Training India: Is skills gap holding the economy back?

  • 28 November 2013
  • From the section Business

In the past two years, India's economy has seen a sharp slowdown and that has had a direct impact on youth unemployment, particularly for graduates chasing white-collar jobs.

But, despite that, some parts of the economy are desperate to find skilled young workers - and that could have a big knock-on effect.

India has a potential "demographic dividend"; its millions of young people could be some of the major global consumers of the coming decades but only if they get the right education and work.

While many leaving university this year will struggle to find suitable work, they will sit side by side in their struggle with businesses that cannot find enough young people ready and skilled for manufacturing.

Those businesses may have to train up recruits from scratch, a process that can take years.

Foiled again

At the factory of Raviraj Foils in Sanand, a town in the western Indian state of Gujarat, the work is frantic. Aluminium foil is being produced by big green machines and stacks of it are spread out all over the floor of the workshop.

The plant needs 250 skilled employees to work round the clock over three shifts to meet demand from its customers, mostly pharmaceutical and consumer goods companies.

But this skilled labour is in short supply. The factory's owner, Jaydeepsinh Vaghela, is forced to employ untrained youngsters from neighbouring villages.

"From the time that we hire someone, we take at least three years to train them fully so they can independently run a machine," he says.

"This significantly increases costs for us and because we need a lot of precision in our work, we often have to suffer wastage as we're forced to keep the factory running with unskilled staff.

"We don't mind paying more for trained workers, but where do we find them?"

Career 'taking off'

It is a problem most sectors in India are struggling with, despite the fact that the country has one of the largest young populations in the world.

The reason is clear. According to the government's Planning Commission, a body that charts the long-term economic roadmap for the country, just a tenth of those looking to join the workforce receive any training.

In comparison, 60%-96% of workers in developed nations in Asia and the West undergo skills development.

A report by FICCI (Federation of Indian Chambers of Commerce and Industry) and Ernst & Young shows that India has fewer than 10,000 vocational training institutes with a capacity of just 1.3 million.

Ganesh Gaikar is a student at the Kohinoor Technical Institute. He's 22 years old and joined the mechanical skills course because he found that past students at the school had no trouble finding jobs.

"This training has really helped me. I still have a few months to go to complete the course but I already have a couple of offers from different companies. I think my career can really take off," he says.

White-collar disappointment

This is in contrast to students finishing university in India. With the economy slowing down sharply over the past two years, fewer white-collar jobs are now available.

Mayank Mehta, a student of finance at a college in Mumbai, is worried about finding work once he graduates. "I don't think it will be easy for me to get a job. The competition is very tough. "

Even the opportunities that are on offer are lower than most students expect. "I think we study so much, we are getting such good education so we need to get that level of job. I don't think that's happening in India," says Suvela Sharma, who's studying mass communication.

The government has woken up to this mismatch between skills and jobs. "I think the problem has been particularly acute in India, both in terms of the education and skilling. And this is where I think we need to get our act together," says Pallam Raju, India's Minister for Human Resources.

The government plans to give skills training to 500 million people by 2022 and it hopes to get industry more involved with the process.

"What I've been focusing on as far as our skilling aspects are concerned is to encourage them to build more linkages with industry and business, because only then the relevance will come in, only then the contemporariness of the skilling will come in and we hope to do it fast," says Mr Raju.

It's a big target, but only when India can reach out to many more of its young people can it turn its large population into an asset instead of a liability.