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30th July 2024 (10 Topics)

Bridging the Skill Gap

Context

India faces a growing mismatch between the rising demand for employment and the lack of a suitably skilled workforce. Despite a significant increase in the number of job seekers, the skills possessed by the workforce often do not align with the requirements of the modern job market.

Severity of the Problem (Economy Survey 2024)

  • Sixty-five per cent of India’s fast-growing population is under 35, and many lack the skills needed by a modern economy.
  • Estimates show that about 51.25 per cent of the youth is deemed employable.
  • In other words, about one in two are not yet readily employable, straight out of college. However, it must be noted that the percentage has improved from around 34 per cent to 51.3 per cent in the last decade.
  • Significance of Skilling:
    • Skilling equips the workforce with the necessary competencies to meet industry demands, fostering innovation and productivity.
    • Employment not only ensures economic stability but also empowers individuals, enhancing their quality of life and contributing to overall societal progress.
    • With one of the youngest populations, a median age of 28, India can harness its demographic dividend by nurturing a workforce that is equipped with employable skills and prepared for the needs of the industry.

What are the reasons behind India’s Skill Gap?

  • Inadequate Educational Systems
    • Outdated Curricula: Many educational institutions offer outdated curricula that do not keep pace with industry advancements.
    • Limited Practical Training: There is insufficient focus on practical skills and vocational training, leaving graduates unprepared for real-world job requirements.
  • Mismatch Between Industry Needs and Educational Output
    • Industry Evolution: Rapid technological changes and evolving job roles demand new skills that are not always covered by traditional education systems.
    • Curriculum Gap: Educational programs often fail to align with current industry standards and needs.
  • Insufficient Vocational Training
    • Neglect of Vocational Education: Vocational training and technical education are less emphasized compared to academic education.
    • Underfunded Institutions: Many vocational training institutions, like Industrial Training Institutes (ITIs), suffer from outdated facilities and inadequate resources.

Challenges

  • Lack of Skills: Graduates and job seekers frequently lack the specific skills required for available jobs, leading to high unemployment or underemployment.
  • Skill Gaps in Emerging Sectors: New industries and sectors require specialized skills that are not adequately addressed by existing training programs.
  • Cost of Training: High costs associated with training and skill development can be a barrier for both individuals and companies.
  • Infrastructure Issues: Poor infrastructure in training institutes limits the effectiveness of skill development programs.
  • Access to Opportunities: There is often a lack of access to quality education and training facilities in tier-II and tier-III cities compared to metropolitan areas.
  • Regional Imbalances: Unequal distribution of training resources exacerbates skill deficits in less developed regions.
How does it impact?
  • Productivity Issues: Companies face difficulties in finding skilled employees, which can impact productivity and growth.
  • Economic Inefficiencies: A mismatch between skills and job requirements can lead to inefficiencies in the labor market and economic stagnation.
  • Unemployment and Underemployment: Persistent skill gaps contribute to higher rates of unemployment and underemployment, affecting economic stability.
  • Reduced Aspirations: Lack of proper training and job opportunities can dampen the aspirations of the youth, limiting their career prospects.
Fact Box: Government Measures for Skill Development
  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY): PMKVY Scheme is for imparting skill development training through Short-Term Training (STT) and Up-skilling and Re-skilling through Recognition of Prior Learning (RPL) to youth across the country including rural areas.
  • Jan Shikshan Sansthan (JSS) Scheme: The main target of the JSS is to impart vocational skills to the non-literates, neo-literates and the persons having rudimentary level of education and school dropouts upto 12th standard in the age group of 15-45 years, with due age relaxation in case of “Divyangjan” and other deserving cases.
  • National Policy on Skill Development & Entrepreneurship (NPSDE): It aims to bridge gaps, improve industry engagement, and expand apprenticeship opportunities.
  • National Apprenticeship Promotion Scheme (NAPS): This Scheme is for promoting apprenticeship training and increasing the engagement of apprentices by providing financial support to industrial establishments undertaking apprenticeship programme under the Apprentices Act, 1961.
  • Craftsmen Training Scheme (CTS): This scheme provides long-term training through Industrial Training Institutes (ITIs) across the country.
  • Training: In the Union Budget 2024-25, government announced a new centrally sponsored scheme under the Prime Minister’s package, in collaboration with state governments and industry. This scheme aims to skill 20 lakh youth over five years and upgrade 1,000 Industrial Training Institutes (ITIs).
  • Model Skill Loan Scheme:  The Model Skill Loan Scheme will be revised to facilitate loans up to ?7.5 lakh with government-backed guarantees, benefiting 25,000 students annually.
  • Employment-Linked Incentive Schemes: The government has unveiled a robust package to bolster employment and skill development, targeting 4.1 crore youth over five years. This includes three Employment-Linked Incentive Schemes to enhance job creation and support employees and employers. 
    • Scheme A - First Timers offers up to ?15,000 in three installments for first-time employees registered with EPFO, encouraging new workforce entrants. 
    • Scheme B - Job Creation in Manufacturing provides incentives for EPFO contributions for both employees and employers in the first four years of employment, fostering job creation in the manufacturing sector. 
    • Scheme C - Support to Employers reimburses up to ?3,000 per month for two years towards EPFO contributions for each additional employee, easing the financial burden on employers and promoting workforce expansion. Further, a new scheme for internships will provide opportunities for 1 crore youth in 500 top companies, offering valuable industry exposure and experience.

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