Skill Development for a Competitive Economy in India

Skill Development for a Competitive Economy in India: Anticipating and

Matching Labour Market and Skills Needs

Introduction

With an increasing global competition, rapid technological intensification and

highly young population, skill development for an advanced and competitive India

has come to the forefront of policy debates. It’s high time for India to invest highly

for providing learning opportunities for all sections of society, because India has

a great shortage of skilled workforce in all sectors. From the time of

independence, various policies have taken to reduce the gap between rich and

poor through the provision of literacy programmes. Till now we have seen various

educational reformations for the betterment for educational standards of youth

and adult who are out of schooling provision. But, evidences show that our

society faces an acute problem of unemployment which is the direct cause for

the poor living standard of people.

Global economic crisis have caused several economic and social challenges in

both developed and developing countries by lowering industrial production,

slowing exports, increasing unemployment rate, serious drop in investments etc.

Interestingly, the recent trends of Indian economy show that the country is less

adversely affected by the negative shocks of the global economic crisis because

of limited integration of financial markets and serious global checks over growth

and investment spending in export-oriented sectors (Pradhan, J P, 2009: Ghosh,

J, 2009). Though the financial sector does not have serious short-term impacts, it

is an opportunity to look into other development sectors, especially social welfare

services (education, health etc.) because a joint report by the United Nations and

the Asian Development Bank (ADB) warns that the global economic crisis could

trap an additional 21 million people in the Asia-Pacific region in extreme poverty,

living on less than $1.25 a day (UN-ADB Report, 2010).

India is a country with vast resources, both natural and human resources. But,

sad to say that we are unsuccessful in utilizing these resources. Statistics shows

that IT sector can gain a lot for India by providing best services and new

technologies. Together with IT, other areas of service sector also boost up the

economic strength. But we are unable to compete with other international giants.

Because we are acknowledging only less than one fourth of our capacities. If we

have better plans and programmes for a better human resource management,

India would grow fast. To that end, we need to develop more ‘education power

houses’, which would equip the unskilled and under-privileged.

Indian economy is considered as one of the fastest growing economies globally.

In addition to a steady growth pattern, India is going to become a super power

with its high-tech talents. One of the greatest advantages for the Indian economy

is the sustained growth of the workforce population. It is estimated that from a

77.5 crore in 2008 the Indian working population is expected to increase to 95

crore in 2026. This trend is so significant when we compare the graying economy

in all Western and European countries. It is also reported that by 2020, the

average Indian will be only 29 years old, compared to 37 in China &US, 45 in

West Europe and 48 in Japan. The crucial point here is to sustain a skillful and

competitive labour force though better education and other learning programmes.

Education and Development

In development literature, education is considered to be an important factor for

socioeconomic development because ‘we live in an age when there is great

optimism about the power for education to influence the well-being of individuals

and nations’ (Lauder, 2006). Modern society has benefited more from education.

But at the same time there are social problems which may prevent education

being given to all. Social and economic growth will be at a risk without basic

education. ‘Educational equality is treated as one means of reducing economic

and social inequality’ (Singh, 1997). As a social process, education helps to

achieve social cohesion and equality in society. Therefore, acquiring ‘education

for all’ has become the primary concern in the process of growth and

development for all developing countries. In addition to the country-wise

planning, achieving universal primary education has become the second most

objective of the Millennium Development Goals (MDGs) of the United Nations

(2007).

Since education and skill formation have helped technological development,

policy makers have understood the role played by education in imparting

information to the society for all-round development. ‘The education and training

of men and –although often neglected- of women contributes directly to

economic growth through its effects on productivity, earnings, job mobility,

entrepreneurial skills, and technological innovation. In addition, education has

important indirect effects, as female participation in schooling slows population

growth and spreads better health and nutrition and practices’ (Aggarwal, 1990).

Experiences from the development patterns of many Western and European

countries reveal the fact that if education is properly imparted, socio-economic

growth and equality can be attained. The development process of the Asian

Tigers also shows that proper economic and human capital policies and practices

enhance the society.

In social science research, there is a strong link between investment in education

and economic growth for both individuals and countries and more stress is given

for a reasonable investment in education and training in response to

technological advancements (Denison, 1962 in Rubenson, 2006). In countries

like India, with plenty of human resource, increased investment in education is

essential to boost-up the growth and development. According to Dreze and Sen

(2002), ‘development is the creation of freedom and opportunities- freedom in the

form of literacy, social and cultural freedom and opportunities for economic

development’. Education is, therefore, been regarded as an important agent of

rapid growth with equity. While explaining the reasons for East Asian ‘economic

miracle’, Andy Green (2007) has pointed out five areas such as: culture,

geography, geopolitics, historical timing and policies, the latter including both

economic and social policies, including education, the most prominent are those

which focus on economic and human capital formation policies.

There have been several educational programmes in India, even from a precolonial

period. Though those programmes were to impart education to people, a

system was developed to create privileged people with better information, where

the majority was unable to access education. Even today, our education system

supports those who are able to access. Though the accessibility is a crucial

point, it is also important to look into the quality of education that the state is

providing. At present we have a high rate of unemployment. In addition to a high

unemployment rate, our system also faces high rate of drop-out and also a

similar situation of out-of-school symptom. These occur even when we have

several programmes to attract students to schools. It is now right to evaluate our

educational programmes to know whether our system produce pupils according

to the needs of the society. An examination of these trends would indicate a fact

that there is a lag between the supply and demand of skilled people.

While Indian economy is progressing, the needs of the society and the demand

of the economy would also change. Our educational system should also provide

skilled and competent man power to face these radical changes. For that we

need more learning programmes to equip all sections of the society. Vocational

education and training programmes should get adequate consideration and the

importance can only be understood if there is a proper mechanism to study and

anticipate the labour market needs. In order to maintain an inclusive society,

lifelong learning programmes should also be given prominent importance.

According to OECD report ‘at a time when it is so important to invest in

knowledge, skills and capacities that are relevant to economies and societies,

particular pressures will be faced in those systems which rely on a major

component of work-based training as part of vocational education and training at

the secondary or tertiary levels’ (OECD, 2009).

For a sustainable development process, we need a system to identify and

anticipate labour market needs. At present we have only programmes to identify

and provide skills. Since the need of the economy is changing, the needs of the

changing situations would be different from now. Then the skill and capacities of

the personnel would be different. In order to understand the development

process and the emerging needs, we need a system to anticipate and plan such

educational programmes. ,A windfall awaits those looking for lucrative

employment avenues with just four sectors --IT, telecom, banking and healthcare

-- expected to generate over five lakh jobs by March next year’, says experts

(Indian Express Finance, 2010). Experts continue to say that ‘at various global

consulting firms, financial year 2010-11 comes with huge job opportunities across

sectors and different hierarchical levels in companies’.

Skill development for a competitive economy

Skills matter: skills mean employability and mobility. They are critical drivers of

economic and social growth. A strong skills base is pivotal to jobs, to productivity

and to our national prosperity. Together with the provision of learning new skills,

skills upgrading and acquisition of new skills are very important. To support the

young economy, our educational institutions (power houses) need to impart

knowledge and skills for a rapidly changing economy and society. Education has

always been a critical investment for the future, for individuals, for economies

and for societies at large (Ischinger, Barbara, 2009). At present, India requires

various lifelong learning programmes to support the growing number of workingage

people. A lifelong approach for India is relevant thorough planning updated

educational opportunities for children, vocational education and training for those

who are out-of-school provision as well as to for those who were unable to learn.

Towards an aim of preparing a skilled manpower, the Government of India has

set up National Skill Development Coordination Board (NSDCB).The broad

objective of this board is the ‘creation of a pool of skilled manpower in numbers

with adequate skills that meets the employment requirement across various

sectors of the national economy’, (Planning Commission, 2009). There are

several boards and commissions to prepare skill development programmes and

the vision for this initiative is as follows;

Massive Ambition: Our aspirations must exceed our current resources.

Our vision should create 500 million skilled people by 2022.

 High Inclusivity : We must design the skill system for inclusivity and to

deal with the divides of gender, rural /urban, organized / unorganized

employment, and traditional /contemporary work place.

Dynamic and Self-healing: The system must be designed so that supply

(trained candidates) adjusts dynamically to changes in demand.

For a dynamic, inclusive and a competitive economy, we need to promote

learning programmes to impart needed skills and competences. Systematic

approach to understand the needs of the society would help us to understand

that we have to prepare both students and working class community. Because,

our society is rapidly changing where opportunities would be available for all.

Skills are important for the Indian economy due to several reasons:

Economic reasons: to make the economy more competitive and advanced

- we need high quality and more innovative products delivered by higher

skilled people

- we need to encourage creativity and entrepreneurship

- we need economic restructuring (for a recovery from crisis)

- to solve the skill mismatch in the labour market

- to absorb the opportunities in the high-tech market and to strengthen

the economy with new business opportunities

Social reasons: to maintain social cohesion

- most of the people are not sufficiently skilled (1.3 million unskilled and

unqualified school dropouts and illiterates), therefore it is very

important to provide opportunities for low skilled people to upgrade,

adapt and widen their skills portfolio

- only one forth of people have high level qualifications and at the same

time they are likely to upgrade their skills and follow lifelong learning

Demographic trends: for an inclusive society

- Indian society is benefiting the demographic dividend (with more than

50 per cent of working aged population), therefore suitable and

relevant skills need to be imparted.

- Among the workforce of 400 million, 30-35 percent is female, and

within this section, only 20 percent work in urban India particularly in

the IT BPO Industry, therefore more gender participation is inevitable

for a sustained and equitable society.

Together with the socio-economic and demographic trends, there are some

specific reasons which promote the need for ‘right’ SKILLS.

Skills;

- for a productive and satisfactory work

- moving us out of recession into recovery

- best guarantee of our ability to sustain our growth and secure

lasting economic success

- important for personal development and well-being

- adds to employability- better paid work + productive and

Satisfied

Suggestion to anticipate labour market needs

From the above said facts it is evident that Indian economy is growing steadily

and rapidly but the prosperity would be sustained only with the support of a

skilled labour force. It is also evident that we have a powerful labour force and a

functioning system but we lack something. After a systematic analysis of the

present status, I have found that we lack a co-ordination of academic institutions

(those who are providing skills) and the labour market (employers who absorb

the skilled personnel). It is also understood that the existing educational

institutions are not providing the employable or necessary skills. Therefore, I

would like to argue for a system for matching and an anticipating labour market

and skills needs.

Why a matching of labour market and skills needs is important? It is so important

because the present statistics depicts the fact that the unemployment rate is

rapidly increasing and many lose jobs. At the same time there is an increased

growth of performances of the secondary and the tertiary sectors of the economy

(especially the service sector). It shows a mismatch with the demand for and the

supply of skills.

Why an anticipation of labour market and skills needs is important? The growth

and development pattern of the Indian economy and society clearly depicts that

we need to be prepared for the future, more specifically, anticipation of skills for a

better labour market. The economy is growing and will be so competitive in the

coming years. Therefore it is important to analyze the trends of growth of

different sectors and to anticipate new and important skills suitable to the

emerging market.

References

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Comparative Study of Education for All By 2000 AD and National Policy on

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Era: Strategies for Successful Globalization. (Department for International

Development: Educational Papers, UK).

Indian Express Finance (2010) ‘Jobs galore in FY 2010-11’, Sunday April 11,

07:40 PM Ischinger, Barbara (2009) ‘Investing and Innovating in Education for Recovery’ in

Education at a Glance

Lauder, H, Brown, P, Dillabough, J and Halsey, A.H (2006) Education,

Globalization and Social Change (Oxford University Press: UK).

OECD, 2009, Globalisation and emerging economies, Policy Brief

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DEVELOPMENT

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