Welcome to my website.

Here I offer perspectives on a wide range of topics - politics, economy, current affairs and life in general.

India's Unemployed, Unemployable & Unskilled | Midweek Matters 23

18-08-2021published_dt 2021-08-18T05:19:29.894Z18-08-2021 10:49:29 IST
Updated On 18-08-2021 10:56:29 ISTmodified_dt 2021-08-18T05:26:29.860ZUpdated On 18-08-20212021-08-18T05:19:29.894Z18-08-2021 2021-08-18T05:19:29.894Z - 2021-08-18T05:26:29.860Z - 18-08-2021

Hello and Welcome

To Midweek Matters.


A couple of weeks ago I spoke to you about BJP's population politics and India's population policy. Today I want to return to the population question and examine it from the point of view of demographic dividend. I would also look at the employment and unemployment figures that came out a few days ago, and also place the demographic dividend in the context of our population's skills and labour participation rate. 


The demographic dividend that India enjoys today is incomparable. About 54% of our population is below 25 years of age. In fact, we are in a unique position in the world. Union Government's policy documents and pronouncements from 2015 reveal that it is aware of the promise this holds for the country. The policy documents also tell us that the government is aware of the challenges the nation faces in harnessing this dividend. However, that awareness doesn’t seem to prevent the ruling party from pursuing politics that can potentially obliterate the demographic dividend that The country enjoys today. And what is worse, the pursuit of this politics runs counter to the government's declared policy of bridging the skill gap. Today I will dwell on these issues.


On the one hand, the government in its public documents, affidavits submitted to the Supreme Court, and policy pronouncements says that india doesn’t need a policy to limit the family size. It told the apex court that it is against any coercive policy in this regard. It says that the population growth along with the total fertility rate is on the verge of replacement rate. Strangely, on the other hand, the Prime Minister says from the ramparts of the Red Fort that population growth is a cause for concern. The state governments run by he BJP begin to implement Population stabilisation policies mainly aimed at the imagined rise of Muslim minority birth rate. Data that I examined a couple of weeks ago clearly told us how false the ruling party's claims in Assam and Uttar Pradesh are. And how in the country as a whole total fertility rates across the religions are rapidly declining. But the BJP bashes on regardless.


Government documents, and policy pronouncements proudly announce the massive demographic dividend. The documents also talk about the challenges that the demographic dividend pose if skills are not imparted to our young population. But since 2015, the union government has hardly showed any seriousness about Skill Development. Skill India slogan has remained just that, a slogan without any meaningful action. 


Let us begin by looking at the structure of India's demography. More than 62% of our population is in the 15 to 59 years age group. That is, in the working age group. About 54% are below 25 years of age. The population pyramid is expected to bulge at the 15-59 years slab in the coming decade. As I said, we are in a unique position in the world. There’s one more important thing that is in our favour. In the next 15 to 20 years, the labour force in the industrialised world is expected to decline by about 4%. But in india, it is going to increase phenomenally, by about 32%. No only do we enjoy a huge demographic dividend today, but it is also going to last until at least 2040, maybe even up to 2050.


Our median age is going to be 31 years in 2025, and 38 years in 2050. The US median age is going to be 40 years and 42 years for those years. China's is going to be 39 and 44 years. Japan's is going to be 50 and 53 years. Europe's 45 and 49 years for 2025 and 2050 respectively. It means india is going to remain much younger even up to 2050 compared to the other major economies in the world. We have the potential to outperform every economy and emerge as the biggest wealth producer in the world. 


However, 32% increase in the country's labour force means nothing if the labour force is not skilled. They will not only be unemployed, but unemployable. At best they will be underemployed or deployed in the least productive way. The world of work has been rapidly changing for the last decade or so.


The Covid 19 pandemic has further accelerated the pace of change. This rapidly changing world of work demands completely different skill sets. The days of joining a job after college, and retiring after 30 odd years without any learning are over. In the emerging scenario of work an average a person is required to undergo training and upgrader their skills at least 7 times before they retire. If it’s Research & Development for industry, it’s Learning & Development for individuals.


Although we enjoy a massive demographic advantage compared to the rest of the world, our labour force hopelessly lags behind in skills and training. Only about 5% of our labour force has undergone any formal skill training. Compare that to 68% in the UK, 75% in Germany, 52% in the US, 80% in Japan and 96% in South Korea. That tells you that a 32% increase in our work force will yield little advantage to us if our skilling remains at an abysmally low level as it is today. 


Now, let us look at the government's own estimates and projections of the skill gap. By next year, that is 2022, there’s going to be a shortage of about 150 million skilled workers in the infrastructure. 35 million in auto and auto components sector. 33 million in building and construction. 26 million in clothing and textiles. About 18 million in transport and logistics. Another 17 million in organised retail. Nearly 14 million in real estate services. Around 13 million in healthcare. About 10 million in food processing, and 6 million in education. If the skill gap continues, people will be available but they will be unskilled and unsuitable, and therefore, unemployable. If employed, they will be less productive and bring down our global  competitiveness in those sectors.


In October 2018 the government of India in partnership with World Economic Forum and Infosys has constituted a Closing the Skills Gap Task Force. It is supposed to involve 50 to 100 corporates and other groups in the civil society to develop an action plan and priorities to address the current and emerging skills gap. The workings and progress achieved by this Task Force are as yet unknown. The annual reports of the Ministry of Skill Development do not talk about the Task Force. The Task Force announcement was perhaps for a day's headlines.


The National Policy on Skill Development and Entrepreneurship 2015 declared as its objective that   25% of the country's schools will integrate skilling with formal education by 2020. But the government hardly has any progress to report on this score. After the declaration of intent made a splash in the media, its utility seems to have been over. The policy document was buried no sooner than the gala event concluded. The latest Annual Report of the Ministry of Skill Development and Entrepreneurship doesn’t even see it fit to mention it. I’ve given a link to the Report in the description below. Please take a look at it.  


The latest India Skills Report 2021 came up with disappointing findings. Among the formally educated, employability is less than 50% across the board. About 47% of B Tech, 47% of MBA, 43% of BA, 40% of B Com, 30% of BSc graduates are reported to be having employable skills. Only 22% of MCA degree holders are employable. About 75% of ITI pass outs do not possess employable skills. It’s 67% unemployability among our B Pharma graduates. If you add other sectors too, it’s estimated that nearly 65 to 75% of the 15 million young people who enter the labour market every year are unemployable. It’s reported that 53% of Indian businesses could not recruit in 2019 owing to lack of skills. That’s even before the pandemic. ILO forecasts that India is staring at a prospect of massive skill gap by 2030. Accenture estimates that we are likely to lose about 1.6 trillion dollars in terms of GDP because of skill gap.


Now let’s turn our attention to the current employment and unemployment scenario. CMIE's latest data show that 399.38 million people are employed in the country, both in salaried and non-salaried jobs. By end of July the unemployment rate is 6.95% with 8.


3% unemployment in urban areas and 6.4% in rural India. Labour Force Participation Rate showed a rise of less than 1 percent, from 39.57 to 40.17 from June to July. Just 0.6%. But a large portion of even that tiny bit is absorbed by the unskilled, low paying, low productivity jobs in the agriculture sector. And July is the season when agriculture temporarily absorbs huge labour force. Once the season is over, these jobs disappear from the sector. Another distressing signal comes from the core sectors. There is a significant shedding of jobs in manufacturing and mining. Both the sectors where some skills are required. Service sector absorption remained unchanged. A bulk of the labour force is either unemployed, or employed in the less productive tasks, or unemployable due to absence of skills. 


While the Government of India ignores its own data on population and policy declarations about the skill gap, the ruling party at the centre and in various states where it is in power is busying itself with creating a phobia among the Hindu majority about minority population explosion. Instead of celebrating and harnessing the demographic dividend across religions and regions, its agenda seems to be to create and deepen communal divide and unleash base political animal spirits for winning elections. This short sighted agenda will only spawn armies of vigilantes roaming the streets that are ready to respond to dog whistles of some obscurantist religious and political persuasions. And will only result in weakening our efforts to make ours a 5 trillion dollar economy.


With less than 5% of trained labour force, a noble intent like Atmanirbharata will remain an empty slogan. Without a sincere attempt to Skill India, slogans like Make in India, Stand Up India, Start Up India, Digital India sound farcical. They were useful for headline management for a day or two. But the cruel insincerity behind those catch phrases has now begun to show. Governance is now increasingly showing that election promises were merely a comical snake oil sales pitch. Why will a government sincerely committed to Shrestha Bharat need a communal divide to win mandate? Why will it require to subvert institutions? Why will it need to snoop on its citizens, opposition political leaders, journalists, it’s own ministers and ruling party leaders? Why will it need the help of a Pegasus. 


A Shrestha Bharat and an Atmanirbhar Bharat is a skilled Bharat, with skilled people of all religions, regions and languages. Not just of a preferred religion, some regions and a favoured language. The question, therefore, is what stops the union government from waking at least now to the urgent need to Skill India? What stops the government from working for a common future of all the sons and daughters of India?


That’s all for this week.

Will be back again next week, Wednesday, lunch time at 1:00 o’clock.

Stay safe and do take good care of yourselves and all your loved ones. 

Until then, Bye.