Why Skilling Is Essential For Job Creation

Neeraj, from IIT-Delhi, this year got placed in Microsoft company with an envious salary package. After graduating from a prestigious university and having consistently performed well in college, it was only obvious that there wouldn’t be any lack of job opportunities for him. Neeraj is one of the few fortunate young graduates who did not have to get anxious about getting a good job after graduating. Not everyone is that fortunate though.

“Around 54% of the Indian youth is not employable” Indian Skills Report, 2019

One of the biggest reasons for more than half of the country’s youth being unemployable is lack of skills possessed by them. Most of the graduates are just not job ready.

Why is skilling so important? 

• High unemployment rate- Unemployment was at 45 year high when the Periodic Labour Force Survey Report came out in 2019. The situation only got exacerbated by the Covid pandemic which threw millions of people out of their jobs.

• Demographic dividend- It refers to the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working age population is larger than the non-working share. According to the US Census Bureau, by 2025, India will have the largest population in the world belonging to the working age category. But to reap the benefits of this demographic potential, the country will have to take up skilling of its youth in a mission mode.

• Shift towards innovation- We are witnessing a major shift towards adoption of new technologies like Artificial intelligence, automation, quantum computing, electric vehicles. Although these innovations will create many new jobs, they have the potential to destroy even more of them. WEF Future of Jobs Report, 2020 states that in contrast to previous years, job creation is slowing while job destruction accelerates. To avoid this scenario of job destruction, current employees will have to be upskilled to adapt to the changes brought by these technological developments.

Challenges on the skilling front

Even though the need for having a skilled youth population has been asserted many times before, nothing much has changed over the past few years. The Indian government has launched various schemes like Skill India Mission and PM Kaushal Vikas Yojana, yet employability of the Indian youth has remained stagnant for the last 3 years. 

There are various reasons for this. 

• Inadequate funding by the government- There was a drastic cut in the amount allocated to the Ministry of Skill Development and Entrepreneurship in 2019 due to underutilization of funds allocated to it. This meant lack of funds to the ongoing and new skilling schemes by the government.

• Poor industrial interface- There’s not enough quality academic-industrial collaboration due to which the majority of the graduates doesn’t possess skills required by the industry. 

• Low RoI- Since most of the inexperienced and newly recruited employees don’t possess industry specific skills, companies have to invest heavily in training them. The return on such investment is not always high.

• Lack of tools to measure Return on Investment of upskilling and reskilling employees- Businesses lack tools to measure RoI of skilling and reskilling their employees.

 “Frameworks to track the value of human capital, to determine a re-investment strategy  for human capital through redeployment, reskilling and upskilling, as well as to account for return on investment remain nascent” points out WEF

What can be done?

To address these challenges, what is needed now is a multi stakeholder approach.

• Industry should be incentivized to set up training institutes in PPP mode. This will not just upscale fundings but will also upgrade the quality by imparting those skills which are required by the industry and will make the youth more job-ready.

• Businesses need to develop tools to measure return on investment of skilling and reskilling the workforce. That will direct the skilling exercises taken by them in the right direction.

• As WEF suggested, companies broadly classed as EdTech and reskilling services companies can support the process of redeploying the workers into the jobs of tomorrow. Such companies utilize advanced data and AI capabilities matched with user interfaces that guide workers and managers through discovering possible pathways into new job roles.

• Public Coursera- Coursera is a popular website which provides courses on several courses. Government can take inspiration from it and can create a similar platform to provide skills at affordable rates, if not for free. 

Skilling the youth is absolutely essential for any country but equally important is reskilling of the existing workforce without which skills gradually become redundant and there can be a decrease in workforce engagement.

Efforts need to be strengthened between companies looking to support their workforce, governments willing to fund reskilling and professional services firms that can map potential job transitions or provide reskilling services.