Compare the target of skilling 90 lakh persons in FY14—and 5 crore in the 12th Plan—that finance minister P Chidambaram spoke of in his Budget speech, with the 4 lakh or so that the National Skills Development Corporation (NSDC) hopes to achieve in FY13, and it’s obvious there is a yawning gap. This, despite the fact that NSDC has itself ramped up quite rapidly—it has, it says, met its yearly targets—from around 20,000 persons receiving skilling from its training partners in the first year of its operations to 1,80,000 persons in the second year and a likely 4,00,000 this year. So, if the model is scalable, and by now NSDC has got its various skills councils—to set an agreed skilling curriculum based on industry’s needs—in place, what are the big issues that face NSDC? Three years after NSDC first began choosing its partner organisations—and after it experimented with various types of formats from equity grants to soft loans—the biggest learning of its skilling partners is that it is next to impossible to find people to skill in anywhere near the required numbers.
While this is why the finance minister announced a reward of R10,000 for every person who passed an exam after getting skilled this year—it’s not clear if this is to be extended in scope over the years. Whether this will fix NSDC’s biggest problem is not clear, but the reason people are not queueing up to get skilled is another big mindset issue that needs tackling. Rising wages in rural India, and MGNREGA has been a contributing factor here, has meant people are not rushing to urban areas from rural ones. Industry constantly complains of not getting enough skilled workers but, as NSDC’s partners will aver, few firms are willing to pay a premium for skilled/trained workers. With industry not willing to pay, the demand-pull for NSDC skills is weak. And the reason why industry is reluctant to pay more is that (a) it has enough of a pool of lower-paid unskilled workers and (b) industry doesn’t want to invest in skilling if workers are going to be expecting significantly higher wages immediately. A good example of this is Maruti Suzuki where temporary workers wanted wage parity with full-time employees.
This is where the Apprentice Act that the Economic Survey spoke of comes in. In countries like Germany, where 75% of all people under 22 have served as apprentices, even after formal training, apprentices have a graduated scale of reaching salaries earned by full-time employees. The flexibility this gives makes industry want to hire more apprentices. In India, thanks to inflexible apprentice laws—to prevent, it appears, industry from hiring cheap labour under the guise of an apprentice programme, the Survey says—just 3 lakh apprentices are employed. Apart from reworking India’s Apprentice Act, NSDC will obviously need to relook its model and the government its incentives—perhaps staggered payments to skill providers linked to every month skilled staffers stay on board, or continued skilling programmes linked to salary hikes? Whatever the government decides, what’s clear is that business-as-usual is simply not an option.