Skill vouchers: The next big thing for employability

By D. Dhanuraj

Centre for Public Policy Research

dhanu@cppr.in

The nation is going to polling booths to elect its 16th LokSabha and the debate is entrenched on the type and nature of the policies that would accentuate the economic growth that the new Government will adopt. The new buzzword in campaigning is ‘entrepreneurial climate’. Irrespective of the political ideologies, almost all of the political parties are trying hard to win over the young voters by promising jobs, investment friendliness and entrepreneurial climate once they are into power. Poll promises in manifestos need not be translated into the policy work in 100 days. It will be a huge challenge to convert the poll promises to policies in such a short spans, as it demands innovative action plans and out of box thinking. Any Government considering these poll promises as political agenda may not be able to achieve what the country desires.It requires comprehensive hand holding arrangements among all the stake holders to benefit the youth at large.

While various initiatives like Operation Black Board, Sarva Shisha Abhiyan, Mid Day Meal Schemes etc might have propelled to reduce the school drop outs, mere increase in numbers of the school enrollment does not reflect the quality and skills imparted in the education sector. It is more dismissive at the higher education level. More than 50 lakhs students are graduating in India every year.

[1]According to the findings of the ‘National Employability Report – Graduates (Annual Report 2013)’ by ‘Aspiring Minds’, the employability of graduates varies from 2.59% in functional roles such as accounting, to 15.88% in sales related roles and 21.37% for roles in the business process outsourcing (BPO/ITeS) sector. The issues are plenty at the recruitment level; poor English language skills, lack ofanalytical or cognitive skills etc,. The report also says, “Not more than 25% of the graduating students could apply concepts to solve a real-world problem in the domain of Finance and Accounting. On the other hand, on average, 50% graduates are able to answer definition-based/theoretical questions based on the same concept. This shows that even though students have got exposure to the concepts, they really do not understand them or know how to apply them”. This issue with the educated and college going students is only one sideof the coin.The other side of the coin is the less educated youth of employable age who also completely lack employability and skillability. On one hand the traditional and conventional channels of education fail to meet the demands of the industry, on the other hand, labour intensive sectors lack the suitable set of the employable youth of less education profile. India’s labour markets have been stuck for the last 20 years with 12 percent manufacturing employment, 50 percent self-employment, 90 percent informal employment and 50 percent agricultural employment.

The benefits of demographic dividend have been discussed widely over the last two decades. While the demographic dividend presents us with the huge pool of the man power, the economic slowdown has affected the job creation. The lack of employability is adding pressure to already dull job market to make things even more worse. With the thrust on the manufacturing sector getting dominance, ready to deployable labour force is essential for overall growth of the economy. In fact, The National Manufacturing Policy aims to create 100 million additional jobs in the next decade. Data shows that 10 lakh youth join the labour force every month for the next 20 years. If we don’t capitalize on this phase, the fruits of Demographic Dividend will remain as a distant dream.

The setting up of National Skill Development Corporation (NSDC) as a public – private partnership to train skilled work force is a commendable initiative by the Central Government. Its objective is to contribute significantly (about 30 per cent) to the overall target of skilling / upskilling 500 million people in India by 2022, mainly by fostering private sector initiatives in skill development programmes and providing funding. It has set up 29 sector skill councils at the regional level. Vocational Education and Training (VET)has been the major thrust area of the council over the years. But the success rates of these training programs are quite complex in terms of bench marking improvement in the learning outcomes of those undergone training. Moreover, it is in the clutches of the bureaucratic controls which focus onthe quantity over the quality in their process. There is no incentive for the individual training according the requirement and expertise demanded by the industry. The present structure limits the competition and choices among the students while incentives for the providers to offer focused results and placement oriented programmes is also missing. This scenario presents the idea of skill vouchers to put in practice for better and effective service delivery in the skill training program.

[2]A skill voucher is an instrument given to an individual or an enterprise which enables the recipient to sign up for VET from any education institute accredited with the provider of the voucher. Payment for tuition of the VET is made with the vouchers. The additional amounts are paid by top-up contributions made by the student/learner. Once training is completed, the accredited institution redeems the voucher from the Government. This would encouragemore private institutions whichare closer to the market activities to take up the challenge of imparting skill training for both highly and less educated youth.

The scheme can be more profound in encouraging the private companies to set up their own Finishing schools in their own areas of work. Students can join there and would be absorbed by the respective companies most of thetimes or by their counterparts. The benchmarking will be done by the recruiters while the trained students carry the brand logo of the private companies who trained them. This would be different from the Government offered skill training programmes where the gap between the industry and potential employment opportunities may still exist.

High growth areas such as manufacturing, automotive, retail, trade, transport, construction, hospitality and healthcare have the ability to provide the required expanded employment. Skill vouchers are better solutions to the grumbling about the poor quality of skilled labour, so that the private companies can invest tremendously in the training aspect as it is with engineering giant L&T now. This will help in potential demand driven innovations to meet the skill training required to meet the challenges on the employability front of the nextgen.

Article published in the magazine “Pallikkutam”, April 2014 issue
[1]NATIONAL EMPLOYABILITY REPORT GRADUATES, Annual Report 2013, Aspiring Minds
[2]Great potential of skill vouchers, http://jeevika.org/great-potential-of-skill-vouchers/

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