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Skilling workers is a public good, needs bigger thrust

  • Category
    Economy
  • Published
    7th Mar, 2019

Just 2.2% of those between 15 to 59 years age group received formal vocational training while 8.6% in the same age-group received non-formal vocational training, reveals a government survey. This means around 90% of the people did not receive any kind of vocational training.

Issue

Context:

Just 2.2% of those between 15 to 59 years age group received formal vocational training while 8.6% in the same age-group received non-formal vocational training, reveals a government survey. This means around 90% of the people did not receive any kind of vocational training.

About:

  • The latest NSSO survey findings also reflect that passing down of hereditary skills, self-learning and 'on-the-job' learning continue to generate more skilled workforce than country's formal vocational training establishments.
  • The survey found 'driving and motor mechanic work' was the most preferred kind of training among rural males (22.3%) while 'computer trades' was the top choice for urban males (26.3%).
  • Among rural females, 'textile related work' was the most popular (32.2%) while urban females chose 'computer trades' (30.4%).

What is public good?

  1. Public good is something which is both non-rival and non- The former means that if one person is consuming it, it does not deplete the quantity available to another. The latter means that if one person is allowed to consume it, it is usually not possible to exclude others.
  2. Because of the non-rival nature of a public good, it can be “infinitely consumed", which means that ideally, one should just pay a price close to zero. Therefore free market economic model would not support production of such goods. This will be done by the government using compulsory taxation and enforcing coercive laws.

Analysis

Causes of lack of skills:

  1. Employers: They under-invest in the training. That’s because once a worker gets adequate training, his market value increases tremendously and he can be poached by another competing employer who did not have to “invest" in that worker’s skilling.As a result, collectively, the entire industry ends up under-investing in skilling, leading to an aggregate skills shortage and low productivity.
  1. Workers: They cannot themselves acquire skills through private skilling academies, because most workers cannot afford the fees that such private academies would charge.
  2. Banks: If the workers take up loan to pay for skilling academies, such loans would have no collateral and can lead to large defaults and non-performing assets for banks.
  3. Government:
    1. The setting up of the National Skill Development Corporation (NSDC) in 2008, or the launching of the Pradhan Mantri Kaushal Vikas Yojana is the government effort in the direction. But the policy is still far from achieving its intended result.
    2. Working in Public-Private Partnership model, the NSDC looks at imparting skill and vocational development training through the various Sector Skill Councils (SSCs). Their entire focus seems to have been on the implementation of the PMKVY without regard to whether it will really meet the exact skill needs of the sectoral industry or turn out skilled manpower of global standards or persons that would get placed after the training.

Improvements after skilling of workers:

  1. Skill development is an important driver to address poverty reduction by improving employability, productivity and helping sustainable enterprise development and inclusive growth. It facilitates a cycle of high productivity, increased employment opportunities, income growth and development.
  2. The success of the major programmes of the current Government viz; Make in India, Digital India, Smart City, Namami Gange, Swachh Bharat depends on the success of the Skill India Mission in skilling and reskilling 460 million by 2022.

Vision behind skilling the workers:

Countries that have succeeded in linking skill development to gain in productivity, employment and development have targeted skill development policy towards three main objectives:

  1. Matching supply to current demand for skills: Relevance and quality of training matching the provision of skills with labour market demand requires labour market information systems to generate, analyse and disseminate reliable sectoral and occupational information, and institutions that connect employers with training providers.
  2. Helping workers and enterprises adjust to change: Learning new skills, upgrading existing ones and lifelong learning can help workers to maintain their employability and enterprises to adapt and remain competitive.
  3. Building and sustaining competencies for future labour market needs: A long-term perspective, anticipating the skills will be needed in future and engendering a virtuous circle in which more and better education and training fuels innovation, investment, technological change, economic diversification and competitiveness, and thus job growth.

Way Forward:

  • Present scenario: Human capital formation is suboptimal in the aggregate, taking the nation downwards in the growth trajectory.
  • Future awaiting: When the average level of education and skills in society increases, it results in better quality of jobs, incomes and standard of living for all, not just the skilled persons themselves.
  • Government efforts: They can use technology to automate, improve and scale training and certification approach of skill-based training. By creating better linkages between the many stakeholders in the process and establishing key deliverables and a clear chain of accountability would help make such training programs more effective.
  • Improving the Education level of the Labour Force: The universalization of elementary education has improved the enrolment to the upper primary level. However, there is sharp dropout after that. The school dropouts needs to be provided the second chance to acquire basic numeracy and literacy skills to move them out of low paid unskilled work in the informal economy.
  • Strengthening Private sector participation: Given that target to be achieved is huge and resources with the government are limited, there is urgent need to incentivise industry to be to either set up training institutions in PPP mode in industry clusters to facilitate availability of trained manpower for big and MSME units or to adopt existing government ITIs and Polytechnics.
  • Proactiveness by private sector: The private industry chambers should come together and agree to train and skill their own workers, and also have a non-poaching agreement. This will ensure the retaining of skilled workers who have value added to them compared to as they joined.

Learning Aid

Practice Question:

According to NSSO’s 68th report, only 4.7% of the workforce had formal skill training. Discuss the causes for low skill rate in India and government’s efforts undertaken to improve it. How can the nation pace on track of development by skilling workers?

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