Dr Raj Nehru
India’s labour market has undergone significant changes over the past two decades. From 2001 to 2021, the employed workforce grew by 105 million, from 382.3 million to 487.4 million. However, the working-age population (15-64 years) increased by 294 million, from 656 million to 950 million during the same period. This discrepancy highlights a pressing issue: despite an increase in the employed workforce, the rate of unemployment has also risen. According to the Centre for Monitoring Indian Economy (CMIE), the overall unemployment rate in 2023-24 stands at approximately 8%, up from 7.4% in 2016-17.
Educational advancements are evident, with the Gross Enrolment Ratio (GER) rising from 10% in 2001 to 28% in 2023. However, this improvement in enrolment has not translated effectively into employment, and as per India Skills Report 2024, 50% of graduates are deemed unemployable by industry standards. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) has trained 13.7 million youths, yet only 22% have secured placements, raising concerns about the quality and relevance of training provided.
Self-employment remains the predominant form of employment, accounting for 55.8% of the workforce in 2022. This category has grown by 66% in the past five years. Casual and regular employment represent 22.7% and 21.5% of the workforce, respectively. Despite the high engagement in self-employment and the informal sector, which comprises 82% of the workforce, the quality of employment remains poor, with 90% of informal workers experiencing low job security and stagnant or declining wages. Self-employed individuals earn an average monthly income of Rs 11,973, regular workers Rs 19,010, and casual workers Rs 8,267. Furthermore, wage disparity persists, with women earning about 40% less than men for similar work.
Prime Minister’s laudable effort of Viksit Bharat can be further augmented by promoting labour-intensive sectors where the Employment Elasticity Index (EEI) is higher. It is crucial to push for the creation of productive non-farm employment and to support MSMEs. Formalizing employment in the informal sector and focusing on rural job creation, including investing in the development of rural industries, present substantial opportunities for job generation. Additionally, it is essential to invest in enhancing the quality, monitoring, and delivery systems of skill and vocational education.
Notably, the Prime Minister has already taken significant steps such as the implementation of the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) for skill development, the Start-Up India initiative to support entrepreneurship, and the MUDRA Yojana to provide financial assistance to small businesses. These initiatives have laid a strong foundation, and with targeted efforts in labour-intensive sectors and rural job creation, we can drive significant employment growth and contribute to the vision of a developed India. As a Vice Chancellor of Skill Development University where we work very closely with industry and labour market and handle both demand and supply side, some suggestions below will surely help India to move faster towards achieving its objectives.
India needs to establish a robust, digitally enabled Labor and Learning Information Management System (LLIMS). This platform, beyond consolidating national labour, skill, and job-related information, can assist individuals in self-assessment, career choices, skill development, and connecting with employers. It should support local languages and act as a transformative tool to unlock potential and dynamically connect users to the real world of careers and employment, especially given the rapidly changing shelf life of skills.
Most surveys indicate that 87% of respondents desire internships. To address this demand, we propose increasing the National Apprenticeship percentage from 15% to 25% for MSMEs, especially in labour-intensive sectors, and raising the stipend by 25%, from Rs 1500 to Rs 2500. This would require an additional impact of approximately Rs 3000 crore if targets of apprenticeship have to double from 7lac to 15lac. Furthermore, certain regulations should be implemented to link the increased apprenticeship percentage to job conversion rates by the industry. Extending social security benefits such as ESIC to apprentices during their training period is also essential. Additionally, a Seed Fund body, modelled after the Provident Fund, should be created with contributions from employers, apprentices, and the government. This fund can provide exiting apprentices with the initial capital needed to start small businesses or pursue self-employment opportunities, immediately after they complete their apprenticeship.
The data shows that NSQF/PMKVY trained youths placement is at 22%. It is strongly recommended to align Recruitment rules to recently announced National Credit Framework. It will improve the employability of NSQF trained and certified youths by making these vocational certifications aspirational. This will also improve the enrolment NSQF/PMKVY trainees into National Apprenticeship Promotion Scheme.
Reports are indicating that Skill Training Centres across India has reduced from 12k to 1k. National Capacity for Skill Development needs to be increase. There are more than 53 Central Universities, 1243 Kendriya Vidyalayas. Create a mandatory skill development fund for all central government run academic institutions to offer need based NSQF aligned Skill and Vocational programs/ PMKVY programs, from their campuses (This should be based on local demands and local skill gap studies). Integrate vocational programs with mainstream education.
Life Long Learning Focus. Create a fund that encourages Recognition of Prior Learning. The incentivization in the form of wage loss component through DBT needs to be increase and match the actual loss. The current Rs 500 is too less for a worker to attend a 7-10-day RPL Training. These RPL camps must be run within government infrastructure that is available and can be offered in a flexible model including evenings after work to improve quality and supervision
Given that self-employment and informal sector has seen a significant growth of more than 60% in last 5 years, there is a need to improve the ecosystem for promoting quality of employment in this sector. Allocate fund to all central government run institutions to promote Entrepreneurial Development Centre (EDC). These EDC’s can focus on local needs and demands and facilitate entrepreneurial skills linked to such needs. Institutions should be asked to provide Gross Entrepreneur Ration (GER) as a measure for utilising these funds. A proportion of these funds can be offered to state universities as well, interested in promoting GER linked EDC
A direction needs to be issued to all education and training institutions to also examine the thrust areas where Government of India is making significant investments ( e.g Railways, Space Health, Defence, Agritech etc) and map and align their skill and vocational development budget, funds and initiatives to the same. A ratio between local and national can be planned accordingly.
Recent survey in India and International reports have highlighted that Artificial Intelligence will replace 60% of Jobs in next few years. Create a fund to establish 10 Technology Centre of Excellence ( a hands on skilling model) in PPP mode that focuses integration of AI ,Robotics, IOT, Cybersecurity related skills and prepare students and teachers for emerging Jobs.
Organised Taxi market in India is estimated to be $20 B in Fy 2023 of which 15% is with online cab aggregators. This market is expected to grow at the rate CAGR 6.6% in next 5 years and expected to become $27 B. A survey conducted indicated that taxi operators who are not with online cab aggregators reported 30% of their earning loss due to finding customers. Open Network for Digital Commerce (ONDC) is a good solution available. There is a need to create awareness and digital skilling to get this platform leveraged for this and other sectors that can be brought on digital platforms.
As per NITI Aayog, 77 lakh (7.7 million) workers were engaged in the gig economy in 2020-21 and the workforce is expected to “expand to 2.35 crore (23.5 million) workers by 2029-30”. A national policy on their social security can dress their concerns and fears where they would be entitled to fair terms of employment, wages, accident, health, retirement benefits which will be funded through contribution by the State and Central government as well as the platforms in a welfare fund be ensured through a law to encourage more youths to take advantage of their skills.
Incentivise Corporates to allocate their 50% of CSR funds towards skill and vocational education with a ration proposed below class 12th and above.
Incentivise public pvt setup of skill development universities, with the corporates involved from conceptualisation to execution. With no revenue for corporates other than a) their advertisement b) treating the expense as tax deductible c) allocation of seats for the employees and their wards. Such institutions should be within specified distance preferably in Tier 2 and Tier 3 areas, rural belts.
(The author is Vice Chancellor Shri Vishwakarma Skill University)
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