation and threats cation and training workshops on different as-
of automation from power looms. To overcome pects of e-commerce, primarily in Hindi or local
these challenges and preserve cultural heritage languages, though the demand for functional
and weavers’ livelihoods, the Ministry of Textiles literacy in English remains strong.
is working with several e-commerce companies Platforms such as Weavesmart are gaining India needs
to provide direct market links and promote the ground through social media, with increasing a 15-year,
Indian handloom brand in India and overseas. awareness and demand for ethnic products
2020–35
The startup Weavesmart was launched in among urban consumers. Okhai, launched by
2015 to connect to weavers in the highly frag- the Tata Chemicals Society for Rural Develop- perspective
mented and unorganised textile and apparel ment, procures products directly from cooper- plan focused
industry and to improve their livelihoods. As an atives and community-based producer organi-
online aggregator it eliminates intermediaries in sations, and provides direct market linkages for on transferable
the value chain, sourcing handloom products weavers. In the process weavers are also trained skills that can
directly from the weavers and providing direct in modern handicraft production, including
access to markets and better margins for prod- costing, design and visual merchandising. Fac-
meet demand
ucts. A mobile app allows weavers to display and tory visits keep weavers in touch with the latest from industries
sell their products. On National Handloom Day, trends in the fashion and apparel industry.
now and in
1. Ministry of Textiles 2018. the future.
Source: Weavesmart 2016.
To prepare
the plan the
government
indigenous manufacturing in the biopharma- for skill providers and for workers (figure 4.7).
should
ceutical sector and create a globally competi- And it calls for mutually reinforcing policies,
tive industry. The industry–academia collabo- actions, incentives and understanding among establish a
ration is expected to nurture an ecosystem for and between these four key stakeholders to Commission
preparing India’s technological and product successfully adapt and anticipate skills for India
development capabilities and for strengthening in the 21st century. for 21st
the bio-cluster network. Century Skills
Prepare a 15-year perspective plan for 2020–35:
I ndia needs a 15-year perspective plan focused
Policy recommendations for adapting and on transferable skills that can meet demand
anticipating skills from industries now and in the future. Central
and state governments should create appropri-
Given the time it takes to skill both existing ate incentives for workers to pursue such skills
and new workers, all stakeholders in the skill- and make sure that labour markets are work-
ing space must work together to adapt and ing efficiently. To prepare the plan the gov-
anticipate skills that India will need in the next ernment should establish a Commission for
two or three decades to continue to generate 21st Century Skills of four or five knowledge-
good jobs for its rapidly expanding workforce. able persons who will reach out to central and
This imperative calls for distinct roles and state governments, large and small firms, pub-
responsibilities for employers, for governments, lic and private training providers and current

73
 FIGURE 4.7 Working together to skill India: governments, providers, employers and workers

Establish a Commission on 21st Century Skills

to prepare a 15-year perspective plan for
2020–35

Improve the investment climate and the ease

Shift from necessity to of doing business
opportunity entrepreneurs
Connect private and public stakeholders
Scale up to reap economies of scale
better
Provide in-service training for fresh
trainees, reskilling and upskilling for Deregulate labour markets while
experienced workers simultaneously providing social security

Adopt modern labour and Focus on quality and inclusion

human resource practices
Go Prepare for the new face of
s ve
This NCAER Ensure corporate er r manufacturing
social responsibility pl oy n
Commission ongoing,

m
Report can
Em

Support employees

en
regular, skill-related
when employers have

ts
provide a to retrench them
labour market research

framework for
the terms of
Focus on employability—
reference for a knowledge plus advanced
W

s
id l
er
ke cognitive, non-cognitive and/or
Skil
or

Commission on rs technical and vocational skills

ov
21st Century pr Sharpen academic–industry mutual
interaction
Skills
Ensure flexibility in education and training
Acquire transferable skills Train students for a knowledge economy, with social
Learn to learn awareness

Pursue flexible employment,

not just lifetime careers

and future workers. The Commission’s terms of effective business reforms, or reforming labour
reference would include designing a dual strat- laws. Sectors that can absorb the most labour,
egy for catering both to India’s current skilling whether directly or indirectly, will then create
needs and doing it in such a way to increasing- quality jobs.
ly poise Indian workers to meet future known
and unknown skilling needs. This NCAER Connect private and public stakeholders better: W
 ith
Report can provide a framework for the terms a better investment climate and better func-
of reference for such a Commission. tioning labour markets, firms will have the
conditions to better integrate into both domes-
Improve the investment climate and the ease of tic and international supply chains, grow pro-
doing business: M
 acroeconomic stability and duction and therefore create more jobs. The col-
reforms that ensure the effective working of laboration of State Skill Development Missions
markets are preconditions for accelerating and industry associations will be key for tap-
and sustaining long-term economic growth. ping into local pools of potential workers and
They are necessary for reaping the bene- for initiating skill development programmes for
fits of India’s comparative advantage while key growth sectors.
expanding the formal part of the economy,
whether by implementing tax reforms such Opening
Institutionalise flexible social security: 
as the goods and services tax, implementing more to trade and rapidly evolving technology

74
will create gainers and losers. The government Notes
needs to shape effective, flexible social secu-
rity so the losers can be compensated in cash 1. Autor, Katz and Kearney 2006; Autor 2015.
or through reskilling and upskilling support. 2. Azam 2012.
Without social support systems, flexible sys- 3. Amirapu and Subramanian 2015.
tems will be harder to introduce and sustain. 4. Bhandari and Srinivas 2016.
5. Gupta 2014.
Focus on quality and inclusion: India’s education 6. Accenture 2013, 13.
and training systems need to change as quickly 7. Snell, Gekara and Gatt 2016, 7.
as possible to focus on quality, adaptability and 8. Snell, Gekara and Gatt 2016, 12.
learning outcomes. School system reforms (dis- 9. ILO 2007.
cussed in chapter 2) will especially take time. 10. Accenture 2013, 17–18.
They need to be mapped to learning outcomes 11. ILO 2007.
through a National Qualifications Framework 12. Deloitte n.d.
so that the education system is adequately 13. ILO 2007.
geared towards preparing future workers for 14. ILO 2007.
the ever-changing world of work. 15. Nieuwenhuis, Nijhof and Heikkinen A combination
2002, 4. of scientifically
Prepare for the new face of manufacturing: The 16. New York Times 2010.
designed
blurring boundaries between industries and 17. Auer 2010.
between industry and services, along with 18. IBM 2017. household,
increasing servicification, make it imperative 19. Business World 2017. enterprise and
for any skill development initiative to provide 20. Government of India 2017c.
core foundational skills that cut across sectors 21. Agrawal and Vanneman 2014. labour market
and aid workers to adapt to changing times. 22. Chui, Manyika and Miremadi 2016. surveys can
Tech and soft skills, both higher-order cogni- 23. Manpower Group 2017.
tive and non-cognitive, will be required for 24. KPMG and Google 2017. greatly help
enhancing employability in Industrial Revolu- 25. NASSCOM 2017. understand
tion 4.0. 26. Padmanabhan 2016.
the triad of
27. Padmanabhan 2017.
Commission ongoing, regular, skills-related labour 28. Telecom Regulatory Authority of India 2017. acquiring–
market research:  The new National Skills 29. Chopra 2017. matching–
Research Division in MSDE should carry out 30. Government of India 2017a.
labour market research to identify core/trans- 31. Bhattacharya and Bijapurkar 2017. anticipating
ferable and vocational skills, and then use it 32. Mercedes-Benz India n.d. skills and
to help develop course content and training 33. Government of India 2017b.
provide
standards in consultation with various stake-
holders. Such research can identify trends, evidence to
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 Skilling India
No Time To Lose
Understanding how structural and technological chang- framework for skilling India­ —­acquiring, matching and
es in the 21st century are radically altering today’s work- anticipating skills­—­that can help break the vicious cycle
place and the nature of work is imperative. While India of poor skilling and few good jobs. Working together,
must deal with its large and persistent backlog of un- government, industry, skill providers and workers can
skilled informal workers, it must also provide for its fu- move India from its low skilling trap to a virtuous cycle
ture to sustain rapid progress. Firms of different sizes of higher skilling and more good jobs. As the nation
are already demanding different skills­—­large firms need grapples with the legacy problems of its existing skills-
formal business and high technological skills, smaller jobs mismatch, it must also pay attention to anticipating
firms need multitasking and adaptability to business the skills of tomorrow.
practises. The 21st century Indian worker has to move India needs a 15-year, 2020–35 perspective plan fo-
from lifetime employment to lifetime employability. cused on transferable skills that can meet the demand
Above all, India needs to create an agile workforce that from industries, now and in the future. To prepare such
can anticipate and adapt to changes in technology, au- a plan, the Central Government should establish a Com-
tomation and digitisation. mission for 21st Century Skills. This Report can pro-
After suggesting a simple way for thinking about vide a framework for the terms of reference for such a
the types of skills required, this NCAER Report offers a Commission.

IBM Now Has More

Employees in India
Than in the U.S.
IBM has shifted its center
of gravity halfway around
the world to India.
The New York Times,
28 September 2017

Ever More Indians

Are Struggling to
Find Work
The country is missing
out on its “demographic
dividend”
The Economist,
14 September 2017

National Council of Applied Economic Research

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