Skill Formation and Employment Assurance in the Unorganised Sector

Skill Formation and

Employment Assurance in

the Unorganised Sector

NATIONAL COMMISSION FOR ENTERPRISES IN THENATIONAL COMMISSION FOR ENTERPRISES IN THENATIONAL COMMISSION FOR ENTERPRISES IN THENATIONAL COMMISSION FOR ENTERPRISES IN THENATIONAL COMMISSION FOR ENTERPRISES IN THEUNORGANISED SECTORUNORGANISED SECTORUNORGANISED SECTORUNORGANISED SECTORUNORGANISED SECTOR

16th & 19th Floor, Jawahar Vyapar Bhawan,1, Tolstoy Marg, New Delhi-110 001

www.nceus.gov.in2009

December, 2008December, 2008December, 2008December, 2008December, 2008

National Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised Sector19th Floor, Jawahar Vyapar Bhawan, 1 Tolstoy Marg,New Delhi - 110001Website: www.nceus.gov.in

Earlier Reports of National Commission for Enterprises in theEarlier Reports of National Commission for Enterprises in theEarlier Reports of National Commission for Enterprises in theEarlier Reports of National Commission for Enterprises in theEarlier Reports of National Commission for Enterprises in theUnorganised SectorUnorganised SectorUnorganised SectorUnorganised SectorUnorganised Sector

1. Social Security for Unorganised Workers, May 2006

2. National Policy on Urban Street Vendors, May 2006

3. Comprehensive Legislation for Minimum Conditions of Work and SocialSecurity for Unorganised Workers, July 2007

4. Conditions of Work and Promotion of Livelihood in the Unorganised Sector,August 2007

5. Financing of Enterprises in the Unorganised Sector, November 2007

6. Creation of a National Fund for the Unorganised Sector (NAFUS), November2007

7. Report on Definitional and Statisticla Issues relating to Informal Economy,November 2008

National Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised SectorNational Commission for Enterprises in the Unorganised Sector19th Floor, Jawahar Vyapar Bhawan, 1 Tolstoy Marg,New Delhi - 110001Website: www.nceus.gov.in

Previous reports of National Commission for Enterprises in thePrevious reports of National Commission for Enterprises in thePrevious reports of National Commission for Enterprises in thePrevious reports of National Commission for Enterprises in thePrevious reports of National Commission for Enterprises in theUnorganised SectorUnorganised SectorUnorganised SectorUnorganised SectorUnorganised Sector

1. Social Security for Unorganised Workers, May 2006

2. National policy on Urban Street Vendors, May 2006

3. Comprehensive Legislation for Minimum Conditions of Work and SocialSecurity for Unorganised Workers, July 2007

4. Conditions of Work and Promotion of Livelihood in the Unorganised Sector,August 2007

5. Financing of Enterprises in the Unorganised Sector, November 2007

6. Creation of a National Fund for the Unorganised Sector (NAFUS), November2007

7. Report on Definitional and Statistical Issues relating to Informal Economy,November 2008

8. A Special Programme for Marginal and Small Farmers, December 2008

Previous Working Papers of the National Commission forPrevious Working Papers of the National Commission forPrevious Working Papers of the National Commission forPrevious Working Papers of the National Commission forPrevious Working Papers of the National Commission forEnterprises in the Unorganised SectorEnterprises in the Unorganised SectorEnterprises in the Unorganised SectorEnterprises in the Unorganised SectorEnterprises in the Unorganised Sector

1. Measure of Labour Force Participation and Utilization, January 2008

2. Contribution of the Unorganised Sector to GDP Report of the SubCommittee of a NCEUS Task Force, March 2008

3. Definitional and Statistical Issues Relating to Workers in InformalEmployment, January 2009.

ii

Preface

The issue of skill building has been at the forefront of policy debates in recent years. India can take advantage of

its young workforce and hence the demographic dividend, only if the workforce possess relevant skills and is

ready to seize the opportunities arising domestically as well as in the international arena. Several committees/

commissions/task forces have examined the issues related to skill formation and recommended to expand/

upgrade the skill building efforts. However, most of these recommendations have generally remained focused

on the formal sector.

It is in this context that the NCEUS has examined the issue of skill formation in the unorganized sector. The

Commission has carried out a detailed analysis of the socio-economic characteristics of the skilled and unskilled

persons based on the latest set of data from the Sixty-first Round of the National Sample Survey in 2004-05. It

is estimated that only 11.5 per cent of those in the age-group 15-29 have received (or were receiving) any

training, whether formal or informal. Only 2.5 per cent of total unorganised sector workers had formal training

while 12.5 per cent had non-formal training. In the organised sector, 11 per cent workers had formal training

and another 10.4 per cent had informal training. The Commission recommends the proportion of formal

training to increase from 2.6 per cent of the labour force as per the NSS 2004-05 Survey to reach a level of 50

per cent of the labour force by 2021-22. Those targeted would include potential entrants into the labour force as

well as the existing pool of workers whose skills require to be upgraded.

The Commission has examined the specific features of the skill formation process in the unorganized sector.

In this context, it has underscored the need to understand the heterogeneity of the informal sector in India,

which leads to a wide range of training needs, requiring analysis and policy formulation that is different from

that of the formal sector. The informal sector is highly heterogeneous and encompasses a wide range of

economic activities as well as people (i.e. workers, producers, employers) engaged in manufacturing/service

activities under several types of employment relations and production arrangements. Some basic questions

related to training and skill-building/ upgrading as applied to the informal sector, and which have been discussed

in detail in this report, concern such aspects as: training for whom, for what, what kind of training and how best

it can be provided.

The Commission has put forward a set of comprehensive recommendations for building a skill development

and training system that explicitly focuses on the expansion of Vocational Education and Training (VET) for the

informal sector workers who generally also have low levels of education. While doing so, we have deliberately

not focused upon systems of formal training primarily intended for organised sector workers with reasonable

levels of education. These systems of training are a subject of reform and have been discussed extensively in

other reports.

A major highlight of this report is the proposed scheme of Skill Formation and Employment Assurance which

provides entitlements to all registered youth in the unorganized sector to receive training through placements.

The scheme will provide employment to poor persons for about six months and impart to them formal marketable

skills. The scheme is intended for youth with at least primary but less than higher secondary levels of education.

Further, it is largely intended to cover the poor youth. In the first phase, urban areas with inadequate employment

opportunities may be focused. Pilot projects in some 50 non-metropolitan smaller towns with population

between 50,000 and 5 lakhs may be taken up. This may be followed by the other segments of the eligible

population, such as youth in the rural areas and larger towns. The financial provision per worker would be Rs

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10,000/- which would cover on-the-job training/employment, cost of certification and cost of training/incentive

to the provider/employer. The programme requires a one time financial outlay of Rs. 10,000 per worker, which

is the same as that provided under the NREGA. A provision of Rs 10,000 crores over five years for this project

would thus ensure additional training-cum-employment to one crore persons through this mechanism,

augmenting the present training capacity by 2 million per year under the programme. A higher budgetary

allocation would result in larger job creation. However, the success of the programme would crucially depend

upon motivating the existing and newly created administrative mechanisms to effectively implement this proposal.

The Commission has studied the major institutional developments in the field of skill development in the last few

months which has seen the setting up of the Prime Minister's National Council on Skill Development, the

National Skill Development Coordination Board under the Planning Commission, and the National Skill

Development Corporation under Ministry of Finance. These are welcome steps as they provide an institutional

backbone for formulating policy guidelines, channelling funds and ensuring coordination in skill building efforts.

The Commission is confident that the country will not let go the present opportunity and take forward the

programme of skill-building in a Mission mode. This will help the country achieve its goal of rapid and inclusive

growth.

Arjun SenguptaArjun SenguptaArjun SenguptaArjun SenguptaArjun Sengupta

Chairman

National Commission for Enterprises in the Unorganised Sector

New Delhi

April 24, 2009

iiiiii

Acknowledgements

The Commission wishes to acknowledge the contributions of a large number of persons in the preparation of

this report. The members of the Task Force on Skill Formation in the Unorganised Sector made a valuable

contribution by holding discussions and offering suggestions and written inputs. The Commission also benefited

by the discussions in the Advisory Board. District-level studies were carried out for the Commission by the

G.B.Pant Institute of Social Sciences, Allahabad, Debate, Bhopal, and North Eastern Development Finance

Corporation (NEDFI), Guwahati.

Officials of the Government of India, particularly the Ministry of Micro, Small and Medium Enterprises and the

Ministry of Labour and Employment provided relevant material and useful feedback to the Commission. Experts

in the India office of the International Labour Organisation (ILO) and World Bank helped the Commission by

providing information on a number of issues concerning skill formation, particularly the experiences of different

countries. Editorial support was received from Dr.N.K.Nair. The Commission takes this opportunity to thank

the above individuals/organizations.

We would like to place on record our deep appreciation of the contribution of the staff of the Commission

towards preparation of this Report. Shri J.D.Hajela, Director bore the main responsibility for co-ordinating all

the activities related to the preparation of this Report. Ms. Sumangala Damodaran, Consultant rendered valuable

support in the analysis and writing of this Report. Professor Jeemol Unni and Shri Biswajeet Saikia contributed

to the first draft of the Report during their stint as Consultants to the Commission. Excellent research assistance

was provided by Ms. Swati Sachdeva, Shri Ajaya kumar Naik and Ms. T. Shobha Singh. Shri S.V.Ramana Murthy,

Director provided critical assistance on statistical issues. Shri Savitur Prasad, Joint Secretary, Shri G.Sajeevan

and Ashutosh Mishra, Directors in the Commission, Shri G.Raveendran, consultant, Shri D.P.Singh and Shri

Suresh Kumar, Under Secretaries, and Shri H.S. Chhabra, Section Officer and the whole team of supporting

staff provided excellent services in the functioning of the Commission in general and the preparation of this

Report in particular.

Contents

Chapter/ No.Chapter/ No.Chapter/ No.Chapter/ No.Chapter/ No. Page No.Page No.Page No.Page No.Page No.

Preface.................................................................................................Preface.................................................................................................Preface.................................................................................................Preface.................................................................................................Preface................................................................................................. iiiii

Acknowledgements ...............................................................................Acknowledgements ...............................................................................Acknowledgements ...............................................................................Acknowledgements ...............................................................................Acknowledgements ............................................................................... i i ii i ii i ii i ii i i

1 .1 .1 .1 .1 . Introduction ..........................................................................................Introduction ..........................................................................................Introduction ..........................................................................................Introduction ..........................................................................................Introduction .......................................................................................... 11111

2 .2 .2 .2 .2 . Skill Formation, Productivity & Growth-Issues in a Developing EconomySkill Formation, Productivity & Growth-Issues in a Developing EconomySkill Formation, Productivity & Growth-Issues in a Developing EconomySkill Formation, Productivity & Growth-Issues in a Developing EconomySkill Formation, Productivity & Growth-Issues in a Developing Economy 44444

3 .3 .3 .3 .3 . Skill Profile of the Indian Workforce ......................................................Skill Profile of the Indian Workforce ......................................................Skill Profile of the Indian Workforce ......................................................Skill Profile of the Indian Workforce ......................................................Skill Profile of the Indian Workforce ...................................................... 1111111111

4 .4 .4 .4 .4 . International Experiences of Skill Development & Training ..................International Experiences of Skill Development & Training ..................International Experiences of Skill Development & Training ..................International Experiences of Skill Development & Training ..................International Experiences of Skill Development & Training .................. 3 73 73 73 73 7

5 .5 .5 .5 .5 . System of Skill Development in India .....................................................System of Skill Development in India .....................................................System of Skill Development in India .....................................................System of Skill Development in India .....................................................System of Skill Development in India ..................................................... 4 54 54 54 54 5

6 .6 .6 .6 .6 . Summary & Recommendations ...........................................................Summary & Recommendations ...........................................................Summary & Recommendations ...........................................................Summary & Recommendations ...........................................................Summary & Recommendations ........................................................... 7 27 27 27 27 2

References ...........................................................................................References ...........................................................................................References ...........................................................................................References ...........................................................................................References ........................................................................................... 8 58 58 58 58 5

Abbreviations and Acronyms ..................................................................Abbreviations and Acronyms ..................................................................Abbreviations and Acronyms ..................................................................Abbreviations and Acronyms ..................................................................Abbreviations and Acronyms .................................................................. 8 78 78 78 78 7

Annexures ................................Annexures ................................Annexures ................................Annexures ................................Annexures ................................................................................................................................................................................................................................................................................................................................................. 9 09 09 09 09 0

List of TablesList of TablesList of TablesList of TablesList of Tables

3.1 Educational Attainment of Persons, 2004-2005 ............................................................. 12

3.2 Skills of Population in the Age Group 15 -29, (1993-94) ................................................... 15

3.3 Skill Levels of Population in the Age Group 15 -29, (2004-05) (in millions) ...................... 16

3.4 Percentage of Persons in Age-group 15 - 29 Years with Formal Training among States,(2004-2005) .................................................................................................................... 18

3.5 Percentage of Workers in Age-group 15 - 29 Years by Vocational Training Status(2004-2005) .................................................................................................................... 18

3.6 Percentage of Persons in 15 - 29 Years with Vocational Training by Education & Gender(2004-2005) .................................................................................................................... 20

3.7 Percentage of Persons in Age-group 15 - 29 Years Receiving/ Received Formal VocationalTraining by Field of Vocational Training & Sex (2004-2005) ................................................ 22

3.8 Percentage of Persons in Age-group 15 - 29 Years Receiving Formal Vocational Trainingby Institute of Training & Sex, (2004-2005) ..................................................................... 25

3.9 Vocationally trained youth in Labour Force: International Comparison........................... 27

4.1 Training Systems ............................................................................................................ 39

4.2 Advantages / Disadvantages of Unregulated Apprenticeship ........................................ 41

Contents


List of FiguresList of FiguresList of FiguresList of FiguresList of Figures

3.1 Educational Attainment of Workers Aged 15 & Above by Sectors, (2004-2005) .............. 13

3.2 Percentage Distribution of Persons with Marketable Skills, (1993-94) ........................... 14

3.3 Percentage Distribution of the Unemployed by Marketable Skills, (1999-2000) ............. 15

3.4 Percentage of Population with Skills in the Age Group 15 -29, (2004-05) ........................ 17

3.5 Percentage of Population with Skills in the Age Group 15 -29 by Place of Residence,

(2004-05) ........................................................................................................................ 17

3.6 Skills of Workers (15 - 29 years) by Employment Status & Sector (2004-2005) ............... 19

3.7 Distribution of Population in the Age Group 15-29 across Education & Skill Levels

(2004-2005) .................................................................................................................... 20

3.8 Educational Levels of Usual Principal and Subsidiary Status Workers with Formal

Skills (15-29 years) by Sector (2004-2005) ...................................................................... 21

3.9 Percentage of Persons in the Age Group 15 -29 with Formal Skill in Poverty Groups

(2004-2005) .................................................................................................................... 23

3.10 Percentage of Persons with Skills in the Age Group 15 -29 for each Social Groups

(2004-2005) .................................................................................................................... 24

List of BoxesList of BoxesList of BoxesList of BoxesList of Boxes

5.1: Vocational Education in Indian Planning ......................................................................... 46

List of Appendix TablesList of Appendix TablesList of Appendix TablesList of Appendix TablesList of Appendix Tables

A3.1 Skills across the Population (1993-94)............................................................................... 29

A3.2 Skills of Workers (15 - 29 years) across Industries and Sectors (2004-2005) ....................... 30

A3.3 Percentage of Workers Receiving/ Received Formal Vocational Training in Age-Group

15 - 29 Years by Institutions of Training and Sector (2004-2005) .......................................... 31

A3.4 Logit Model: Dependent Variable Vocational Training (Have Training, Formal and

Informal/No Training) ..................................................................................................... 32

A3.5 Occupation of Workers by Education & Skill (2004-2005) : Sector Status ............. 33

A3.6 State-wise Total Labour Force and Increase in Labour Force and Training

Capacity .......................................................................................................................... 36

A5.1 Skill Development Programmes being Organised/Funded by Ministries/Departments of

Central Govt. (Nos.) ......................................................................................................... 69

Contents


List of AnnexuresList of AnnexuresList of AnnexuresList of AnnexuresList of Annexures

1. Terms of Reference of the Commission.......................................................................... 90

2. Past and Present Composition of the Commission ......................................................... 91

3. Composition of the Advisory Board ................................................................................. 92

4. Composition and the Terms of Reference of the Task Force on Skill Formation in the

Unorganised Sector ..................... 93

5. Summary of Comments by Central Ministries, State Governments, NGOs, Academia

and others on the Draft Report on Skill Formation & Employment Assurance in the

Unorganised sector ........................................................................................................ 96

1

Introduction11.1 The National Commission forEnterprises in the Unorganised Sector has beenconstituted as an advisory body and a watchdogfor the informal sector. It has the mandate toexamine the status of the unorganised sector,analyse the constraints on the growth of the sector,and make necessary recommendations. Thedetailed terms of reference and composition ofthe Commission as well as its Advisory Boardare given in Annexures 1 to 3 of this report.

1.2 India’s growth achievements during theeconomic reform period have been documentedextensively. In recent years the country grew atnearly 9 per cent per annum and real nationalincome grew by 125 per cent during 1992/93 -2005/06 compared to 93 per cent during theprevious period of same duration. While theseachievements are, no doubt, remarkable from amacroeconomic perspective, this Commission hasdocumented other aspects of the developmentscene in India, viz. the preponderance as well asthe perpetuation of the informal economy. TheCommission estimated that the informal orunorganised workers constituted an overwhelming86 per cent of total workers in 2004-05. Between1999-2000 and 2004-05 what increased in Indiawas the informal employment, both in theorganised as well as the unorganised sectors. Morethan three-fifths of this workforce is self-employed. Of the remaining regular or casualwage workers, only half are employed in theorganised sector. Given these trends, the bulk ofemployment is likely to be in the unorganised

sector of the economy, at least in the immediateyears to come.

1.3 This Commission has, in its earlier report(NCEUS 2007), also highlighted the need fordeveloping the potential and productivity of thehuge workforce, from the point of view of boththe economy as well as the individual. Severalstudies and policy documents have highlightedthe acute mismatch between the workforce needsand the availability of skilled manpower to sustainthe economy’s growth rates. With a very low levelof labour productivity, the need for large numbersof skilled people is felt more acutely in the contextof the country’s need to compete internationallyin manufacturing as well as services and to emergeas a significant player in the knowledge economy.From the demand side, while the economyexperiencing rapid growth, skill shortagesemerged across the board, drawing our urgentattention to the problem of skill development. Oneestimate indicates the need for a 20 millionincrease in skilled workers by 2015 (CII-McKinsey Report ‘Made in India: the next bigmanufacturing export story’ (October 2004) orincremental skilling of 1.5 million people everyyear.

1.4 The present report of the Commissionbrings out various aspects of the need for, andways to enlarge the skill base of the economy,keeping in mind the large size, nature of growthand dynamics of the unorganised sector. Ithighlights the fact that while it is necessary toincrease the number of skilled people in the

2

Skill Formation and Employment Assurance in the Unorganised Sector

economy, the preponderance of the informal sectornecessitates a view of the issue different from that of theorganised sector. In other words, in order to increase theproductivity of more than 9/10ths of India’s workforcein, the nature of their participation in and linkages withthe economy have to be explicitly kept in mind.

1.5 The role and performance of the existing skilldevelopment and training system have been extensivelyreviewed by a number of organizations and a number ofproposals have been made within the governmental systemto strengthen and expand the skill development systemin the country. On August 15, 2007 the Prime Ministeralso announced a four-fold increase in the skilledmanpower training capacity of the country as an integralpart of the National Skill Development Mission.

1.6 In keeping with the urgency of massivelyexpanding the skill base of the economy, the NCEUSconstituted a Task force in June, 2005 on Skill Formationin the Unorganised Sector to consider the followingaspects.

• Identify the characteristics and specificities ofskill formation in the unorganised Sector.

• Review the existing arrangements for skillformation in the unorganised sector at theCentral and state levels.

• Examine the adequacy of the training and skilldevelopment component of the currentprogrammes of wage employment and self-employment and recommend measures forimproving their effectiveness.

• Recommend measures for optimally utilizingthe existing infrastructure for training and skillformation for addressing the needs of theUnorganised Sector.

• Identify the unmet as well as emerging demandfor skill sets in an expanding and globalisingeconomy and devise an institutional frameworkto rectify the mismatch between demand andsupply of skills.

• Study the characteristics of urban employmentand under employment and assess the potentialof programmes of skill development as a strategyof employment generation in urban areas.

• Identify the best practices in the programmesof skill formation in the unorganised sectoroperated by the government and non-government organizations.

• Design a National Skill Development Initiativefor the unorganised sector and suggest a strategyfor its implementation.

1.7 The Task Force included several eminent peopleand received many valuable suggestions which areincorporated in this report. The Composition and theterms of reference of the Task Force is given in Annexure-4. The Draft Report and recommendations were alsodiscussed with the Commission’s Advisory Board. Anumber of comments/suggestions on the draft report werereceived which are summarized in Annexure-5

1.8 The report is structured as follows. The presentchapter provides a brief introduction to issues in skilldevelopment in the informal sector and outlines themethodology of preparing the report . Chapter 2 reviewsthe role of knowledge based inputs (i.e. education, skillsand technical education) in promoting growth, especiallyin the emerging knowledge economy, by highlightingthe cases where the skills-productivity linkages have beenexperienced in developing economies such as in East Asia.The Commission also lays out a framework for lookingat the issue of skills in the unorganised sector, from thepoint of view of those who are part of it.

1.9 A significant aspect of this report is a detailedskill profile of the Indian workforce, presented in Chapter3. The Commission constructed a skill profile of India’sworkforce that encompasses both education as well asthe knowledge acquired, through formal or informalmeans, that prepares an individual for a vocation oroccupation. This profile bases itself on informationregarding the level of marketable skills, both formal andinformal, that are possessed by people in India accordingto NSSO surveys and assessments of the number of peopletrained through the various formal vocational skillacquisition programmes. It attempts to evaluate the leveland kind of skill availability with estimates of the leveland nature of demand for skills in the economy. It alsolooks at the relationship between the level of skills andeducational profile of the workforce and also betweenskill availability, education and poverty. It demonstrates

3

that, on the one hand, a large part of the Indian workforcehas low educational attainments and lacks even the basicfoundational skills in the form of literacy and numeracyand on the other, India’s skill base is mostly informal andthus it is difficult to adapt to the changing market andtechnological environments.

1.10 We have presented the salient features ofdifferent models of international skill development andtraining experiences in Chapter 4, which lays specialemphasis on initiatives that have been seen for theunorganised sector.

1.11 The existing system of skill development andtraining in India, consisting of a large number ofinstitutions, programmes and initiatives of the Centraland state governments, as well as the private and NGOsectors, is reviewed in Chapters 5. Through this review,the aim of the Commission has been to collate a hugecorpus of information collected from diverse sources andpresent it under a coherent framework. More crucially itbrings out the key features of the skill development system

in India. It also aims to locate the possible reasons forthe existing narrow skill base. Our review of the existingsystem in India also critically examines the issues raisedby several governmental and international organizations.

1.12 Our focus on the unorganised sector and theperceived need to view skill development differently, giventhe preponderance of this sector in the Indian economy,enabled us to lay out a detailed strategy and a set ofrecommendations for revamping, expanding andreorienting the existing skill development system in India.These are presented in the last Chapter of the report. Itenvisions the setting up of a system that lays out clearguidelines and a coherent organizational framework forthe country as a whole, focused on the decentralized,representative and need based delivery systems at the locallevel. The Commission believes that this suggestedstructure will be able to address the needs of a growingeconomy on the one hand and the huge workforce onthe other.

Introduction

4


Skill Formation, Productivity& Growth - Issues in aDeveloping Economy

2

2.1 It is being increasingly argued that oneof the prerequisites to enhancing the quantum andquality of employment in developing countries isadequate skill formation and training of theworkforce. In more contemporary experiences ofdevelopment, the case that is quoted widely is thatof the countries of East Asia where, beginningfrom very low levels of training and skillacquisition, several countries made spectacularprogress in providing these to very large segmentsof the workforce. This has also been held up as atextbook case of extraordinary achievements inhuman capital formation. In turn, the large scaletraining and skilling of the workforce is seen tohave contributed substantially to the sustainedeconomic success of these countries.

2.2 The term ‘skills’ is used to refer to a widerange of attributes in the literature and to thatextent, there is no clear definition of a skilledworker. According to the World EmploymentReport (1998), the term ‘skill’ ‘skill’ ‘skill’ ‘skill’ ‘skill’ refers to an acquiredand practiced ability or to a qualification neededto perform a job or certain task competently. It isa multidimensional concept as most jobs requirea combination of skills for adequate performance,ranging from physical abilities to cognitive andinterpersonal skills.

2.3 According to the Planning Commission’sCommittee on India Vision 2020 skill skill skill skill skill can also be

perceived as the ability to direct human energyefficiently to achieve desired goals. It is one ofthe attributes that generate knowledge resources,the others being technology, organisation,information and education skill. While materialresources are consumed when they are utilised,knowledge resources increase when shared andcan be stored at negligible cost. (GOI/PlanningCommission 2002b:26).

2.4 In practical terms, ‘marketable skill’arketable skill’arketable skill’arketable skill’arketable skill’ iscommonly understood to refer to any skill /expertise / ability that has market value or hasthe potential of being utilised for generatingincome/employment. According to the NationalSample Survey Organisation (NSSO), anymarketable skill, whether acquired throughformal or informal means, irrespective of whetherit is being marketed or not, whether the intentionis to market it or not, is considered skill. In thissense, an inventory of such marketable skillsprovides information on the kinds of work thatpeople can do, irrespective of whether it has beenacquired formally or not.

2.5 However, when reference is made to levelsof availability of skilled labour in the context ofeconomic development, it is processes of formalskill acquisition and training for employment thatbecome important. Developing countries tend tolag behind in making these processes available to

5

their populations. These processes of formal skillacquisition and training come from general educationalsystems and systems of technical and vocational educationand training (TVET) that are linked to specificoccupations. They include learning designed to developthe skills for practising particular occupations, as well aslearning designed to prepare for entry or re-entry intothe world of work in general. TVET includes both initialvocational training undertaken by young people prior toentry in to the labour market and continuing vocationaltraining undertaken by adults whilst in work or duringperiods when they are economically inactive. In otherwords, it encompasses both initial skillsinitial skillsinitial skillsinitial skillsinitial skills development andvarious forms of ‘Re-skillingRe-skillingRe-skillingRe-skillingRe-skilling’ and ‘Up-skilling’.Up-skilling’.Up-skilling’.Up-skilling’.Up-skilling’.

2.6 While retaining the practical definition of‘marketable skills’ for detailing the skill profile of theIndian workforce in the following chapter, theCommission recognizes the issue of skill acquisition inits widest sense, to encompass education, pre-employmenttraining, on-the-job training, continuous learning andretraining in the context of the linkages between skills,productivity and growth.

Rationale for Skill Formation – TheRationale for Skill Formation – TheRationale for Skill Formation – TheRationale for Skill Formation – TheRationale for Skill Formation – TheSkills-Productivity-Growth LinkSkills-Productivity-Growth LinkSkills-Productivity-Growth LinkSkills-Productivity-Growth LinkSkills-Productivity-Growth Link

2.7 In contemporary analyses of systems of skilldevelopment in developing countries, the commonlyraised issues are: 1) Developing effective skill developmentand training systems in the interest of enhancingproductivity and sustaining high rates of growth, 2)Changing skill requirements of economies that arewitnessing fast changes in the nature of economic activityand work, 3) Matching skills to markets, 4) Financialsustainability of different skill formation systems andfinally 5) Role of different agents (firms, private actorsand the government) in delivering skill and trainingefficiently and effectively.

2.8 First, it is known that skills development isimportant because of its contribution to enhancingproductivity at the individual, industry and also nationallevels. Enhanced skills enable individuals to be moreproductive and potentially generate higher incomes.Workforce skills make enterprises more productive andprofitable, and help national economies raise productionand create wealth. This takes place because of

complementarities that exist between physical capital andhuman capital on the one hand and between technologyand human capital on the other. A higher level of skillswhich results in a higher level of human capital formationenables plants and machinery to be used more efficiently,raising the rate of return on investments. Similarly,without a skilled workforce, the returns fromtechnological progress remain low. With the advancementof technologies, necessitating a high rate of labourturnover across industries and occupations, adaptabilityis crucial to keeping labour and capital employed andmaintaining competitiveness.

2.9 The case of several countries in East Asiademonstrates the necessity as well as possibilities in thisarea for developing countries. Apart from universalizingprimary education, achieving very high levels of secondaryeducation and also vocational education within thesecondary education system, countries such as SouthKorea, Singapore and Malaysia have achieved formaltraining of the majority of their population as well ashigh rates of employment of the trained workforce. Avast volume of literature on the sources of sustained highgrowth in these economies have located this growth in‘endogenous’ processes that enable a highly skilledworkforce to adapt technology to country requirements,innovate at the level of the enterprise and meet ambitioustargets in a short period of time. While many of thesesystems were put into place at an early stage of theircontemporary development, with some of these countriesexperiencing crisis, they also undertook overhauling ofsystems in tune with the needs of a globalised economy.In other words, the need for the skill mix to change atdifferent levels of development and in response to differentdegrees of openness was recognized and responded to.

2.10 In contemporary production systems, the demandfor skills has changed to some extent because of extensivechanges that economies have seen as a result of greaterintegration with the world economy. Increasedcompetition and the introduction of ICT have promptedenterprises to make fundamental changes in their internalorganization and work practices, necessitating theexistence and acquisition of specific skills in workforcesthat are required to be increasingly adaptable and flexible.Improved access, universal basic education andfoundations of literacy offer essential first steps on the

Skill Formation, Productivity and Growth - Issues in a Developing Economy

6


path to becoming successful knowledge economies. Butknowledge economies demand not just more education,but education and training that are also better anddifferent. In the context of knowledge economy aspirations,the challenge of educational and vocational reform istherefore not just to increase access or even raise conventionaltested achievements, but also to change the nature andimprove the quality of learning, teaching and training sothat they address knowledge economy objectives.

2.11 Fast changing knowledge economies call for newcore competencies among all learners in the society. Atthe heart of these are longstanding “soft skills” such ascommunication, collaboration and teamwork. To these,can be added others such as the ability to create, apply,share and distribute knowledge; to convert tacitknowledge into explicit and formally codified knowledgethat is easily transferable to others; to employ effortlessuse of advanced information technology; to work in teamsthat may be socially and psychologically heterogeneous;to have the capacity to re-skill and retrain ascircumstances demand; to be able to participate innetworks and develop the social capital that creates thelearning and develops the resilience to cope with change;to cultivate a positive, opportunistic and entrepreneurialorientation to change; and to become committed tocontinuous and lifelong learning far beyond the years offormal education. This effort to see a change in the skillmix in fast changing economies has been recognized bySouth Korea, which has a Comprehensive Plan forLifelong Education and Learning, which allows localcommunities in provinces to enter and exit the learningand training process in line with the requirements of theeconomy on the one hand and with their own need forimprovement. Similarly, Singapore has made majorchanges in its skill strategy through the introduction of aNational Continuing Education and Training Frameworkand a Lifelong Learning Endowment Fund.

2.12 Second, it is well documented in the literaturethat skill development is an area where typically marketsmight not deliver optimum volumes of skill thateconomies need. This is because of ‘externalities’ in skilland training provision, where if a private firm undertakesskilling of its workers, it might not be able to reap thebenefits sufficiently if the worker leaves the firm. Anotherfirm, on the other hand, might benefit without bearing

the cost if the worker joins the firm. Even though thespecific industry will benefit if workers are trained for itsspecific needs, no particular private firm might beinterested in providing the skills and training, resultingin its ‘under – provision’ if it is left entirely to marketforces. While this is an argument that is crucial for anyeconomy, this is considered to be especially relevant insmall firm contexts. It is argued that the under-provisionof formal training found in small and microenterprises iseither due to ‘ignorance’ on the part of employers or‘market failure’ due to a variety of supply and demandside features such as their short-term perspective whichprevents the recognition of the longer term benefits oftraining. Therefore, even though there might be anexplicit recognition of the need for skills enhancement,the issues of who will provide it, where it will be provided,who will bear the costs and so on become crucialconsiderations.

2.13 Third, while skill development is where publicor collective institutions become necessary due to theexternalities mentioned above, where the basic stimuliwill come from to signal the extent of skill requirements,i.e., whether it should be demand led or supply led, areextremely important, particularly when we consider thefinancing aspect. Existing systems of formal skillprovisioning in most developing countries are found tocover a very small proportion of enterprises and createlarge supply-demand mismatches, resulting in skillshortages even in the presence of significantunemployment. In the context of ‘new’ needs beingperceived in a globalised economy, these skill shortagesare considered to pose a potential hindrance to sustainedeconomic growth. The issue of matching skills to marketshas led to a call for dismantling existing systems of skillprovisioning in many countries or an overhaul of TVETsystems.

2.14 It is against this background that this report looksat the overall picture of skill acquisition and developmentand its link to employment and markets in the case of theunorganised or informal sector in India.

Skill Acquisition and Development –Skill Acquisition and Development –Skill Acquisition and Development –Skill Acquisition and Development –Skill Acquisition and Development –Specific Case of the Informal SectorSpecific Case of the Informal SectorSpecific Case of the Informal SectorSpecific Case of the Informal SectorSpecific Case of the Informal Sector

2.15 In India, the discussion on the impact of existingskill delivery systems and what needs to be done hinges

7

critically on two major characteristics of the workforce:the preponderance of employment in the informal sectorof the economy and a very large proportion of youth inthe population, mostly belonging to the informal sector.It is also well known that the proportion of people whohave had access to some kind of formal skill acquisitionprocess is very low and that of those who have acquiredemployment as a result of this is even lower. While theseaspects are presented in the next chapter, here we examinethe specific characteristics of informal workforce withrespect to the issues raised above.

2.16 This Commission’s work has highlighted thesalient features of the Indian workforce and brought outthe structure of the large informal sector and workforcein India. In order to be able to focus the discussion onthe skill needs of the informal sector and the workforceengaged in it, we briefly present these structuralcharacteristics here.

2.17 The Commission has estimated that in 2004-05, total employment (principal plus subsidiary) in theIndian economy was 458 million, of which theunorganised sector accounted for 395 million, constituting86 per cent of total workers. The Commission’s estimatesare direct ones from the NSSO, based on a consistentdefinition of the unorganised sector (NCEUS 2007). Ourestimates showed that, between 1999-2000 and 2004-05, of the total incremental employment generated, onlyabout 14 per cent was absorbed in the organised sectorwhile 86 per cent was in the unorganised sector. In theyears to come, as the Eleventh Plan document pointsout, the bulk of incremental employment is likely to becreated in the unorganised sector.

2.18 Within this unorganised sector, wage-workers(i.e. those employed by others), constituted only 36 percent of the workers, and the remaining 64 per cent wereself employed.

2.19 While the agricultural sector still contributedthe largest numbers in the unorganised sector, theproportion of non-agricultural workers rose from 32 percent to 36 per cent between 1999-2000 and 2004-05.Agriculture sector, in turn, is constituted by unorganisedworkers who are self-employed (65 per cent) and casualworkers (35 per cent). Even in the non-agriculture sector,nearly 72 per cent of the workers are in the unorganised

sector, an increase of 4 percentage points from 68 percent in 1999-2000. These workers, in turn, are mainlythe self-employed (63 per cent). The rest of the workersin the non-agriculture unorganised sector are more orless equally distributed between the regular (17 per cent)and casual categories (20 per cent).

2.20 In the same period, employment in the organisedsector of the economy increased by 8.5 million or 16 percent (from 54.1 million to 62.6 million), but the changein organised or formal employment was nil or marginallynegative. Therefore, it was pointed out that the entireincrease in the employment in the organised sector over thisperiod has been informal in nature i.e. without any job orsocial security. The Commission argued that this can be termedas informalisation of the formal sector, i.e., employment increaseconsists of regular workers without social security benefits andcasual or contract workers again without the benefits that shouldaccrue to formal workers.

2.21 Three major structural features of employmentin the Indian economy were highlighted by theCommission. First, the informal sector is hugelypreponderant in the Indian economy. Second, theincreases in employment have been of the informal kind.Third, within the informal sector, there is a hugepreponderance of self-employed workers. Informalisationof the workforce is probably a feature that is here to stay,making the discussion below especially relevant.

2.22 Another structural feature that the Commission’swork has highlighted is the heterogeneity of the informalsector itself. It analysed in detail the incidence andconditions of different types of informal workers, i.e.,wage workers in the unorganised sector, self-employedworkers in the unorganised sector and unprotected wageworkers in the organised sector. Within the category ofthe self employed, there are different categories such aspersons who operate farm or non-farm enterprises orengaged in a profession or trade, either on own account,individually or with partners, or home-based workerswhich include unpaid family workers also. The formerhas been referred to as independent self employed workersand the latter as dependent. The Commission estimatedthat within the 395 million people that constituted theunorganised sector in 2004-05, about 344 million wereself- employed, of which 69 million were in the non-


8


agricultural sector. As a special category in terms of poorconditions of work and high levels of vulnerability, home-workers were estimated at nearly 8.2 million workers(or 12 per cent of the non-agricultural self employedworkers) of whom about 4.8 million were women.

2.23 What this highly heterogeneous picture of theinformal sector points towards is the fact that the natureand conditions of work in the informal sector are verydifferent, and, therefore, lead to a wide range of trainingneeds, requiring analysis that is different from that of theformal sector. Different kinds of workers in the informalsector are employed in production units with widelydiffering features and in a wide range of economicactivities. They consist of different kinds of people (i.e.workers, producers, employers) in service activities orproducing under varying types of employment relationsand production arrangements. The basic questions of skill-building and training for whom, for what, what kind oftraining and how it can be best provided have somewhatdifferent dimensions given this diversity in the informalsector. The Commission wishes to lay stress on this aspect,something that has been relatively neglected in the vastliterature on existing skill development systems in India.

2.24 In the international literature on training needsand possibilities in the informal sector of developingcountries, several sets of issues have been identified. Thefirst relates to motivations of the people in the informalsector for training. Those working in the informal sectoroften see little need for further skills acquisition and havelittle knowledge about where to go even after the skillsare acquired. This is true even for enterprises in theinformal sector, often dismissed as ‘ignorance’ on the partof enterprise owners as well as workers. The principalproblems of poor literacy and numeracy often preventinformal sector workers from participating successfullyin conventional training programmes, even if they perceivethe need. Training can also be prohibitive in terms ofcosts. Even token fees for the training can form a realbarrier for participating in training. Working hours areoften long and any time off from the productive workmeans loss of income, which affects the willingness toparticipate in a training programme, even if it is relevantand easily available. It is also unlikely that informal sectorentrepreneurs will provide their workers time off fortraining. In fact, skilling workers may appear threatening

for the entrepreneurs because skilled and trained workersmay demand higher pay, leave to work for competitorsor establish enterprises themselves. The motivation issue,therefore, has to be kept in mind when designing trainingprogrammes for the informal sector.

2.25 The second set of issues relates to who requiretraining and for what. Broadly, we can distinguish betweenown-account workers, workers in enterprises andentrepreneurs. In the informal sector, apart from thetraining needs of workers of different kinds, which mightbe essential for increased productivity, most of those whofall under the category of entrepreneurs may themselvesneed training and face the same kinds of motivationalproblems as those already mentioned above. It has oftenbeen argued that non-specialization (avoidingconcentrating on a single trade) is the most commendablestrategy for those who exist on the broad “underside” ofthe labour hierarchy and education and training need tobe able to cater to them because, very often, survivalrequires constant search for new sources of income andthe will and ability to be as flexible as possible. In thecontext of self- help organizations and networks, suchtraining would imply that learning is not only generatedin the process of production, but also takes place throughother external mechanisms such as `learning bynegotiating’ and ̀ searching for openings’. Learning wouldimply a process of becoming aware of the potential of anetwork or cluster of enterprises to solve problems, andacquiring those competencies that are needed toimplement solutions. Additionally, the training would needto build up capabilities to shift from one profession toanother, to obtain the freedom to make choices withoutlosing status.

2.26 Third, the requirements in the informal sectorin a range of activities or in micro-enterprise basedproduction are a combination of ‘social competencies’ andtechnical skills that might be industry or trade based.Social competency, defined as ‘the ability to co-operate,communicate and represent collective interests’ is centralto conducting a business as much as the technical aspectsof the industry itself. All training programmes for suchenterprises have to necessarily also develop literacy andcognitive competencies, as they facilitate the organisationof economic activities and are used to developcommunicative skills. Further, even within small

9

enterprise based entrepreneurship, two distinctivecategories are ‘survivalist’ entrepreneurs, lacking even basicliteracy and women entrepreneurs who, in addition tomost often lacking basic literacy and numeracy, facespecific problem of mismatch between home duties andtraining. Training would involve, for all sets of people, acombination of ‘social competencies’ and technical skillsand at different levels. For example, in many categories, arange of skills that enable mere survival or the ability toshift professions are essential as argued above. Systemsof skill development, keeping informal sector workers inmind, would need to provide the whole range of theseskills, from basic literacy and numeracy to technicaltraining. This, in turn, is unlikely to be taken up by theprivate sector, as the workers concerned are at the bottomrung in the production hierarchy and encounter the worstterms of trade. In such cases, directed skill programmesmay be focusing on a group approach and can not onlyenhance their productivity but also enable them to bargainfor better terms.

2.27 Underlying all the issues raised above, however,especially in the case of the informal sector, is a basicquestion: do the skills that are perceived or foundnecessary in the informal sector have to be ‘formally’provided? In other words, should skill developmentprogrammes for all these sets of workers be subject toprocesses of trainer accreditation and trainee certification?Should these be done at a centralized, nation-wide orstate-wide level or should it be decentralized? Is the modeof working of the existing systems of informal on the jobskill acquisition through the traditional methodssufficient? Apart from recognizing the heterogeneity ofthe informal sector, an understanding of the role thatdifferent segments of the sector play in the economicprocess is crucial to be able to provide an answer to this.This report puts forward concrete recommendations thatdeal with the centralization-decentralization issue as wellas the formal certification versus informal provision, buthere we flag off the analytical issues that are importantin this discussion.

2.28 The previous section outlined the rationale forskill development in general and noted that it has beenknown to enhance productivity at the individual, industryand national levels. However, in the case of India, theresults of studies that examine this relationship are

ambiguous. This ambiguity notwithstanding, there aresome reasons why one might argue that formal skillacquisition in the informal sector, whether it is throughgeneral education, vocational education or work-placerelated skill acquisition with certification, can lead toenhanced productivity. First, the informal sectorcontributes substantially to national output in India andthe organizational structures of the informal sector arevery important in determining the structure of nationaloutput. In a situation where production technologies arechanging very rapidly in both the manufacturing andservice sectors, entrepreneurs and workers are very oftenrequired to adapt to changes and also acquire new skills.With changing technologies, the ability to cope withchange is given by the skill base of the economy whichhas to expand, permitting increase in productivity acrossthe board. Strengthening and widening of the educationsystem as well as provision of skills to be able to adaptand change production systems or switch jobs becomeessential even for informal sector entrepreneurs andworkers. For example, in a range of industries and servicesthat use ICT, it might be broad based computer skills,communication and cognitive skills and knowledge ofEnglish that might be needed to access the labour marketor even continue to undertake production in specificindustries. Although the level at which skills have to beimparted might not be very advanced, certificationbecomes very essential in order to ensure minimum levelsof skill that have the potential to enhance productivity.

2.29 Second, while the informal sector contributessubstantially to national output, the heterogeneity of thesector results in a large range of vintages of technologyused and products produced. Even across different marketand consumer segments, quality standardization isessential to ensure effective marketing of the products ofthe sector and upgradation of skills is essential, alongwith other inputs, to achieving standardization. Theviability of large parts of the informal economy mightitself be contingent on the existence and provision offormal, standardised skills.

2.30 Together, the above two aspects suggest that formany in the informal sector, the acquisition of formalskills might be a necessary condition to gain entry intosegments of the labour market that can potentially generategreater income or to be part of viable production systems


10


that can potentially result in better livelihoods. TheCommission’s analysis in the rest of this report stronglysuggests that the formal systems of skill imparting areessential for the informal sector.

2.31 It is reasonably well established that in India,formal skill acquisition, through VET systems, has beenhardly successful in helping those in the informal sectorto get jobs, even at the very low levels at which they havebeen provided.

2.32 Literature looking into the reasons for low levelsof skill formation in developing countries, identify thestate run vocational education and training systems asbeing too supply driven and far-removed from marketdemand. It is suggested that they should be respondingto market demand with a greater role for the private sectorand for enterprises. There is an assumption here that byvirtue of their closer contact with the market, anemployer-operated training could be more efficient withprivate firms and small enterprises at their centre,coordinated through business associations and other suchintermediary institutions. To use existing patterns ofmarket demand alone to signal what the training needsof the economy are and also determine the outcomes oftraining initiatives will, however, bypass most membersin the informal sector. The extent and quality of trainingis constrained by the nature of the economy and level ofenterprise development. The largest part of the informalsector consists of workers/enterprises where private

initiative would not be forthcoming for skills up-gradation, as they are either out of the loop vis-à-vis theformal sector or are involved in ways that provide thecushion against adversity for the formal sector. In thesecases, leaving them as they are, forming the base of thelow cost economy, will serve the needs of the organisedsector best. Further, even if private actors perceive theneed for training, they might be too small in size to garnerresources to provide/undertake training.

2.33 There is scope for upgradation in a range ofinformal sector activities where existing markets will notgenerate conditions conducive for training. These marketscan be tapped only once the interventions have been made,requiring the active participation of public agencies. In asense, therefore, a distinction has to be made betweenexisting patterns of demand and potential demand whichdoes not get expressed or is even perceived as existing. Infact, this typically exists in services like cleaning,housemaids and so on which are often considered lowquality, low productivity work.

2.34 Despite all their weaknesses, we stress stronglythat there is a need for public technical and vocationaleducation establishments or other forms of collectiveorganizations to play a definite role in finding new waysof teaching and learning to make them more relevant tothe informal sector’s needs. Given the large numericalpresence of such self-employed workers, as has beenpointed out earlier, this point is especially relevant.

11

Skill Profile of the IndianWorkforce

3

3.1 This chapter looks at the overall pictureof skill acquisition and development of theunorganised or informal sector in India. In thisreport, , , , , we have used different measures of skill.The first is the level of education of the individualand the second being the extent of vocationaltraining. Vocational training is broadly definedas training that prepares an individual for a specificvocation or occupation. The main objective ofvocational education and training is to preparepersons, especially the youth, for the world of workand make them employable for a broad range ofoccupations in various industries and othereconomic sectors. VET aims at imparting trainingto persons in specific fields through providingsignificant ‘hands on’ experience in acquiringnecessary skills, which make them employableor create for them opportunities of self-employment. Vocational training may be non-formal or formal. Since acquisition of skillsthrough non-formal training is, by definitionunstructured and since it is difficult to have a cleardefinition of skills, it is very likely the case thatthe surveys on which our analysis is basedunderestimate the extent of non-formal skillacquisition, especially in certain sectors such asagriculture. This caveat should be borne in mindwhile using the results shown below.

3.2 There has been no special effort on thepart of the government to collect data on skillsregularly as part of the administrative process. The

main source of data at the national level is theDirectorate General of Employment and Training(DGE&T), Ministry of Labour. The other sourcesof data on skills are the recent ad hoc surveys ofthe National Sample Survey Organization(NSSO). The NSSO has asked questions relatingto possession of skills in surveys of 1993-94, 1999-2000 and 2004-05. Each survey had a differentscope, but taken together they give us some ideaof the skill profile of the population.

3.3 This chapter bases itself on informationregarding the level of marketable skills, bothformal and informal, that are possessed by peoplein India according to NSSO surveys andassessments of number of people trained throughthe various formal vocational skill acquisitionprogrammes. It attempts to evaluate the level andtype of skill availability with estimates of the leveland nature of demand for skills in the economy. Italso looks at the relationship between the level ofskills and educational profile of the workforce andbetween skill availability, education and poverty.

Foundational Requirements: Literacy,Numeracy, Education

3.4 Education may be treated as thefoundation for acquiring formal skills and also ascreating generic skills. Education prepares a personto acquire different types of skills and higher formsof cognitive skills may require high levels ofeducation. Thus, general education is highly

12


important in itself. However, we do not see generaleducation as a substitute for skill acquisition since thelatter prepares people to carry out specific tasks. It is,however, important to recognize the complementaryrelationship between different levels of education anddifferent types of skills. In other words, some level ofeducation may be seen as foundation for acquiring aspecific type of skill. In order to emphasize on skill trainingit is important to have an idea whether the people havethe basic foundation in terms of literacy and numeracy aswell as absorptive capacity in terms of a particular levelof education for a specific type of formal training. Thus,level of educational attainment of the population tells usabout the generic and foundational skills residing in apopulation.

3.5 In 2004-2005 the share of population of 15 yearsand above who were illiterate or below primary educationcomprised 47 per cent (Table 3.1). This share was higheramong women (58 per cent) and in rural areas. While13 per cent of population had primary education 16 per

Source: Computed from unit level data of NSS 61st Round 2004 - 2005, Employment-Unemployment Survey.

Table 3.1: Educational Attainment of Persons (2004-2005)

RuralRuralRuralRuralRural UrbanUrbanUrbanUrbanUrban TTTTTotalotalotalotalotal

MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal

15 and Abo15 and Abo15 and Abo15 and Abo15 and Abovvvvve e e e e YYYYYearsearsearsearsears

Illiterate &Below Primary 44.5 67.7 56.0 19.7 35.6 27.1 36.7 58.3 47.2

Primary 15.3 10.8 13.1 12.6 12.1 12.3 14.4 11.2 12.8

Middle 19.1 11.3 15.3 19.4 16.8 18.2 19.2 12.9 16.2

Secondary &Above 21.1 10.2 15.7 48.3 35.6 42.3 29.7 17.6 23.8

TTTTTotalotalotalotalotal 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0

15 -2 9 15 -2 9 15 -2 9 15 -2 9 15 -2 9 YYYYYearsearsearsearsears


Primary &Middle 43.9 33.8 38.9 37.6 33.2 35.6 41.8 33.6 37.9

Secondary 15.4 10.3 12.9 19.1 17.7 18.5 16.6 12.5 14.6

HS & Above 12.9 8.1 10.6 29.6 29.0 29.3 18.4 14.3 16.4

Technical 1.7 1.0 1.4 6.7 4.4 5.7 3.4 2.0 2.7

TTTTTotalotalotalotalotal 100100100100100 100100100100100 100100100100100 100100100100100 100100100100100 100100100100100 100100100100100 100100100100100 100100100100100

cent had middle level of education. The share of educatedpersons i.e. those with secondary and above was higherat 24 per cent. The share of educated persons is higheras expected among men and in urban areas.

3.6 One can expect a certain pace of cohort-wiseimprovement, but even among the 15 -29 yearspopulation, in 2004-05, educational attainment was stillquite low with 31 per cent of them having below primarylevel of education and 38 per cent population with primaryor middle level education only (Table 3.1). There issome improvement over the years. In 1993-94, in theage group 15-29 years, the share of persons educated upto below primary was 45.2 per cent while 32 per centhad passed primary or middle classes.

Workforce and Educational Attainments

3.7 The Commission has, in its 2007 Report onWorking Conditions, analysed the educational status ofworkers in the organised and unorganised sectors, formallyand informally employed workers, by social and gender

13

status etc. The educational status of workers in theorganised and unorganised sector of the economy is givenin Fig 3.1. The Commission, in the above report,expressed the view that low levels of education and skillsare one of the primary reasons leading to a hierarchy ofwork relationships, segmentation of the workforce andvulnerability. Improving the access of all sections of thepopulation to quality education at least up to the secondarylevel must therefore be highlighted as one of the mot urgentdevelopmental requirements.

Skill Base of Population in 1993-1994

3.8 The National Sample Survey on Employmentand Unemployment, 50th Round, 1993-94 canvassed aseparate question on skill along with the questions oneducation and technical education. The question on skillinvolved asking the respondents to choose from a givenlist of 31 skills types including an option ‘No skill’ and a

Fig. 3.1: Educational Attainment of Workers Aged 15 & Above by Sectors, (2004-2005)

Source: Computed from unit level data of NSS 61st Round, 2004 - 2005, Employment-Unemployment Survey and adjusted forpopulation

miscellaneous category of ‘Others’.1.The above question

enabled a categorisation of the population into those withskills and those without. On the other hand, it enabledanalysis of the distribution of the population among selectskill types and identified the predominant skills. Besidesas it pertained to the entire population the skill of allsegments of the population could be ascertained. However,the question on skill had two limitations. Firstly, it limitedthe skills to be chosen from a select 30 categories, leavingno scope for individuals to specify skills outside the given

list, leaving them with no option other than to classifythemselves with ‘others’. Secondly, the skills asked inthe 50th round were more in line with traditional skillset, barring certain exceptions. The skill set associatedwith the newer trades were not adequately represented.The survey did canvass a separate question on technical/vocational education leading to certificates, diplomas or

1 The various skills included in the list were Stenographer; machineman; fitter, die-maker; electrician; repair of electronic goods;

motor vehicle driver; fisherman; miner, quarryman; spinner including charkha operator; weaver; tailor, cutter; carpenter; mason;bricklayer; shoemaker, cobbler; moulder; blacksmith; goldsmith; silversmith; boatman; potter; nurse, midwife; basket maker,wick product maker; toy maker; brick maker; tile maker; bidi maker; book-binder; barber; mud-house builder & thatcher andOthers.

Skill Profile of the Indian Workforce

14


degrees which could be used to glean information onupper end skill acquisition.

3.9 Analysis of this data reveals that nearly 90 percent of the total population did not have any skills.Approximately 10 per cent of population reported ashaving skills (91.2 million). The proportion of skilledworkers in the workforce was very low (Fig 3.2). Inrural areas, only about 10 per cent of the men (34.2million) and 6.3 per cent of the women (20.3 million)possessed specific marketable (formal or non-formal)skills. The percentages are reported higher in urban areas,but still very low — only 19.6 per cent for men (24.3million) and 11.2 per cent for women (12.4 million).However, as discussed earlier, these only refer to the lowerlevel skills and not the skills of professional and morequalified workers.

3.10 Among the population with skills, thepredominant group was tailors (17.1 per cent), followedby weavers (8.2 per cent). Other skills with share above5 per cent were motor vehicle drivers, stenographers andbidi makers (Appendix Table A 3.1). Some other skillswith a relatively high share of more than 2 per cent ofthe total were: carpenters, masons, mud house builders/thatchers, fisher men and basket/wick product makers.

3.11 For purpose of analysis the skills reported in the50th round have been classified by us into predominantlyformal and predominantly informal. The generaleducational attainment levels of the persons with skills

Fig.3.2: Percentage Distribution of Persons with Marketable Skills, (1993-94)

Source:Source:Source:Source:Source: Computed using unit level data of NSS on Employment and Unemployment, 50th Round, Schedule 10, 1993-94

was examined and taken as a guideline to classify theskills. The distribution of the population was explored todetermine the educational levels. The skills whereinmajority of population were illiterate & below primaryeducated and primary & middle educated, while low shareof population were educated at secondary and above levelwere considered as skills which were predominantlyinformal. The skills wherein a substantial proportion ofpopulation had even secondary and higher education wereclassified as predominantly formal. The only exceptionwas nurses and midwives which was classified aspredominantly informal for rural and predominantlyformal in urban areas.

3.12 Based on the above analysis the skills consideredpredominantly informal are: fisherman; miner, quarryman;spinner including charkha operator; weaver; tailor, cutter;

carpenter; mason; bricklayer; shoemaker, cobbler;moulder; blacksmith; goldsmith; silversmith; boatman;potter; midwife (rural); basket maker, wick product maker;toy maker; brick maker; tile maker; bidi maker; book-binder; barber; mud-house builder & thatcher andOthers. Skills considered predominantly formal are:Stenographer; machine man; fitter, die-maker; electrician;repair of electronic goods; motor vehicle driver andmidwife (urban). According to our categorization, in1993-94, approximately 2 per cent of the population hadpredominantly formal skills, while 8.2 per cent of thepopulation had predominantly informal skills. The

15

corresponding shares among the labour force were 4.2and 15.3 per cent. (Table 3.2)

Skill Base of Unemployed 1999-2000

3.13 The NSSO Survey on Employment andUnemployment (1999-2000) had sought information onthe skill levels of the unemployed only. The results showedthat in rural areas, only 16.4 per cent of the maleunemployed workers and 18.8 per cent of femaleunemployed workers possessed specific marketable skills(Fig. 3.3). The percentage of males unemployed in urban

areas was almost identical to that of rural areas. However,a significantly higher proportion of about 32 per cent ofthe female unemployed workers in the urban areas arereported to possess some skills. Among the rural maleunemployed, 17 per cent possessed skills of stenographer,12 per cent of drivers (vehicle or tractor), 9 per cent of

Source:Source:Source:Source:Source: Computed using unit level data of NSS on Employment and Unemployment, 50th Round, Schedule 10, 1993-94

Table 3.2: Skills of Population in the Age Group 15 -29, (1993-94)

RuralRuralRuralRuralRural UrbanUrbanUrbanUrbanUrban TTTTTotalotalotalotalotal

SkillSkillSkillSkillSkill MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal

Formal 3.9 0.5 2.2 9.7 2.7 6.4 5.6 1.1 3.4

Informal 10.6 10.7 10.7 16.3 15.0 15.7 12.3 11.9 12.1

No Skill 85.5 88.8 87.1 74.0 82.3 77.9 82.1 87.0 84.5


Fig. 3.3: Percentage Distribution of the Unemployed by Marketable Skill, (1999-2000)

mechanic and 8 per cent of electricians. Of the female

unemployed in rural areas, 37 per cent possessed tailoring/cutting skills while 22 per cent could work asstenographers. Among the urban unemployed males, 18per cent could work as stenographers, 9 per cent asmechanics, 8 per cent as electricians and 7 per cent asdrivers. Of the females unemployed in urban areas, 30per cent could work as stenographers and 22 per cent astailors. More than 5 per cent of each of the four categories

of unemployed had computer programming skills.However, on the whole more than 18 per cent of theunemployed possessed marketable skills.

Skills among the Youth in 2004-2005Skills among the Youth in 2004-2005Skills among the Youth in 2004-2005Skills among the Youth in 2004-2005Skills among the Youth in 2004-2005

3.14 The NSS round 2004-05 collected informationabout the skill profile of the youth (15-29 years), with

SSSSSourourourourource:ce:ce:ce:ce: Computed from NSS 55th Round, 1999-2000, Employment-Unemployment Survey.


16


enquiries as to whether the respondents had or wereundergoing formal or non-formal training. Non-formaltraining includes both hereditary and other training.When the expertise acquired enabled him/her to carryout the trade or occupation of their ancestors overgenerations, it was considered a ‘hereditary’ source. Anyother ‘non-formal’ vocational training received from otherthan the household members to pursue a vocation, whetherhereditary or not, was considered ‘other’ sources. Formalvocational training is the training that took place ineducational and training institutions which followed astructured training programme and led to recognizedcertificates, diplomas or degrees. Formal vocationaltraining had the following characteristics: (i) Structuredtraining programme towards a particular skill, and (ii)Certificate / diploma / degree received had recognitionby accreditation agencies..

3.15 The 15-29 years age-group comprised 27 percent of the total population of 1089 million as on 1stJanuary, 2005 which is marginally lower than in 1993-94. It is estimated that on the whole, only 11.5 per centof those in this age-group 15-29 have received (or werereceiving) any training, whether formal or informal. Ofthose with informal or formal skill training, 33 per cent

2 In 1993-94, approximately 3.4 per cent of persons in the age group of 15-29 years had predominantly formal skills while 12

per cent of population had predominantly informal skills (Table 3.2). These cannot be strictly compared with 2004-2005 as thecriteria of skill are different.

SSSSSourourourourource:ce:ce:ce:ce: Computed from unit level data of NSS 61st Round 2004 - 2005, Employment-Unemployment Survey.

Table 3.3: Skill Levels of Population in the Age Group 15 -29 in 2004-05 (in millions)

RuralRuralRuralRuralRural UrbanUrbanUrbanUrbanUrban Rural + UrbanRural + UrbanRural + UrbanRural + UrbanRural + Urban

SkillSkillSkillSkillSkill MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal

Receiving formaltraining 1.1 0.5 1.5 1.7 0.8 2.4 2.7 1.2 3.9

Received formaltraining 1.5 1.2 2.7 2.6 1.8 4.4 4.1 3.1 7.1

FFFFFororororormalmalmalmalmal 2.6 1.7 4.3 4.2 2.6 6.8 6.8 4.3 11.1

Hereditary 5.9 3.1 9.0 1.5 0.7 2.2 7.4 3.8 11.2

Others 3.8 2.9 6.7 3.0 1.3 4.3 6.8 4.3 11.0

InformalInformalInformalInformalInformal 9.6 6.1 15.7 4.6 2.0 6.6 14.2 8.1 22.3

No training 88.3 88.9 177.3 40.4 36.1 76.5 128.7 125.0 253.7


have received or were receiving formal training accountingfor 11 million (Table 3.3). A total of 3.9 million personsin this age group (about 1 per cent of the total) werereceiving formal vocational training while about 2 percent received formal vocational training, constituting about3.8 per cent of the population with formal training (Fig.3.4).

3.16 Gender differences in skill training are quitesignificant among the trained, both the informally andthe formally. A lower proportion of women (8.9 per cent)than men (13.9 per cent) in both the rural and urbanareas received vocational training (formal and informal)(Fig. 3.5). Formal skills were confined to 3.1 per centwomen in this age group, compared to 4.5 per cent men.About 5.8 per cent women had informally acquired theskills compared to 9.4 per cent men. (Fig. 3.4).

2

3.17 Urban/rural location provides another elementof difference. While only 2.1 per cent of the youthpopulation had acquired (or was acquiring) formal skilltraining in rural areas, this proportion was much higherat 7.6 per cent in urban areas. This difference, however,does not persist with respect to informal skill acquisition(which is in fact somewhat higher at 7.9 per cent of the

17

Fig. 3.4: Percentage of Population with Skills in the Age Group 15 -29, (2004-05)


Fig. 3.5: Percentage of Population with Skills in the Age Group 15 -29 by Place of Residence, (2004-05)


youth in rural areas, compared to 7.3 per cent in urbanareas).

3.18 Across the states as well, the pattern of skillacquisition varies very significantly. We have focused(Table 3.4) on formal skill acquisition. The largest shareof youth with formal skills was in Kerala (15.5 per cent),

followed by Maharashtra (8.3 per cent), Tamil Nadu(7.6 per cent), Himachal (5.60 per cent) and Gujarat(4.7 per cent). The lowest incidence of formal trainingwas in Bihar (0.5 per cent). Among those trained orundergoing formal training, Maharashtra accounted for21.7 per cent. Kerala and Tamil Nadu had more than 10per cent share in the skilled youth with formal skills.


18


Gujarat and Andhra Pradesh too have a relatively highershare of skilled population in 15–29 age groups. Thus,the southern and western states form a continuous zonewherein the share of population with formal skills isrelatively high. Together the six states accounted for 63per cent of the formally trained people. These are primarilythe states which have more industries, higher levels ofeducation, and a higher availability of traininginfrastructure and training capacity both in the publicand private sectors.

Formal Training in Unorganised & OrganisedSectors

3.19 In India, the discussion on the impact of existing

skill delivery systems and what needs to be done hingescritically on the characteristics of the workforce, anoverwhelming proportion of whom is employed in theinformal sector of the economy. The estimates of formal/organised and informal/unorganised sector workers asper 55

th and 61

st Rounds NSSO Surveys show that more

than 86 per cent of the employment was in theunorganised sector. The Commission has estimated that135 million workers in the unorganized sector were inthe age group 15-29. Among the 5.4 million workerswho received formal training in this age group, 3.4 millionworkers, (63 per cent of the total trained people) belongedto the unorganised sector. This shows that the organisedsector, for one or the other reason, is unable to absorb amajority of the formally trained youth who find a placein the unorganised sector. Given the characteristics ofthe formally trained at this point of time, these personsundoubtedly form an upper segment of the unorganisedworkforce.

3.20 Among the informally trained, 17 million werein the unorganised sector, compared to 1.9 million in theorganised sector. As a percentage of the workforce, only2.5 per cent of the total unorganised sector workers hadformal training while 12.5 per cent had non-formaltraining. In the organised sector, 11 per cent workershad formal training and another 10.4 per cent had informaltraining (Table 3.5). It appears that a range of formalskills can be absorbed both in the upper segment of the

Source: Source: Source: Source: Source: Computed from unit level data, NSS 61st Round, 2004 -2005, Employment-Unemployment Survey, adjusted for population.

Table 3.5: Percentage of Workers in Age-group

15 - 29 Years by Vocational Training Status(2004-2005)

Usual StatusUsual StatusUsual StatusUsual StatusUsual Status FFFFFororororormalmalmalmalmal Non-formalNon-formalNon-formalNon-formalNon-formal TTTTTotalotalotalotalotalMaleMaleMaleMaleMale

Unorganised 2.6 12.9 15.4 (86.9)Organised 10.1 10.7 20.8 (13.1)Total 3.6 12.6 16.1

FemaleFemaleFemaleFemaleFemaleUnorganised 2.3 11.7 14.03 (91.5)Organised 14.2 9.4 23.61 (8.5)Total 3.3 11.5 14.84

PersonsPersonsPersonsPersonsPersonsUnorganised 2.5 12.5 15.0 (88.4)Organised 11.0 10.4 21.4 (11.6)TTTTTotalotalotalotalotal 3.53.53.53.53.5 12.212.212.212.212.2 15.715.715.715.715.7

Source: Source: Source: Source: Source: Computed from unit level data of NSS 61st Round2004 - 2005, Employment-Unemployment Survey.

Table 3.4: Percentage of Persons in

Age-group 15 - 29 Years with Formal Trainingamong the States, (2004-2005)

StateStateStateStateState Statewise distributionStatewise distributionStatewise distributionStatewise distributionStatewise distribution Percentage of PersonsPercentage of PersonsPercentage of PersonsPercentage of PersonsPercentage of Personsof Persons withof Persons withof Persons withof Persons withof Persons with with Fwith Fwith Fwith Fwith FororororormalmalmalmalmalFFFFFororororormal mal mal mal mal TTTTTrrrrrainingainingainingainingaining TTTTTrrrrraining to aining to aining to aining to aining to TTTTTotal Sotal Sotal Sotal Sotal Statetatetatetatetate

(Per cent)(Per cent)(Per cent)(Per cent)(Per cent) PopulationPopulationPopulationPopulationPopulationJ&K 0.4 2.0HimachalPradesh 1.0 5.6Punjab 2.8 4.1Uttaranchal 0.8 3.9Haryana 2.8 4.5Delhi 1.7 4.1Rajasthan 2.5 1.7Uttar Pradesh 6.9 1.7Bihar 0.8 0.5Assam 0.8 1.4West Bengal 6.9 3.2Jharkhand 0.8 1.3Orissa 1.9 1.9Chhatisgarh 2.0 3.5Madhya Pradesh 3.4 2.2Gujarat 6.6 4.7Maharashtra 21.7 8.3Andhra Pradesh 6.6 3.2Karnataka 4.6 3.1Kerala 12.2 15.5Tamil Nadu 11.3 7.6North-east 0.4 1.3Union Territories 1.3 12.6TTTTTotalotalotalotalotal 100.0100.0100.0100.0100.0 3.93.93.93.93.9

19

unorganised sector as well as the organised sectors, anddue to reasons of employment, a majority of such workersare absorbed in the unorganised sector. Later in thischapter we identify the characteristics and spread of skilledworkers across the organised and unorganised sectors.

3.21 Among the youth in the age group 15 to 29years about 53 per cent were workers, 3 per cent wereunemployed, 20 per cent attended educational institutionsand 24 per cent were non-workers. While 11.5 per centof all youth received vocational training, about 17 percent of the unemployed and 16 per cent of the workersdid so. About 22 per cent of the regular workers and 16per cent of the self employed received training (Fig 3.6).Across employment status, formal training is the highest

among regular workers, followed by the self-employed,and lowest among the casually employed. Non-formaltraining is, however, the highest among the self-employedfollowed by the regularly employed and then the casuallyemployed. It is noteworthy that the difference in informaltraining status across activity status is much smaller thanformal training status.

3.22 This pattern replicates itself across both theunorganised and organised sectors, though the level offormal as well as overall training is higher in theorganised sector.

3.23 The share of those with formal skills acrossindustrial categories also indicates that there are certainindustries, in both the unorganised and organised sectors,

Fig. 3.6: Skills of Workers (15 - 29 years) by Employment Status & Sector (2004-2005)

SE= Self-employed; RW = Regular Workers; CW = Casual WorkersSource: Computed from unit level data of NSS 61st Round 2004 - 2005, Employment-Unemployment Survey.

which absorb more formal training. This is evident bythe fact that the share of workers with formal skills ishigher in Health & Social Work, Real Estate, Finance,Education and Public Administration (Appendix TableA 3.2). It is however interesting to note that the sharesof the formally trained in a few sectors such as education,public administration and construction are estimated asbeing higher in the unorganised sector. Although formalskills are more prevalent in the organised manufacturingsector, workers with any skill are more prevalent in theunorganised sector. The analysis also shows that the shareof those with formal skills is negligible in several sectorsincluding agriculture and private households withemployed persons.

3.24 Industries in which formal skills are low butthe percentage of workforce with any skills is quite high,such as manufacturing, construction, trade, hotels, andcommunity and personal services are clearly those wherethere is prima facie requirement of developing expandedformal training systems.

Education & Skill Acquisition

3.25 If education is examined in conjunction withtraining, a pattern emerges. Non-formal training is higheramong those with lower levels of education (up tomiddle) and declines thereafter. But the proportion offormally trained persons is higher among the highereducated youth. The incidence of formal skill trainingwas only about 0.2 per cent among the illiterate youth.


20


This rises to 17.5 per cent in the case of those withgraduate and above formal education. (Table 3.6).Difference by gender in this pattern is not high, thoughmen at all levels of education tend to have a higherincidence of training.

SSSSSourourourourource:ce:ce:ce:ce: Source: Computed from unit level data, NSS 61st Round, 2004 - 2005, Employment Unemployment Survey, adjusted forpopulation.

Table 3.6: Percentage of Persons in 15 - 29 Years with Vocational Training by Education & Gender(2004-2005)

EducationalEducationalEducationalEducationalEducational FFFFFororororormalmalmalmalmal Non-Non-Non-Non-Non- TTTTTotalotalotalotalotal FFFFFororororormalmalmalmalmal Non-formalNon-formalNon-formalNon-formalNon-formal TTTTTotalotalotalotalotal FFFFFororororormalmalmalmalmal Non-formalNon-formalNon-formalNon-formalNon-formal TTTTTotalotalotalotalotalAttainmentAttainmentAttainmentAttainmentAttainment formalformalformalformalformal (((((WWWWWith ith ith ith ith SSSSSkilkilkilkilkill)l)l)l)l) (((((WWWWWith Sith Sith Sith Sith Skilkilkilkilkill)l)l)l)l) (((((WWWWWith Sith Sith Sith Sith Skilkilkilkilkill)l)l)l)l)LevelsLevelsLevelsLevelsLevels

MalesMalesMalesMalesMales FemalesFemalesFemalesFemalesFemales PersonsPersonsPersonsPersonsPersons


Primary 0.6 12.2 12.7 0.5 6.7 7.3 0.6 9.7 10.3

Middle 1.2 10.6 11.8 1.5 6.4 8.0 1.3 8.9 10.2

Secondary 4.1 8.1 12.2 3.2 5.0 8.2 3.7 6.8 10.6

Higher Secondary 9.8 5.6 15.4 7.3 3.5 10.8 8.7 4.7 13.5

Diploma/Certificate 70.4 2.9 73.3 68.3 2.7 71.0 69.7 2.8 72.5

Graduate &Above 17.5 4.5 22.0 17.4 2.8 20.2 17.5 3.7 21.2


Fig. 3.7: Distribution of Population in the Age Group 15-29 across Education & Skill Levels (2004-2005)

Source: Source: Source: Source: Source: Computed from unit level data of NSS 61st Round 2004 - 2005, Employment-Unemployment Survey

3.26 As Fig. 3.7 shows, 74 per cent of the formallytrained persons have higher secondary or higher levelsof education while, on the other hand, 78 per cent personswith informal skills have middle or lower level ofeducation. The issue therefore is not that persons with

21

3 However, in spite of the improvement in the educational profile, there has been a fall in the level of overall skills, during the 11

year period for all categories of education and sex except for higher secondary and above.

lower levels of education can not acquire skills, but thatthe existing training systems are oriented towardsproviding formal training only to those persons withhigher levels of education.

3. Most vocational training

programmes, including the ITIs, require at least secondaryor higher secondary levels of education to be able to enrollin the programme.

3.27 The education and skill relationship prevails evenwithin unorganised and organised sectors. But, as onemight expect, there are some differences. In the organisedsector, 94 per cent of the formally trained workers hadsecondary or higher educational levels (Fig. 3.8). But inthe unorganised sector, this percentage was lower at 77per cent i.e. in the unorganised sector slightly less than aquarter of the formally trained workers had middle orlower education. This percentage was higher amongwomen, 30 per cent of the formally trained female workershave middle or lower education (compared to a figure ofabout 20 per cent for male workers).

Fig 3.8: Educational Levels of Usual Principal and Subsidiary Status Workers with Formal Skills (15-29years) by Sector (2004-2005)


Trades & Formal Training

3.28 The NSSO provides information regarding thetrades for which formal skill training has been providedto the persons in 15 – 29 years age group. The mostsought after field of formal vocational training was‘computer trades’ (nearly 30 per cent). For men the nextmost popular trades were electrical and electronics (18.2per cent), followed by mechanical engineering (12.3 percent), ‘driving’ (9.4 per cent), ‘civil engineering’ (4.7 percent), health and paramedical (4.3 per cent) and officeand business work’ (4.1 per cent). Among women therewas concentration of vocational training in computersfollowed by ‘textile related trade’ (22 per cent). The nextmost popular trades among women are ‘health andparamedical’ and office and business work. While theoverall preferences were not very different among men inrural and urban areas, the demand from rural female wasa little different (Table 3.7). Among the female youth inrural areas, the first preference for vocational trainingwas textile and related trades (31 per cent), followed by


22


computer trades (21 per cent), and health and paramedicaltrades (10 per cent). Among urban women it wascomputer related trades (39 per cent) followed by textilerelated (18 per cent) and heath and paramedical trades(9 per cent).

3.29 An analysis of formal training among the workersshows that there are quite a few trades where training isconcentrated among both organised and unorganisedsector workers (Appendix Table A3.3). However, there

Source:Source:Source:Source:Source: Computed from unit level data of NSS 61st Round, 2004 - 2005, Employment-Unemployment Survey and adjusted forpopulation

Table 3.7: Percentage of Persons in Age-group 15 - 29 Years Receiving/ Received Formal Vocational

Training by Field of Vocational Training & Sex (2004-2005)

PPPPPopulatioopulatioopulatioopulatioopulation (15-29 n (15-29 n (15-29 n (15-29 n (15-29 YYYYYears)ears)ears)ears)ears) WWWWWorororororkers (15-29 kers (15-29 kers (15-29 kers (15-29 kers (15-29 YYYYYears)ears)ears)ears)ears)

FFFFField of ield of ield of ield of ield of VVVVVocococococatioatioatioatioational nal nal nal nal TTTTTrrrrrainingainingainingainingaining PPPPPersoersoersoersoersonsnsnsnsns MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale UnorganisedUnorganisedUnorganisedUnorganisedUnorganised OrganisedOrganisedOrganisedOrganisedOrganised TTTTTotalotalotalotalotal

Mechanical Engineering 7.9 12.3 1.0 7.5 12.1 9.2

Electrical & Electronic Engineering 12.5 18.2 3.5 12.8 13.8 13.1

Computer Trades 30.0 29.9 30.0 23.5 32.3 26.8

Civil engineering and building construction related

works 3.3 4.7 1.2 3.9 2.1 3.3

Chemical Engineering 0.3 0.5 0.0 0.1 0.2 0.1

Leather Related 0.2 0.3 0.1 0.4 0.0 0.2

Textile Related 9.8 1.9 22.2 11.7 4.4 9.0

Catering, nutrition, hotels and restaurant related work 0.9 1.1 0.6 0.6 0.9 0.8

Artisan/ craftsman/ handicraft and cottage basedproduction work 1.9 1.5 2.5 2.8 0.9 2.1

Creative arts/ artists 1.2 0.8 1.9 0.4 1.3 0.8

Agriculture and crop production related skills and foodpreservation related work 0.6 0.7 0.4 0.6 0.3 0.5

Non-crop based agricultural and other related activities 0.5 0.5 0.5 0.7 0.5 0.6

Health and paramedical services related work 6.4 4.3 9.9 4.9 8.6 6.3

Office and business related work 4.8 4.1 5.8 2.9 4.3 3.4

Driving and motor mechanic work 5.9 9.4 0.5 13.0 5.6 10.3

Beautician, hairdressing & related work 1.7 0.0 4.3 1.7 0.2 1.1

Work related to tour operators/ travel managers 0.1 0.0 0.0 0.0 0.0 0.0

Photography and related work 0.1 0.2 0.1 0.4 0.0 0.2

Work related to childcare, nutrition, pre-schools and crèche 1.0 0.0 2.6 1.3 1.4 1.3

Journalism, mass communication and media relatedwork 0.3 0.3 0.1 0.1 0.5 0.2

Printing technology related work 0.5 0.6 0.5 0.9 0.5 0.7

Other 9.1 7.9 10.9 9.9 10.2 10.0

TTTTTotalotalotalotalotal 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0

are a handful of trades where the incidence of formaltraining is higher in the informal sector. These are: textilerelated trades; handicraft/artisan/cottage basedproduction; and driving and motor mechanic work.

Poverty & Formal Skills

3.30 Poverty is undoubtedly a significant barrier inacquiring skills. A poor person has hardly any chance ofacquiring formal skills. The incidence of training is fairly

23

high only for the middle and high income groups. Ouranalysis shows that 7.5 per cent of the middle and 17.6per cent high income groups were formally trained (Fig.3.9). Such a systematic association between income and

training status is not the case with non-formal trainingwhich is fairly dispersed across the lower income groups.While any formal training system has to overcome thebarrier posed by the economic status of the potentialtrainee, possession of informal skills does not provideworkers a way out of poverty.

Social Group & Formal Skills

3.31 The relationship between education levels andskills also vary across social groups. The share of personswith formal skills increases from STs, SCs, OBCs toOthers in that order. Indeed it is only the general castecategories for whom the incidence of training is higherthan the average of 3.8 per cent (Fig 3.10). As far asinformal skills are concerned, there are difference acrosssocial groups. These are the highest among OBC persons(who form a large proportion of non-agricultural self-employed workers) and relatively the lowest amongpersons belonging to the general caste groups.

Fig. 3.9: Percentage of Persons in the Age Group 15 -29 with Formal Skill in Poverty Groups (2004-2005)


MultivarMultivarMultivarMultivarMultivariate Aiate Aiate Aiate Aiate Analnalnalnalnalyyyyysis of the Fsis of the Fsis of the Fsis of the Fsis of the Factors Influencing Factors Influencing Factors Influencing Factors Influencing Factors Influencing FororororormalmalmalmalmalSkills AcquiredSkills AcquiredSkills AcquiredSkills AcquiredSkills Acquired

3.32 The above analysis shows quite clearly that the

likelihood of being formally trained is higher for thosewith high levels of education, the economically betteroff, males, those living in urban areas, and those belongingto upper castes. One may like to know whether each ofthese factors exercise an independent influence on theprobability of being formally trained after accounting forthe influence of the other factors. Appendix Table A3.4presents the likelihood of certain variables which impactthe formal training by sex, residence and education. Thereference variables are rural areas as place of residence,females among sex, illiteracy among education and belowpoverty line among poverty status. We observe that thelikelihood that a person gets formal training is 91 percent more if he comes from an urban area in comparisonto his rural counterparts. Similarly, a male has a greaterchance to be trained in comparison to his opposite sex.The likelihood of an educated person being trained is300 per cent if he is educated up to middle and jumps to


24


Fig 3.10: Percentage of Persons with Skills in the Age Group 15 -29 for each Social Groups (2004-2005)


2500 per cent if he is secondary educated as compared toilliterate persons. The social group also has an influenceon the chances of being formally trained. The SC, OBCand Others all have a higher likelihood of being formallytrained as compared to the STs.

Supply of training: Training providers & Types

3.33 Given the requirement of availability of skilledlabour in the context of economic development, it isprocesses of formal skill acquisition and training foremployment that become important. The fact is thatdeveloping countries tend to lag behind in making theseprocesses available to their populations. These processesof formal skill acquisition and training come from thegeneral educational systems and systems of technical andvocational education and training (TVET) that are linkedto specific occupations. It includes learning designed todevelop the skills for practicing particular occupations,

as well as that designed to prepare for entry or re-entryinto the world of work in general. TVET includes bothinitial vocational training undertaken by young peopleprior to entering the labour market and continuingvocational training undertaken by adults whilst in workor during periods when they are economically inactive.In other words, it encompasses both initial skillsdevelopment and various forms of ‘Re-skilling’ and ‘Up-skilling’.

3.34 The field of formal training obtained by theyouth is related to the supply of training through theexisting institutes of training. The NSS survey alsoenquires into the institutes from where the formal trainingwas being obtained. The Industrial Training Institutes(ITIs) and the Industrial Training Centres (ITCs) providethe largest formal training base for about 7.88 lakhpersons. Vocational education schools provided around2 lakh training places, Institutions affiliated to the UGC

25

and the polytechnics provided about 6.15 lakh trainingplaces. About 2.2 lakh persons were being trained intailoring, embroidery and stitch craft. Altogether, 39.2lakhs or 3.92 million persons were receiving formaltraining at the time of the survey (Table 3.8).

3.35 We have also analysed the type of institutionsthrough which formally trained workers in theunorganised and organised sectors received training(Appendix Table A 3.3). Here again we notice that the

Bold figures relate to inadequate sample size below 30Source: Source: Source: Source: Source: Computed from unit level data of NSS 61st Round, 2004 - 2005, Employment-Unemployment Survey and adjusted forpopulation

Table 3.8: Percentage of Persons in Age-group 15 - 29 Years Receiving Formal Vocational Training byInstitute of Training & Sex, (2004-2005)

Institute of Institute of Institute of Institute of Institute of TTTTTrrrrrainingainingainingainingaining MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal MaleMaleMaleMaleMale FemaleFemaleFemaleFemaleFemale TTTTTotalotalotalotalotal

(in thousands)(in thousands)(in thousands)(in thousands)(in thousands) (in per cent)(in per cent)(in per cent)(in per cent)(in per cent)

ITI/ ITC 704.31 84.60 788.91 26.1 6.9 20.1

Schools with Vocational Course 142.55 58.28 200.83 5.3 4.7 5.1

UGC 287.57 65.66 353.22 10.7 5.3 9.0

Polytechniques 219.27 44.3444.3444.3444.3444.34 263.61263.61263.61263.61263.61 8.1 3.63.63.63.63.6 6.76.76.76.76.7

Janshikshan 15.6915.6915.6915.6915.69 25.0925.0925.0925.0925.09 40.7840.7840.7840.7840.78 0.60.60.60.60.6 2.02.02.02.02.0 1.01.01.01.01.0

National Open 2.392.392.392.392.39 4.804.804.804.804.80 7.187.187.187.187.18 0.10.10.10.10.1 0.40.40.40.40.4 0.20.20.20.20.2

Hotel Management 28.3528.3528.3528.3528.35 3.133.133.133.133.13 31.4831.4831.4831.4831.48 1.11.11.11.11.1 0.30.30.30.30.3 0.80.80.80.80.8

Food Craft, Catering 13.3413.3413.3413.3413.34 0.270.270.270.270.27 13.6013.6013.6013.6013.60 0.50.50.50.50.5 0.00.00.00.00.0 0.30.30.30.30.3

CSISI/ DIC 12.9012.9012.9012.9012.90 6.736.736.736.736.73 19.6319.6319.6319.6319.63 0.50.50.50.50.5 0.50.50.50.50.5 0.50.50.50.50.5

Fashion Technology Institutes 0.470.470.470.470.47 9.569.569.569.569.56 10.0310.0310.0310.0310.03 0.00.00.00.00.0 0.80.80.80.80.8 0.30.30.30.30.3

Tailoring, Embroidery, Stitch Craft 21.1621.1621.1621.1621.16 201.80 222.96 0.80.80.80.80.8 16.4 5.7

Nursing Institutes 35.0135.0135.0135.0135.01 59.58 94.59 1.31.31.31.31.3 4.9 2.4

Physiotherapy, Ophthalmic, Dental Institutes 7.197.197.197.197.19 10.8510.8510.8510.8510.85 18.0518.0518.0518.0518.05 0.30.30.30.30.3 0.90.90.90.90.9 0.50.50.50.50.5

Institute Diploma Pharmacy 41.8141.8141.8141.8141.81 7.497.497.497.497.49 49.29 1.51.51.51.51.5 0.60.60.60.60.6 1.3

Hospital & Medical Training Institutes 47.75 44.76 92.51 1.8 3.6 2.4

Nursery Teachers’ Training Institutes 5.315.315.315.315.31 25.3225.3225.3225.3225.32 30.63 0.20.20.20.20.2 2.12.12.12.12.1 0.8

Training for Agricultural Extension 13.7513.7513.7513.7513.75 4.714.714.714.714.71 18.4618.4618.4618.4618.46 0.50.50.50.50.5 0.40.40.40.40.4 0.50.50.50.50.5

Carpet Weaving Centres 0.000.000.000.000.00 4.824.824.824.824.82 4.824.824.824.824.82 0.00.00.00.00.0 0.40.40.40.40.4 0.10.10.10.10.1

Handloom, Handicraft, KVIC 0.070.070.070.070.07 0.630.630.630.630.63 0.700.700.700.700.70 0.00.00.00.00.0 0.10.10.10.10.1 0.00.00.00.00.0

Recognised Motor Driving Schools 73.18 0.150.150.150.150.15 73.33 2.7 0.00.00.00.00.0 1.9

Institute for Secretariat Practices 5.855.855.855.855.85 26.2726.2726.2726.2726.27 32.1132.1132.1132.1132.11 0.20.20.20.20.2 2.12.12.12.12.1 0.80.80.80.80.8

Recognised Beautician Schools 0.000.000.000.000.00 28.9728.9728.9728.9728.97 28.9728.9728.9728.9728.97 0.00.00.00.00.0 2.42.42.42.42.4 0.70.70.70.70.7

Institutes run by Companies, Corporations 91.69 45.81 137.50 3.4 3.7 3.5

Institutes for Journalism, Mass Communication 32.9832.9832.9832.9832.98 2.462.462.462.462.46 35.4435.4435.4435.4435.44 1.21.21.21.21.2 0.20.20.20.20.2 0.90.90.90.90.9

Other Institutes 895.11 461.32 1356.43 33.2 37.6 34.6

Total (excluding Unspecified) 2697.69 1227.36 3925.05 100.0 100.0 100.0

Total 2709.37 1234.36 3943.73

formally trained have a fairly similar training backgroundin both the organised and unorganised sectors. Forexample, 24.8 per cent of the formally trained in theunorganised sector and 22.4 per cent of the formallytrained in the organised sector come from the ITIs. At

another end, 4.1 per cent of the formally trained in theunorganised sector and 3.8 per cent of the formally trainedin the organised sector come from the vocational schools.There are a few differences, however. A higher proportion


26


of the trained workers in the organised sector are fromthe UGC institutions and the polytechnics. On the otherhand, a higher proportion of those trained in tailoring,embroidery and stitch craft, and in handloom, handicraftare in the unorganised sector.

3.36 The source of formal training is quite differentfor young men and women. While about 45 per cent offormally trained men received their training from ITI/ITC, Polytechnics, or UGC recognized institutions, thispercentage was only 15.8 for women (Table 3.8). On theother hand, 27 per cent women received training frominstitutes for tailoring, stitch-craft and embroidery, nursingand medical training and teachers’ training.

3.37 Besides NSS, information on supply of traininginstitutes and infrastructure is also available fromgovernment sources. The details are provided later in thisreport. While higher end technical education is providedby IITs. engineering institutions, medical colleges,polytechnics and so on, the ITIs/ITCs have formed thebackbone of the system providing lower end formaltraining. There are around 6834 ITIs/ITCs in India witha seating capacity of about 0.9 million throughout thecountry. Of this, ITIs/ITCs in the southern statescomprised nearly 38 per cent, with Andhra Pradeshaccounting for around 12 per cent and Tamil Nadu around9 per cent. The Apprenticeship Training Scheme of thegovernment is available to 2.58 lakh workers. VocationalSchools offer places to about 1 million persons whilepolytechnics offer about 3 lakh places. There are a hostof other public and private training providers for formaltraining.

3.38 MoLE estimates that there are only 2.5-3million vocational education and training places available

in the country. As shown earlier, our direct estimates arethat about 3.8 m were undergoing formal training at thetime of the survey. Given that the duration of such trainingis often less than a year, we have estimated the annualtraining capacity to be about 5 million. Out of these, veryfew places are for those with low levels of education.While the overall formal skill levels are very low, thelarge numbers of people who drop out of school, inparticular, do not have the necessary education and skillsto be productively employed in the economy. This isundoubtedly a very serious challenge to the current growthand development process.

Demand for training

3.39 There is no systematic assessment of the demandfor training in the unorganised sector of the economy.Most assessments of such demand have been made by, oron behalf of, segments of (organised) industry. These donot go into the overall need to educate and train thepredominantly informal sector labour force in India.However, almost all available reports (reviewed later inthis report) pinpoint skill shortages and mismatchesbetween demand and supply.

4

3.40 We have examined the recent characteristics ofthe workforce in the organised and unorganised sectors,including those such as average education level, technicaleducation, incidence of formal and non-formal skills andgrowth rate of employment (Appendix Table A 3.5).Broadly, at the high end of the workforce, we havesegments requiring high levels of general education and/or technical education. Our primary focus is on segmentsof the workforce which have comparatively low levels ofeducation, and who are currently with or without (formal/non-formal) skills. Among these segments, those with a

4 The CII – McKinsey Report ‘Made in India: the next big manufacturing export story’ (October 2004) points out the big

mismatch between the needs of the industry and availability of skilled human resources in India. The report states that if theIndian manufacturing sector has to grow at about 12 per cent per annum, it will be necessary for the education and trainingsystem to produce at least 1.5 million technically skilled people every year. It estimates that the country would need anincremental requirement of about 20 million skilled people by 2015. Similarly, the apparel industry alone requires 2 millionskilled workers by 2010 and the present institutional structure is inadequate to meet the demand. The retail sector is anotheractivity that reportedly requires large numbers of skilled people. The Retailer’s Association of India has signed an MOU withMinistry of Labour and Employment to train the youth registered with the State Employment Exchanges. An estimate says(reported in Economics Times dated June 19, 2007) that there is an immediate requirement of 1.5 lakhs skilled people on theshop floor. A recent Study undertaken by Ernst & Young reports that ‘by targeting the youth population in India, the Retailerswill be investing in the future as they will be able to influence and create loyalty from the start’ (Financial Express, June 8, 2007).

27

fairly high incidence of skills (predominantly non-formal)and rapid growth of employment are clearly those onwhich formal training initiatives would need to focus.Our analysis (based on Table A3.5, in the appendix)identifies the following trades on a prima facie basis asthose in which an intensive effort to expand trainingwould be required: Construction Workers, Stone Cutter;Salesmen, Shop Assistants, Related; Transport EquipmentOperators; Tailors, Dress makers, Sewers, Upholsterers,Related; Production, Related (Others); Carpenters,Cabinet, Related Wood; Tobacco Preparers, TobaccoProduct Makers; Hair Dresser, Barber, Beautician,Related; House Keeper, Matron, Steward, Cooks,Waiters, Bartenders; Stationary Engines, EquipmentOperators, Material Handling, Loaders; Plumber, Welder,Sheet Metal, Structural, Metal Preparers, Erectors;Painting; Arts and Journalists. There are other sectors/segments which are also growing rapidly but wherecurrent levels of training are low. Examples of these tradesare: Maids, Related House keeping Service (Others);Professional Workers, Others; Building Caretaker,Sweeper, Cleaner, Related. The potential/need of trainingin these sectors needs to be carefully examined.

Regional Dimensions of “DemographicDividend” & Training Capacity

3.41 A strong case for strengthening training capacityfor the informal sector workers arises from the increasingrequirement for skilled and semi-skilled labour from therest of the world. India currently has a large emigrantworker population, of whom a large percentage consistsof such workers. It is anticipated that in the years tocome, with the projected increases in India’s labour forceand the projected deficits in labour supply in developedregions/countries, Indian skilled/semi-skilled workersmight play a more significant role in meeting theinternational deficits.

3.42 The Commission projected the increase in labourforce till the year 2017, age group wise, at the state level.It is estimated that between 2006-07 and 2016-17, 52.9percent of the total increase in labour force and 81.6percent of the increase in the young labour force (15-29years) will be in the Eastern and Central states (M.P.,Chhatisgarh, Jharkhand. Bihar, Uttar Pradesh, WestBengal, Orissa, Assam and the Northeastern states), whilethe Southern and Western states will contribute to 28.9

percent of the total increase in labour force and -2.6percent to the increase in the young labour force. Thedetails are given in Appendix Table A3.6. It is to be notedthat, at present, 57.1 percent of the formal trainingcapacity is in the latter group of states whereas the formergroup of states have 28.1 percent of training capacity.Other private and NGO training capacity too follows asimilar geographical pattern. It follows that a major effortwill have to be made to boost training capacity in thelagging states, if the country is to reap the so-calleddemographic dividend.

Training Targets

3.43 As discussed earlier in this report, the level ofvocational skills in the labour force in India comparespoorly with the position in other countries (Table 3.9).The Commission is of the view that the percentage offormally trained labour force should be raised to about50 over the next three five year plans.

Note: Note: Note: Note: Note: Only those who have received formal vocational training areshown as trained in this table. To the extent that training and skills inIndia are acquired through informal methods, including training inthe family, the Indian figures are understated.SSSSSourourourourource:ce:ce:ce:ce: Report of the Task Force on Employment Opportunitiesset up by the Planning Commission

Table 3.9: Vocationally trained youth in Labour

Force: International Comparison

CountryCountryCountryCountryCountry Age GroupAge GroupAge GroupAge GroupAge Group VVVVVocococococatioatioatioatioationalnalnalnalnalllllly y y y y TTTTTrrrrrainedainedainedainedained( per cent of ( per cent of ( per cent of ( per cent of ( per cent of Those inThose inThose inThose inThose in

labour force)labour force)labour force)labour force)labour force)IndiaIndiaIndiaIndiaIndia 20-2420-2420-2420-2420-24 5.065.065.065.065.06

Developing CountriesDeveloping CountriesDeveloping CountriesDeveloping CountriesDeveloping CountriesBotswana 20-24 22.42Colombia(1998) 20-29 28.06Mauritius(1995) 20-24 36.08Mexico(1998) 20-24 27.58

Developed CountriesDeveloped CountriesDeveloped CountriesDeveloped CountriesDeveloped CountriesAustralia(1998) 20-24 64.11Canada(1998) 20-24 78.11France(1997) 20-24 68.57Germany (1998) 20-24 75.33Israel(1998) 18-24 81.23Italy (1997) 20-24 43.88Japan (1997) 15-24 80.39Korea Republic (1998) 20-24 95.86New Zealand (1997) 20-24 63.03Russian Federation (1998) 20-24 86.89Singapore (1998) 20-24 66.24United Kingdom(1998) 20-24 68.46


28


3.44 In order to work out the annual and plan-wisetargets, the Commission has estimated the labour forcefor the years up to 2021-22 using the last three rounds ofthe NSS and the population projections prepared for thePlanning Commission. In order to provide formal skilltraining to half the labour force considerable expansionof training would be required. We estimate that duringthe Eleventh Plan, the annual training capacity wouldneed to about 12.5 million (up from about 5 millioncurrently). A further increase to 18 million would berequired during the 12

th Plan which will go up to 25

million during the 13th Plan. If these targets are achieved,

then by the end of the 13th Plan, about half the total

labour force of 623 million in 2021-22 would acquireformal skills.

3.45 It may be mentioned that the annual increase inthe labour force is presently estimated at about 9.6 millionwhich would fall to about 8 million by the end of the13

th Plan. The medium term strategy proposed by us

would involve provision of training for both new entrantsas well as those already in the labour force. As shownelsewhere in this report, the training of workers in theunorganised sector would require flexible delivery modelswhich do not bank on fixed institutional capacity/infrastructure. The permanent training capacity in thesystem may not need to be raised beyond 10-12 millionworkers in the medium term.

Conclusion

3.46 Although the Indian economy has experiencedrapid growth over the recent period, the low levels ofeducation and formal training of the workforce are amatter of concern. Workers without education and skillsare stuck at the bottom of the labour market with lowproductivity and earnings. From the point of view of theeconomy, the lack of skills, the inability of the workersto adapt to changing technological and market conditions,and the existence of low productivity sectors can not butconstrain the growth of the economy and lead to a lopsided growth structure in which the majority of workersare not able to participate effectively in the developmentprocess.

3.47 The economy has a small organised sector anda large unorganised sector. Workers – waged as well asself-employed in the unorganised sector- are worse offin terms of their educational and skill endowments. Mostof the addition to the labour force is likely to be absorbedin the unorganised non-farm sector.

3.48 The formal skill training system in India wascreated to meet the needs of a growing factory system. Itcatered to a few trades and persons with secondary orhigher education were eligible to undergo training. Overthe years, this system itself has not been able to meet thechanging needs of the organised sector. Moreover, sincethe organised sector itself has not shown significantgrowth in terms of employment, a majority of the trainedpersons have found employment in the upper segmentsof the unorganised economy. Formal training, which isaccessed by a very low percentage of the populationcurrently is directly related to the socio-economic statusof the individual. To some extent, other skill needs of theeconomy are met through non-formal training, which isrelatively more accessible to persons from lower socio-economic backgrounds but which suffers from a numberof limitations. Moreover, even after taking into accountthe non-formally trained, skilled workers in the Indianeconomy are still small in number. There are many sectorswhere there is severe dearth of skills and in which thecase for expanded formal training can be made out.

3.49 In this report, we have focused on the trainingneeds of workers in the unorganised sector who havelow levels of education and low level of formal skills.We are of the view that all entrants in the labour forcemust be equipped with a minimum level of educationwhich must be gradually extended to secondary level.Simultaneously efforts have to be made to provide theseworkers with skill training through modular courses sothat a significant part of the labour force can be imbuedwith formal marketable skills within a reasonable periodof time. Unless this is done, this workforce will not beable to move on a trajectory of higher productivity andhigher incomes, with deleterious consequences for thedevelopment of the economy as a whole.

29

Appendix Table A3.1: Skills across the Population (1993-94)

SkillSkillSkillSkillSkill NNNNNumber of Pumber of Pumber of Pumber of Pumber of Persoersoersoersoersonsnsnsnsns PPPPPererererercent to totalcent to totalcent to totalcent to totalcent to total PPPPPererererercent to total with skilcent to total with skilcent to total with skilcent to total with skilcent to total with skillslslslsls(in lakhs)(in lakhs)(in lakhs)(in lakhs)(in lakhs) (in per cent)(in per cent)(in per cent)(in per cent)(in per cent)

StenographerStenographerStenographerStenographerStenographer 43.4543.4543.4543.4543.45 0.490.490.490.490.49 4.764.764.764.764.76

Fisherman 21.01 0.23 2.30

Miner, Quarryman 8.36 0.09 0.92

Spinner 16.78 0.19 1.84

WWWWWeaveaveaveaveavererererer 74.8974.8974.8974.8974.89 0.840.840.840.840.84 8.218.218.218.218.21

TTTTTailorailorailorailorailor 156.04156.04156.04156.04156.04 1.751.751.751.751.75 17.1017.1017.1017.1017.10

Shoemaker 7.69 0.09 0.84

Carpenter 29.25 0.33 3.21

Mason, Bricklayer 27.89 0.31 3.06

Moulder 2.70 0.03 0.30

Machineman 16.45 0.18 1.80

Fitter, Diemaker 11.43 0.13 1.25

Welder 8.27 0.09 0.91

Blacksmith 9.63 0.11 1.05

Goldsmith 7.81 0.09 0.86

Silversmith 2.36 0.03 0.26

Electrician 16.16 0.18 1.77

Repair Electronic Goods 9.72 0.11 1.06

Motor Motor Motor Motor Motor VVVVVehicehicehicehicehicle Dle Dle Dle Dle Drrrrrivivivivivererererer 73.3773.3773.3773.3773.37 0.820.820.820.820.82 8.048.048.048.048.04

Boatman 2.16 0.02 0.24

Potter 8.99 0.10 0.99

Nurse, Midwife 4.57 0.05 0.50

Basket, Wick maker 24.38 0.27 2.67

Toy Maker 0.34 0.00 0.04

Brick Maker, Tile maker 11.32 0.13 1.24

Bidi MakerBidi MakerBidi MakerBidi MakerBidi Maker 41.7241.7241.7241.7241.72 0.470.470.470.470.47 4.574.574.574.574.57

Book binder 1.25 0.01 0.14

Barber 13.49 0.15 1.48

Mud House builder & thatcher 36.15 0.40 3.96

Others 224.79 2.51 24.64

TTTTTotal otal otal otal otal WWWWWith Sith Sith Sith Sith Skilkilkilkilkillslslslsls 912.44912.44912.44912.44912.44 10.2010.2010.2010.2010.20 100.00100.00100.00100.00100.00

No SkillsNo SkillsNo SkillsNo SkillsNo Skills 8029.458029.458029.458029.458029.45 89.8089.8089.8089.8089.80

TTTTTotalotalotalotalotal 8941.898941.898941.898941.898941.89 100.00100.00100.00100.00100.00

Source: Source: Source: Source: Source: Computed using unit level data of NSS on Employment and Unemployment, 50th Round, Schedule 10, 1993-94


30


Appendix Table A3.2: Skills of Workers (15 - 29 years) across Industries & Sectors (2004-2005)

Bold figures indicate sample size below 30SSSSSourourourourource:ce:ce:ce:ce: Computed from unit level data of NSS 61st Round 2004 - 2005, Employment-Unemployment Survey.

Unorganised SectorUnorganised SectorUnorganised SectorUnorganised SectorUnorganised Sector Organised SectorOrganised SectorOrganised SectorOrganised SectorOrganised Sector AlAlAlAlAll l l l l WWWWWorororororkerskerskerskerskersFFFFFororororormalmalmalmalmal Any SkillAny SkillAny SkillAny SkillAny Skill FFFFFororororormalmalmalmalmal Any SkillAny SkillAny SkillAny SkillAny Skill FFFFFororororormalmalmalmalmal Any SkillAny SkillAny SkillAny SkillAny Skill

Agriculture 0.8 11.0 3.5 13.1 0.8 10.9

Mining 0.30.30.30.30.3 2.12.12.12.12.1 4.44.44.44.44.4 19.019.019.019.019.0 2.32.32.32.32.3 10.410.410.410.410.4

Manufacturing 3.7 31.4 8.7 26.2 5.1 29.8

Electricity, Gas, Water Supply 0.00.00.00.00.0 3.83.83.83.83.8 20.520.520.520.520.5 20.820.820.820.820.8 15.815.815.815.815.8 16.916.916.916.916.9

Construction 2.6 14.0 1.8 8.5 2.4 12.7

Trade 4.2 13.1 14.8 26.1 4.7 13.7

Hotels & Restaurants 1.71.71.71.71.7 12.1 8.68.68.68.68.6 14.814.814.814.814.8 2.9 12.6

Transport 7.5 22.5 14.1 22.1 8.4 22.5

Finance 18.918.918.918.918.9 20.620.620.620.620.6 23.8 26.4 22.3 24.6

Real estate 19.0 30.6 32.1 34.2 24.2 32.1

Public Administration 15.115.115.115.115.1 15.115.115.115.115.1 12.1 14.9 12.1 14.8

Education 23.2 28.1 19.0 22.1 20.9 24.8

Health, Social Work 24.4 42.0 36.6 40.2 29.9 41.2

Community, Personal, Social Service 2.8 28.2 11.511.511.511.511.5 22.322.322.322.322.3 3.5 27.7

Private Households with Employed Persons 5.55.55.55.55.5 8.98.98.98.98.9 0.00.00.00.00.0 7.07.07.07.07.0 5.55.55.55.55.5 9.09.09.09.09.0

Total 2.5 15.1 11.1 21.6 3.5 15.8

31

Appendix Table A3.3: Percentage of Workers Receiving/ Received Formal Vocational Training inAge-Group 15 - 29 Years by Institutions & Sector (2004-2005)

Institute of Institute of Institute of Institute of Institute of TTTTTrrrrrainingainingainingainingaining UnorganisedUnorganisedUnorganisedUnorganisedUnorganised OrganisedOrganisedOrganisedOrganisedOrganised TTTTTotalotalotalotalotalITI/ ITC 24.8 22.4 23.9

Schools with Vocational Course 4.1 3.8 4.0

UGC 1.91.91.91.91.9 3.5 2.5

Polytechniques 2.3 5.5 3.5

Janshikshan 0.60.60.60.60.6 0.50.50.50.50.5 0.60.60.60.60.6

National Open 0.10.10.10.10.1 0.50.50.50.50.5 0.30.30.30.30.3

Hotel Management 0.10.10.10.10.1 0.50.50.50.50.5 0.30.30.30.30.3

Food Craft, Catering 0.50.50.50.50.5 0.30.30.30.30.3 0.40.40.40.40.4

CSISI/ DIC 0.60.60.60.60.6 0.80.80.80.80.8 0.60.60.60.60.6

Fashion Technology Institutes 0.10.10.10.10.1 0.00.00.00.00.0 0.10.10.10.10.1

Tailoring, Embroidery, Stitch Craft 9.3 2.62.62.62.62.6 6.8

Nursing Institutes 1.51.51.51.51.5 3.7 2.3

Physiotherapy, Ophthalmic, Dental Institutes 0.10.10.10.10.1 0.40.40.40.40.4 0.20.20.20.20.2

Institute Diploma Pharmacy 0.80.80.80.80.8 0.90.90.90.90.9 0.8

Hospital & Medical Training Institutes 2.3 3.0 2.6

Nursery Teachers' Training Institutes 1.31.31.31.31.3 1.91.91.91.91.9 1.5

Training for Agricultural Extension 1.01.01.01.01.0 0.30.30.30.30.3 0.70.70.70.70.7

Carpet Weaving Centres 0.20.20.20.20.2 0.00.00.00.00.0 0.20.20.20.20.2

Handloom, Handicraft, KVIC 0.10.10.10.10.1 0.10.10.10.10.1 0.10.10.10.10.1

Recognised Motor Driving Schools 10.2 3.4 7.6

Institute for Secretariat Practices 0.50.50.50.50.5 1.71.71.71.71.7 0.9

Recognised Beautician Schools 1.01.01.01.01.0 0.20.20.20.20.2 0.70.70.70.70.7

Institutes run by Companies, Corporations 2.8 5.0 3.6

Institutes for Journalism, Mass Communication 0.20.20.20.20.2 0.50.50.50.50.5 0.30.30.30.30.3

Other Institutes 33.7 38.4 35.5

TTTTTotalotalotalotalotal 100.0 100.0 100.0

Bold figures indicate sample size below 30Source: Source: Source: Source: Source: Computed from unit level data of NSS 61st Round, 2004 - 2005, Employment-Unemployment Survey and adjusted forpopulation


32


Appendix Table A3.4: Logit Model: Dependent Variable Vocational Training(Have Training, Formal and Informal/No Training)

*- Significant at .01

VVVVVararararariableiableiableiableiable CoefficientCoefficientCoefficientCoefficientCoefficient Odds RatioOdds RatioOdds RatioOdds RatioOdds RatioConstant -7.298

Sector

Rural(R) - -

Urban 0.648* 1.913

Sex

Female(R) - -

Male 0.133* 1.142

Education

Illiterate & Below Primary(R) - -

Primary & Middle 1.177* 3.244

Secondary & Above 3.229* 25.243

Poverty Status

Below Poverty Line(R) - -

BPL to 2*Poverty Line 0.457* 1.579

More then 2* Poverty Line 1.250* 3.492

Socio-religious

ST(R) - -

SC 0.851* 2.342

OBC 0.684* 1.983

Others 0.529* 1.698

33


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75.6

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.93.

34.

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3In

sura

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225

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leri

cal

Rel

ated

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illag

e O

ffic

ials

10.1

11.3

11.1

5.4

5.9

5.9

9.4

9.4

9.4

9.4

9.4

18.1

15.7

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0.2

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12.1

1.9

Mon

ey L

ende

r P

awn

Bro

ker

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8.0

8.0

9.9

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4.5

4.5

4.5

4.5

0.0

0.0

0.0

0.0

0.0

4.5

4.5

4.5

4.5

4.5

13.0

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12.5

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Tel

epho

ne, T

eleg

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Ope

rato

rs,

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l D

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ated

9.2

10.3

9.9

7.5

7.5

7.5

7.5

7.5

5.1

5.1

5.1

5.1

5.1

6.0

19.4

19.4

19.4

19.4

19.4

6.1

6.1

6.1

6.1

6.1

15.0

15.0

15.0

15.0

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0.2

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0.8

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Nur

ses,

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al,

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11.8

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17.2

38.2

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Ele

cted

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Off

icia

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58.

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lect

rica

l F

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ated

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ctri

cal,

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ctro

nic

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13.8

26.5

18.9

42.8

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0.5

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inis

trat

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ager

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prie

tor

Pro

prie

tor

Pro

prie

tor

Pro

prie

tor

Pro

prie

tor

7.8

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8.9

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27.8

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5.8

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Art

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19.7

19.7

19.7

10.5

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44.5

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port

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mun

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mer

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7.3

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17.3

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9.7

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34


Mea

n M

ean

Mea

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n YYYY Y

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of

ears

of

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1.2

1.2

1.2

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Rel

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Rel

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Rel

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9.8

5.8

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7.0

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6.5

16.9

16.9

16.9

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Rel

ated

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7.0

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1.8

1.8

1.8

1.8

1.8

2.5

44.1

45.1

44.3

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ated

Rel

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Rel

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Rel

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Rel

ated

4.9

4.6

4.6

4.6

4.6

4.6

4.9

1.9

1.9

1.9

1.9

1.9

0.0

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0.0

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3.4

3.4

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1.0

1.0

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40.5

44.7

44.7

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11.6

49.0

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36


Table A3.6: State-wise Total Labour Force & Increase in Labour Force & Training Capacity (per cent)

S. No. S. No. S. No. S. No. S. No. State State State State State % to % to % to % to % to TTTTTotal Lotal Lotal Lotal Lotal Labourabourabourabourabour % to % to % to % to % to TTTTTotalotalotalotalotal % to % to % to % to % to TTTTTotalotalotalotalotal % to % to % to % to % to TTTTTotalotalotalotalotal Seating CapacitySeating CapacitySeating CapacitySeating CapacitySeating CapacityFFFFForororororcecececece,,,,, 2006-07 2006-07 2006-07 2006-07 2006-07 Increase inIncrease inIncrease inIncrease inIncrease in LLLLLabour Fabour Fabour Fabour Fabour Forororororcecececece Increase inIncrease inIncrease inIncrease inIncrease in in ITI/ITC *in ITI/ITC *in ITI/ITC *in ITI/ITC *in ITI/ITC *

LLLLLabour Fabour Fabour Fabour Fabour Forororororcecececece (15-29 years),(15-29 years),(15-29 years),(15-29 years),(15-29 years), LLLLLabour Fabour Fabour Fabour Fabour Forororororcecececece2006-07 to2006-07 to2006-07 to2006-07 to2006-07 to 2006-07 2006-07 2006-07 2006-07 2006-07 (15-29 years) (15-29 years) (15-29 years) (15-29 years) (15-29 years)

2016-172016-172016-172016-172016-17 2006-07 to 2016-172006-07 to 2016-172006-07 to 2016-172006-07 to 2016-172006-07 to 2016-171 Andhra Pradesh 8.6 5.8 8.8 2.3 12.12 Assam 2.3 3.3 2.3 4.8 0.63 Bihar 6.4 7.1 6.3 15.4 3.14 Gujarat 5.3 5.7 5.5 3.1 8.25 Haryana 2.1 3.1 2.3 2.8 2.96 Karnataka 5.7 4.6 5.6 -0.3 9.87 Kerala 3.1 1.2 2.7 -2.4 6.78 MP 6.0 7.0 6.2 9.6 3.59 Maharashtra 10.3 9.7 10.0 3.6 11.310 Orissa 3.8 3.3 3.8 3.4 8.311 Punjab 2.4 2.1 2.5 -0.4 3.312 Rajasthan 5.8 7.6 6.3 12.7 5.713 Tamil Nadu 6.6 1.9 5.9 -8.9 9.014 UP 14.4 19.0 14.7 31.7 7.015 WB 7.0 5.6 7.0 5.0 1.516 Jharkhand 2.5 3.3 2.4 6.4 2.217 Chhatisgarh 2.3 2.2 2.2 3.3 1.318 Uttarakhand 0.9 1.0 0.9 0.9 0.919 Other NE States 1.2 2.0 1.2 2.0 0.520 Others 3.3 4.4 3.4 4.9 2.0

Total - South & West(1+4+6+7+9+13) 39.6 28.9 38.5 -2.6 57.1Total- East & Centre(2+3+8+10+14+15+16+17+19) 46.0 52.9 46.2 81.6 28.1All StatesAll StatesAll StatesAll StatesAll States 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0 100.0100.0100.0100.0100.0

Source: Source: Source: Source: Source: Based on Commission's projections

37

International Experiences ofSkill Development & Training

4

4.1 This chapter attempts to reviewinternational experiences of skill development andtraining delivery, keeping in view the issues thatare important from a developing country contextand more specifically from that of enterprises andworkers in the unorganised sector. In Chapter 3,we have seen that, with 5.06 per cent who hadvocational training as a proportion of thepopulation in the age group 20-24 (Table 3.9),India fares poorly even in comparison to some ofthe developing countries such as Botswana,Colombia, Mauritius and Mexico, where theratios were significantly above 20 per cent. Inadvanced countries, of course, the figures aremostly above 60 per cent, with the RussianFederation and the Republic of Korea having astaggering 87 per cent and 96 per cent respectively.The important question is whether it is possiblefor India to drastically change this situation withregard to skill development and training andwhether international experiences can provideguidelines on the directions to be taken andpathways to be planned. This chapter tries toreview the international experiences in skilldevelopment in general and in the informal sectorin particular.

4.2 As pointed out in Chapter 1, the keyconsiderations are the principles that dictatesystems of training and skill development i.e.,whether through the educational system or TVETsystems, whether supply-driven or market demand

led, whether for employment confined to pre-employment training alone or also includes aprocess of continuous learning and re-skilling;who delivers the training and where; and modesof financing the programmes as well as theincentives. While the review below will examinedifferent systems on the basis of the criteriamentioned, here we first briefly review thetrajectory of skill development in the case ofcountries that have made the transition to highlevels of development, both developed as well asdeveloping.

4.3 In a typology developed by the ADB(Asian Development Bank, 2004) to discuss therelationship between skill development andtraining and levels of economic development, ithas been suggested that levels of economicdevelopment roughly corresponded to certainlevels of development of education and training.In the earliest stages, when the primary sector ispredominant, manufacturing is characterized bylabour-intensive activities and low value addedproduction and competitiveness derived from lowcosts, basic education and adult education are thepriorities. Higher education is limited to thegradual development of a basic skills formationfor blue-collar workers. At the next stage, whenthe secondary sector becomes predominant,manufactured good and service exports are highand production concentrates on high value goodsand services, and when competitiveness is based

38


on high-technology, high value added goods , universalsecondary education, worker upgrading, and techniciantraining become the priorities. More specifically, apartfrom the universalisation of secondary education, thereis a deepening of vocational and technical education atthe post secondary levels and a widening of the skills toinclude teamwork and communication. There is also anincrease in the incidence of enterprise level or on-the-job training. In the final stage characterized by innovation-driven growth, leading towards the knowledge economy,there is a need to increase the rate of innovation, adaptationand the commercial development of new technologies.At this stage, higher education with science basedlearning becomes the priority, along with research anddevelopment.

4.4 Typologies such as the one presented above helpseparate the different elements of skill up-gradationcorresponding to different structures of production. Ascountries move from a low skill base to a high skill one,the skill-mix also tends to change and different levels ofeducation and different types of training (with locationbeing important) will have elements of skill developmentstrategies for all levels of skills. However, the pathwaysfollowed by countries that have managed the transitionto high levels of skills and which have in turn translatedinto high levels of development have been very different.This has been on the basis of the institutional structuresput in place to impart different levels of education andtypes of skills in the economies.

4.5 The pathways followed by most of the OECDcountries consist of broadening and universalizing accessto education and evolving skill development systems thatwere variedly market led and state directed and alsodifferently emphasized training in institutions andenterprises. They resulted in outcomes that were spreadacross long periods of time. The distinctly different pathsfollowed by the East Asian countries and Japan, whichachieved very high levels of education and skilldevelopment in a very short period of time, brought outthe importance of conscious targeting, directedinvestments and strong regulation in skill developmentprogrammes. The review below have attempted to bringout the salient aspects of these different paths adopted.

4.6 It is useful to distinguish between public andprivate institutions for skill development and also on thebasis of where the skilling process is located, i.e., withinthe enterprise/firm, in educational institutions and ininstitutions outside the firm. The Study Group set up forthe Second National Commission on Labour hasexamined various systems of skill training in othercountries. These training systems are found to be broadlyof three types - “cooperative,” “enterprise based” and “state-driven.” The State driven system can be further demanddriven and supply driven. These have been summarisedin the Table 4.1 below.

4.7 In the cooperative system, there is no singleinstitution responsible for the planning and delivery oftraining. Instead, the employers’ organisation and tradeunions cooperate strongly for producing the desired result.Germany is one of the successful examples of this system.

4.8 In the enterprise-based system as prevalent inJapan, the educational system provides a foundation ofbasic skills, which is then built upon by employersthrough intensive off and on-the-job training. Whilevocational and technical schools provide some initialtraining, the bulk of skills development is provided andfinanced by employers. Employees with few industry-specific skills on entry are moulded by the system into ahighly skilled workforce that is very adaptable to change.This kind of system has come into existence in the contextof very low turnover of the workforce, labour having long-term commitment to the enterprise and enterprises inturn wanting to invest in the labour force.

4.9 State-driven systems can be divided into twotypes. Education and training systems of the demand-led type, prevalent in the East and South East Asianeconomies, have to respond to rapid changes in thedemand for skills. In this, the governments have playeda key role, especially in meeting the demand for higherlevel skills. In the State-driven systems of the supply-led type, which were operational in many of the centrallyplanned economies of Eastern Europe and the erstwhileUSSR, the training system was sustained throughgovernment financing. It puts little or no pressure onemployers to train with the government taking on theprime responsibility of running training institutes.

39

SSSSSourourourourource:ce:ce:ce:ce: Second National Commission on Labour, World Development Report, 1998-99

Table 4.1: Training Systems

SystemSystemSystemSystemSystem CountriesCountriesCountriesCountriesCountries Main Feature/sMain Feature/sMain Feature/sMain Feature/sMain Feature/s"Co-operative" Austria, Germany , Switzerland, and many Pressures to undertake training resulting from

countries in Latin America counties strong co-operation amongst employers'organisations, the state and trade unions

"Enterprise-based" Japan Low labour mobility, lifetime employment for - Low labour turnover many staff, 'longtermism' arising from absence

of stock market pressure,wage system basedon seniority and enterprise-based trade unions

- Voluntarist The United Kingdom, United States Few institutional pressures on firms to providetraining

"State- driven" Hong Kong , Malaysia, Republic of Korea State plays a leading role in coordinating the a) Demand-led Singapore, Taiwan, China demand for and supply of skills,Operates in

an open and competitive economicenvironment

b) Supply-led Economies in transition, many developing Government takes on a prime responsibilitycountries especially in Asia and Africa for formal sector training in training

institutes,Little or no pressure on employersto train

4.10 The Asian Development Bank in its Report(ADB, 2004) classifies systems of skill formationaccording to training location. According to the report,training can be in schools as part of the formal education;in non-formal training centres outside the school systemand within enterprises as discussed below:

School-based Vocational Education &Training

4.11 Comprehensive High Schools or DiversifiedSecondary Education: Vocational skills are developedwithin secondary schools, typically called comprehensiveor diversified secondary schools, as in the United Statesand Sweden. Students take practical courses accordingto their interest and aptitude in one single school attendedby all students from a given geographical area, regardlessof their career interests.

4.12 Vocational and Technical Schools: In the Frenchmodel, vocational education takes place mainly invocational or technical schools at the secondary level.These institutions run parallel to academic schools thatprepare students for higher education. In France, afterthe age of 13 students are tracked into different types ofschools. They may attend vocational schools for 2 or 3

years and earn a Vocational Proficiency Certificate orVocational Education Certificate; a VocationalBaccalaureate may be earned after another 2 more years.These schools serve two purposes: (a) to prepare youthto work in skilled jobs, and (b) to cater to students thatdo not want to pursue long academic studies. A variantis the technical school (lycee technique), which combinesacademic study with technology. The main difference ofthese from vocational schools is the greater attention toacademic subjects, and the less attention to specialisedsubjects. Graduates are usually trained for supervisoryroles in factories or for highly skilled occupations, e.g.electronics and drafting. There are several cases of successwith this approach in Asian countries whereindustrialisation has been rapid, such as in the Republicof Korea and in Taipei, China.

NNNNNooooon-Fn-Fn-Fn-Fn-Fororororormal mal mal mal mal TTTTTrrrrraining Centraining Centraining Centraining Centraining Centreseseseses

4.13 Vocational Training Institutes (or Technical TrainingInstitutes): These are typically operated by ministries oflabour (or community development), and are outside theschool system. Training is thus provided for youth whohave completed their formal education, and certificates,if conferred, are not recognised as from formal school

International Experiences of Skill Development & Training

40


system. The training can be variable in length - frommodular courses to short duration courses, lasting even2-to-3 years. These training centres have the advantageof being focused on one purpose – ‘training for work’,and in theory can modify the content of trainingprogrammes more quickly than schools in response tochanges in the labour market. The clientele may also bemore serious about training, having completed theirformal education and with reduced aspirations for movingup the educational ladder.

4.14 The Latin American Model: Training in mostLatin American countries (main exceptions are Argentinaand Mexico, which use vocational schools within theeducation system) is based at training centres, and aredesigned for both working adults and young schoolleavers. The various training centres are run(independently of the education system) by autonomoustraining agencies that maintain close links with industrythrough strong representation of employers on theirgoverning bodies. Also significant is their financing,which is based on a payroll tax (about 1 per cent) paid byemployers. These organizational features have enabledthem to provide high quality training and responddynamically and flexibly to changing demands of thelabour market. The systems are separate from academicschools, thereby sheltering ‘training-for-trades’ from theprejudices against manual occupations and the attractionsof higher education. The training levy provides financialstability and a long-range planning horizon. Thesefinancial and institutional arrangements have allowed theinstitutions to survive economic crises and fend offpolitical interference.

Apprenticeship TrainingApprenticeship TrainingApprenticeship TrainingApprenticeship TrainingApprenticeship Training (bybybybyby FormalFormalFormalFormalFormalSector EnterprisesSector EnterprisesSector EnterprisesSector EnterprisesSector Enterprises)

4.15 The German Model: This model draws heavilyfrom the apprenticeship systems that developed in Europefrom the middle ages through occupational guilds. Theapprentice offers labour to a master craftsperson inexchange for a small wage and on-the-job training.Because of its direct links with the labour market, theapprenticeship approach has proved to be quite efficientat transferring skills, especially when technology is stableor changing slowly. It is also largely self-financing anddoes not rely on public financing. At its most sophisticated

form, it has become complex and structured (as inGermany). The famous “““““dual apprenticeship system””””” of of of of ofskilskilskilskilskills trls trls trls trls training in Geraining in Geraining in Geraining in Geraining in Germanmanmanmanmanyyyyy, combines two basic models:centre-based training and enterprise-based training. Thesystem is based on a longstanding tradition ofapprenticeship that is firmly rooted in German corporateculture. Theoretical training for about one day per weekis provided by public vocational training centres andpractical training is provided within enterprises aboutfour days per week. Apprentices sign an employmentcontract with an enterprise, which gives them on average3½ years of formal training under the supervision of acertified master. Apprentices receive an allowance fixedby the collective agreement for each branch of training.The graduates receive a nationally recognized diploma.While a large part of this training is enterprise-based, ithas evolved in response to co-operative behaviour andclose co ordination among employers’ associations, labourunions and public administration.

4.16 While these are the overall categories that canbe seen in different countries, these systems cater mostlyto formal sector enterprises. Below, we review the systemsthat have been tried out in the case of the informal sector.

Training Systems for the Informal Sector

4.17 Traditional (unregulated) Apprenticeship Training:Unregulated apprenticeship training has evolved in theinformal sector in many countries over decades. In fact,in many countries it may be the predominant form oftraining (e.g. in Sub-Saharan Africa and the Indian sub-continent). Typically, a written or oral agreement isconcluded between a master craftsman working in theinformal economy and parents or guardians, with theobjective of the apprentice acquiring relevant, practicalskills. Sometimes, the master receives a training fee, orthe apprentice must earn the training in exchange forwork or reduced wages. Training consists primarily of‘‘‘‘‘observing and imitating the master’’’’’. The apprenticeshipmay last for several years and is product specific.Traditional apprenticeship has several advantages overconventional training methods, but also has disadvantages,as seen in Table 4.2.

4.18 Nigeria, through its National OpenApprenticeship Scheme (NOAS), has recognized the roleof the traditional apprenticeship system. The scheme

41

Table 4.2: Advantages / Disadvantages of Unregulated Apprenticeship

AdvantagesAdvantagesAdvantagesAdvantagesAdvantages DisadvantagesDisadvantagesDisadvantagesDisadvantagesDisadvantages

- practical in orientation,- self-regulating and self-financing,- caters to individuals who lack the educational requirements

for formal training,- serves important target groups (rural populations and urban

poor), and- generally cost-effective

- gender bias (females rarely participate),- exclusion of applicants from very poor households,- perpetuation of traditional technologies,- a lack of standards and quality assurance

involves the state encouraging employers, including thosein the informal sector, to take on apprentices beyond theiressential needs. Allowances are paid both to the traineeand to the master, and there is a system for monitoringthe quality of training. What makes this systemparticularly interesting is that it has the informal sectorproducing state apprentices and “traditional” apprenticeswithin the same workshop. For one group the master isbeing paid by the state, while the others pay for themselvesand make their own traditional arrangements. The durationof training for the new apprentices is less than thecustomary group, and the state apprentices are encouragedto attend some off-the-job training on Saturdays. Thissystem has not been dependent upon full-time institutionaltraining, but on expanding access to training withinindustry — whether formal or informal.

4.19 Bangladesh’s Underprivileged Children’sEducation Programme (UCEP) (World Bank Report,2001) , established in the early 1970s, is an innovativeprogramme designed for the informal sector that seeksto raise the living standards of poor urban children andtheir families. It focuses on the target group of workingstreet children and aims to provide them with skills toenhance their employability in the local labour market,often in the informal sector. UCEP is conducted in 30general schools for non-formal basic education workingon three shifts per day in four major cities of Bangladesh.Total enrolments are about 20,000. Skill training is givenin three training institutions working on two shifts each,training a total of 1,400 trainees. UCEP hasextraordinarily high completion and employment ratesfor its graduates, both averaging about 95 per cent.

4.20 UCEP’s programme can be divided into threestages. (a) First stage is accelerated non-formal basiceducation starting at age 10 or 11. About half of the

graduates from the non-formal basic educationprogramme are admitted into vocational training. (b)Second stage consists of fundamental skills training whichmay vary in length from six months to two years. (c)Third stage is placement in employment and follow-upon the job.

4.21 Factors that have contributed to making UCEPsuccessful include:

• Providing students with a solid base of generaleducation.

• Focusing on the target group, those who intendto enter the labour force after training as semi-skilled workers.

• Continuous linkages with industry, whichensure that trainees are trained in the knowledge,skills and attitudes sought by employers, andalso that employers are aware of thecompetencies of UCEP graduates.

• Focus on acquisition of skills and competenciesthrough highly structured, supervisedindividual “hands-on” instruction (rather thanbeing driven by credentials and certificates).

• Rigorous follow-up of the graduates in termsof employment, earnings and performance onthe job.

4.22 An aspect of informal employment that needs tobe addressed in developing economies that underwentrestructuring is that of retrenched employees, who fallback on the informal sector. An initiative that needs tobe mentioned here is from China, where the Ministry ofLabour and Social Security has introduced a re-employment training programme for the unemployed andlaid-off employees, referred to as the Three Years TenMillion Re-employment Training Programme. During


42


1998-2000, this programme aimed at giving training to10 million people, employees laid off from SOEs andthe unemployed, in order to raise their vocational skills,generating market awareness and assist them towards re-employment. During the execution of this re-employmenttraining programme, the Ministry set the 1-3-1 goal, i.e.each laid-off employee in an enterprise re-employmentcentre is entitled to one occupational guidance interviewfree of charge, three briefings of employment information,and one training opportunity free or partially free ofcharge. Vocational training centres, technical trainingschools under labour and social security departments,other training institutions, including those run by NGOs,the trade unions, the women’s federations, and youthleagues, were the major institutions undertaking re-employment training workshops.

4.23 An important feature of this programme is thatthis training is extended explicitly to those whoseeconomic position is below the socially acceptable levels.For example, in a certain province, those eligible for thistraining were whose family average income is lower thanthe standard which qualifies for social assistance, or whoare under a certain age (40 for males, 35 for females),and they can attend one vocational training course that islonger than a month, free of charge, if they can pass agiven test. In another province, re-employment trainingand service are linked with the provision of basic livingallowance in an effort to change the provision of basicliving allowance to the provision of training opportunitiesand jobs. It is reported that about 75-80 per cent of thetrainees can find satisfactory jobs or start up their ownbusinesses. By the end of 2000, a total of 13.6 millionlaid-off employees, 11 per cent more than the set target,had been exposed to re-employment training.

4.24 Another major informal sector training initiativefrom China consists of the China Rural EmploymentPromotion Project. The participants are mainly localhouseholds in selected counties where micro-loans areprovided as a means of supporting low-income householdsto be self-employed or to form partnerships in startingsmall businesses. The project provides vocational trainingto applicant households, helps them to make a businessplan, and provides micro-lending and assistance in their

business operations.

4.25 A flexible skills training is an essential part ofthe project which focuses on resident communities andhouseholds So training courses are organised near wherethey live. This enables training courses to be closely linkedto local requirements. It combines theoretical teachingwith practice, classroom presentation with follow- upand collective teaching with individual tutoring andcombines training with employment support. The projectalso combines training with local industrialization. Thereare examples of counties that offer up to 3,000 Yuan torural households that are willing to have jobs locally.This financial support helps them to be self-employed.It also serves as a launching fund to help them start uptheir own businesses. They are also entitled to preferentialpolicies as they can be exempted from some fees and getfree access to some facilities.

4.26 Kenya’s Jua Kali (informal sector) project( Johanson & Van Adams, 2004), funded by IDA, is awell-quoted informal sector training initiative that isoriented entirely towards markets. It was aimed at: (a)providing skills and technology upgrading for about25,000 informal sector manufacturing workers; (b)increasing the access of informal sector entrepreneurs toservices; and (c) improving the policy and institutionalenvironment by removing restrictive laws and policies.A key feature of the project is a voucher programmeintended to introduce consumer choice, enabling informalsector operators to purchase the training wherever theywant. Intermediaries / allocation agencies were selectedby competitive tender to market, allocate, and redeemvouchers in a decentralized way throughout Kenya.Allocation agencies received a fee equal to 3 per cent ofthe value of vouchers issued. Vouchers could be used forany kind of training from any registered training provider.Over the course of the project, about 700 training providersbecame pre-qualified for providing training. By early 2001,some 18,000 training vouchers had been issued.

4.27 The impact of the project, evaluated throughtwo studies, has been highly positive for the beneficiaries.Employment among the graduates had increased by 50per cent compared with employment before training, andthe income of surviving enterprises had also increasedby 50 per cent. According to anecdotal evidence, some

43

participants who received a voucher for basic traininghave paid the full cost of more advanced training. Oneunexpected outcome of the voucher training programmewas the emergence of a new kind of training provider -the skilled master craftsperson. The strong preference ofJua Kali workers for appropriate, accessible training bymaster crafts persons was revealed in the first phase ofthe project: 85 per cent of all vouchers went to pay forthe services of master crafts persons, and only 15 percent went to private and public training institutions.

4.28 Some important lessons include:

(a) The use of a voucher mechanism enabled theproject to stimulate demand for training,technology, management and marketingconsultation among micro and small enterprises.A supply response has been generated and atraining market established to address the needsof micro enterprises.

(b) An unexpected impact of the voucher trainingprogramme was the emergence of skilledcraftsmen as the leading providers of training.Entrepreneurs preferred the training services ofmaster crafts persons in the informal sector totraining in formal institutions. The trainingby master crafts persons was usually well adaptedto the entrepreneurs’ need for short duration,practical training. These training providers werepreviously invisible to agencies that wished topay for these trainings directly.

(c) The implementation experience underscores theimportance/viability of appropriate managementarrangements - a project for the private sector isbest managed by the private sector, withgovernment best playing a facilitator’s role.

Lessons from International ExperiencesLessons from International ExperiencesLessons from International ExperiencesLessons from International ExperiencesLessons from International Experiences

4.29 This chapter has outlined the majorcharacteristics of international skill development andtraining experiences and systems. The review has broughtout the lessons that can be drawn for a country like Indiawith a very large informal sector and massive numbers ofpoorly educated people with a low level of formal skills.

4.30 It has been seen that comprehensive systems ofskill development that exist internationally are primarilyfor the formal sector. In countries of East Asia,

characterized as state-led, demand driven systems, it isuniversalisation of basic education, enlarging the coverageof secondary education and developing a vibrant systemof vocational education that laid the foundation towardsspecifically targeting skills designed towards theworkplace. Strengthening the educational system anduniversalizing access is thus an essential prerequisite forwidespread skill development, particularly when the skillmix requires changes to accommodate the needs of greaterintegration with the knowledge economy.

4.31 While training systems might be supported bythe government, especially in a situation whereexternalities limit the extent to which private initiative isforthcoming, it is essential to tailor training to employmentas much as possible. Evolving systems of apprenticeshipand enterprise-based training that allow trainees to usetheir skills, with suitable incentives provided to employersand those trained, is essential. Further, training needsassessment needs to be a joint exercise between thosewho need trained manpower (employers), those who needto be trained (workers) and those who evolve systemsand frameworks (the state), as successful experiencesdemonstrate.

4.32 Further, in rapidly changing economies whichalso undergo restructuring and retrenchment, largenumbers of workers who hitherto belonged to the formalsector would become informal sector workers.Programmes of retraining such as those in Chinademonstrate that support from the government becomesessential to equip workers to make themselves availablefor the market by anticipating demand, which might notautomatically take place.

4.33 Interesting experiences of the programmesdesigned explicitly for the informal sector in differentcountries might offer guidelines for a country like Indiato design a system. For example, making the local area ordistrict the focus of training programmes for employmentas in China will enable a matching of needs of peopleand that of the markets. Targeting training towards thepoorest households and linking it up with employmentin local areas is also a useful initiative for poor informalsector workers.

4.34 The lessons from international experiencesnotwithstanding, it also needs to be kept in mind that the


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need for India is to achieve a major turnaround in itsskill profile. The sheer magnitude means that no singleexperience might be directly relevant or replicable. Thisis because the ‘initial conditions’ that India is faced withare very different from those that confronted either theOECD countries or the East Asian economies as theywent about developing their skill and training systems.These consist, first and foremost, of the preponderanceof the unorganised sector and informal employment inthe economy and an abysmally low level of formal skill

availability by even developing country standards. At thesame time, a fairly elaborate structure of institutions andsystems of education and training, exist in the country,although catering only to a small segment of thepopulation. So while international experiences can provideideas and guidelines on how to go about the formidabletask of expanding the skill base of the economysubstantially, the structure that needs to be evolved hasto be specific and keeping in mind the structure anddynamics of the economy.

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System of Skill Developmentin India

5

5.1 Until now we examined the rationale andrequirements of a suitable skill developmentsystem for the vast majority of the Indianworkforce, located in the informal sector. We havealso traced the contours of the availability of skillsin the economy and the congruence betweenpoverty, low levels of education and the skilldeficit. These trends are seen despite a vast arrayof institutions and initiatives over the entire post-Independence period which have attempted toaddress the issue of generating the requisite skillbase. It is essential to review these systems thatexist as a result of direct state participation in theskilling process as well as through various non-state initiatives. This chapter evaluates separatelygovernment and non-government skilldevelopment systems that exist in India. Variousprogrammes, their objectives, coverage, sectoralfocus and modes of imparting are evaluated.

5.2 In India, skill formation is broadlythrough general education as a provider of genericskills. Vocational education and training providemarketable industry specific skills for betteremployability. Other than basic primary education,skill formation efforts consist of:

• Vocational education,

• Vocational training,

• Sector specific programmes to addressissues of skill formation andenhancement

5.3 Within vocational training, we candistinguish between the formal system and theinformal system, both of which take place underthe aegis of the government as well as private andnon-government agencies. Broadly, there are foursystems that cater to training needs: thegovernmental formal training system, thegovernmental system that focuses exclusively onthe informal sector, the non-government (privateas well as NGO) network of formal traininginstitutions and the non-government (mostlyNGO-led) principally non-formal trainingprogrammes for the informal sector.

5.4 The Commission recognizes that theseare not watertight compartments. Thegovernmental systems rely on private or non-governmental training providers and trainers andthere is a further step up in this direction asgovernments increasingly take on the role offacilitators and coordinators. Further, as seen inthe previous chapter, systems of formal vocationaltraining, however limited they are in terms ofnumbers in comparison to the size of theworkforce, have resulted in only a smallproportion of those trained being absorbed in theformal sector of the economy. Others, who havebeen formally trained, in fact, find jobs in theinformal sector, possibly in the upper rungs,constituting in fact a part of the informalworkforce, apart from the informally trained anduntrained part of the workforce.

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Part A: Governmental Initiatives

5.5 In the present section we focus on governmentalinitiatives, both formal and informal, whereas thefollowing one looks at the initiatives by the private sectorand NGOs. At present, the total training capacity of thepublic sector is estimated to be around 3.8 million. Thedetails are given in appendix 5.1 to the Chapter.

Vocational Education

5.6 Vocational education remains within the broaderschool curriculum and involves provision of specific skillsto increase employability of the students on completionof formal education. Vocational training is especially fora particular trade or economic activity and is conductedoutside the schooling system. Box 5.1 illustrates theprogress in vocational education in India.

5.7 There are three categories of vocationaleducation prevalent in India today - at the lower schooland 10+2 stages and at the specialised level. The system

Box 5.1: Vocational Education in Indian Planning

In 1947, there were only 46 engineering colleges and 53 polytechnics with an annual intake of 6,240 students.Due to the initiatives taken during successive Plan periods, and particularly because of large-scale private sectorparticipation, the number of All India Council of Technical Education (AICTE) approved technical andmanagement institutions has risen to 4,791 in 2001-02 with an annual intake of 6.7 million students.Almost everyFive Year Plan contributed to the strengthening of the vocational education system in the country. The SecondFive Year Plan, for example, provided for the establishment of 38 junior technical schools for students in the age-group 14-17 and these numbers kept on increasing in the subsequent years. Vocationalisation of education at thehigher secondary stage was one of the important reforms included in the Sixth Plan. Measures were initiated toestablish the necessary links combining vocationalisation, skill training, in-plant apprenticeship and placement ingainful employment as composite parts of an integrated effort to raise the level of utility of the programme, and itswider acceptance and success. In the following Plans, facilities for vocational education were diversified intocommerce and services. During the 9th Five Year Plan, the scheme for Vocationalisation of Education at 10+2stage was introduced to regulate admissions at college level. The purpose was to divert at least 25 per cent studentsof 10+2 stage to self-employment or wage-employment, while providing them with vocational competence in afield of their choice.

The Tenth Plan has emphasized that vocational system should be a separate stream within the secondary educationsystem, rather than being imparted through separate educational institutions. It should also establish greaterlinkage with vocational training and academic education to provide for vertical mobility for students aspiring forhigher professional programmes in polytechnics, universities and engineering colleges.

The Eleventh Five Year Plan has recognised the importance of expansion and strengthening of the system ofVocational Education and Training (VET) in the country. It, inter-alia, provides for expansion of vocationaltraining, modernizing ITIs, adding relevant skills, and public-private partnership model for training.

of vocational education is administered by the Ministryof Human Resource Development. At the lower schoolstage, a scheme of pre-vocational education at lowersecondary level was started in 1993-94 to impart simplemarketable skills and to develop vocational interests.The centrally sponsored scheme of Vocationalisation ofSecondary Education at +2 level is being implementedsince 1988. The main objective of the scheme is toenhance individual employability, reduce the mismatchbetween demand and supply of skilled manpower andprovide an alternative for those pursuing higher educationwithout particular interest or purpose. The scheme isimplemented in both formal and non-formal sectors. Inthe formal sector, the scheme is implemented by the StateGovernments at +2 stage of 10+2 scheme, through 9500schools spread all over the country. The total trainingcapacity is estimated at about 10 lakhs per annum. Morethan 150 courses are offered in 6 major disciplines coveringthe broad areas of agriculture, business and commerce,engineering, technology, health and paramedical services,

47

home sciences and services. These courses are selectedon the basis of the assessment of manpower requirementsthrough district vocational surveys. After the completionof a two-year course, the students can undergo a year’sapprenticeship under the Apprenticeship Act.

5.8 The vocational education system suffers fromdeficiencies such as a low component of generaleducation, poor linkages between the vocational educationand general education streams and between the vocationaleducation and vocational training streams. Further, thesystem of basic education itself needs to be strengthenedin the interests of skill acquisition. Education being afoundational skill, the focus on skills needs to start at thelevel of basic education through enlarging access andimproving quality.

5.9 It also needs to be noted that although the linksbetween vocational education, vocational training andactual employment are considered to be weak, there is apaucity of information from the labour market. This hasto be addressed adequately through evolving effectivesystems of feedback.

Vocational Training

FFFFFororororormal mal mal mal mal TTTTTrrrrraining Paining Paining Paining Paining Prrrrrogogogogogrrrrrammesammesammesammesammes

5.10 The Ministry of Human Resource Developmentand the Ministry of Labour and Employment are thetwo major Ministries responsible for formal skill training.While the Ministry of Human Resource Developmentcoordinates the development of technical educationthrough degree courses, diplomas and certificates offeredby universities, technical institutions and polytechnics,the Ministry of Labour coordinates the development oftechnical education through the Industrial TrainingInstitutes and the Industrial Training Centres, as also theindustrial apprenticeship system discussed below. Formalvocational training system demands a minimum level ofeducation, generally higher secondary in the case of thesystems coordinated by the MHRD and middle schoolin the case of the training systems coordinated by theMOLE, which , automatically implies the exclusion ofthose with lower levels of education.

5.11 Ministry of Human Resource Development:Ministry of Human Resource Development:Ministry of Human Resource Development:Ministry of Human Resource Development:Ministry of Human Resource Development:Polytechnics offer diploma-level courses to meet training

needs of manpower for industry at the supervisory level.The All India Council of Technical Education (AICTE)approves diploma programmes in engineering andarchitecture, hotel management and catering technologyand pharmacy. There are 1244 polytechnics run by HRDMinistry with a capacity of over 2.95 lakhs offering three-year diploma courses in various branches of engineeringwith an entry qualification of High School. Besides,there are 415 institutions for Diploma in Pharmacy, 63for Hotel Management and 25 for Architecture.

5.12 MinistMinistMinistMinistMinistrrrrry ofy ofy ofy ofy of Labour and Emplo Labour and Emplo Labour and Emplo Labour and Emplo Labour and Employment:yment:yment:yment:yment: The twoflagship schemes of Directorate General for Employment& Training under Ministry of Labour and Employmentare: Craftsmen Training Scheme (CTS) andApprenticeship Training Scheme (ATS). The CTSprovides institutional training whereas ATS is acombination of institutional as well as on the job trainingin which trainees are exposed to real life industrialenvironment.

5.13 CrCrCrCrCraftsmen aftsmen aftsmen aftsmen aftsmen TTTTTrrrrraining Scaining Scaining Scaining Scaining Scheme (Cheme (Cheme (Cheme (Cheme (CTS):TS):TS):TS):TS): The CTSis implemented through 1987 ITIs run by the stategovernments. In addition, 4847 ITCs in the privatedomain implement the CTS on the same pattern as ITIs.Training courses are available in 110 trades. The coursesaim to impart the basic skills and knowledge so as toprepare the trainees both for wage employment as semi-skilled worker or Junior Executives or for self-employment. The entry level qualifications for thetrainees are: Age 14 to 40 years no upper age limit forwomen in women exclusive ITIs/women wings in generalITIs and education of 8

--12

th class. The duration of the

training varies from six months to 3 years depending onthe trade chosen. A total of 9.33 lakhs training seats areavailable at the ITIs throughout the country (GovernmentITIs – 4.06 lakhs and private ITCs – 5.27 lakhs). Over47,000 seats are exclusively for women trainees.Reservations for SC / STs, disabled, OBCs, ex-servicemen etc. are made as per government directives.About 70 per cent of the training period is allotted topractical training and the rest to subjects relating to tradetheory, workshop calculation & science, engineeringdrawing & social studies. There is also the provision forgrant of stipend and workshop uniform to all the traineesof Govt. ITIs.

System of Skill Development in India

48


5.14 All India Trade Tests of Craftsmen is conductedunder the aegis of the National Council for VocationalTraining (NCVT) and successful candidates are awardedNational Trade Certificate (NTC) which is recognizedfor the purpose of recruitment to subordinate posts andservices under the Central Government.

5.15 Apart from ITIs/ITCs, Craftsmen Training in22 trades is also imparted through 6 Model TrainingInstitutes (MTIs) attached to 5 Advanced TrainingInstitutes (ATIs) and one Central Training Institute (CTI)under the DGE&T. Besides, National VocationalTraining Institute (NVTI) and 10 Regional VocationalTraining Institutes (RVTIs), with about 3000 trainingseats, have been imparting training exclusively to women.In order to reorient the training modules as per thechanging skill requirements of the industries, CraftsmenTraining on modular pattern is offered in 4 ModelIndustrial Training Institutes (MITIs) under DGE&T.

5.16 AAAAApprpprpprpprpprenticeship enticeship enticeship enticeship enticeship TTTTTrrrrraining Scaining Scaining Scaining Scaining Schemehemehemehemeheme ::::: Formalapprenticeship, introduced through the ApprenticeshipsAct of 1961, requires employers in notified industries toengage apprentices in specified proportions of theworkforce Apprentices obtain training for periods rangingfrom six months to four years at the end of which theyare tested by the NCVT. The successful candidates areawarded National Apprenticeship Certificates.Apprenticeship Training for the school leavers and ITIpassed out persons is offered through a network of 23,800establishments in 187 designated trades. As on 30

th June,

2007 1,85,224 training seats for the trade apprenticeshave been utilised against 2,58,163 seats identified. Thetraining is designed to utilize fully the facilities availablein industry for imparting practical / on-the-job trainingin the industrial environment to the apprentices to enablethem meet the requirements of the industry foremployment. All India Trade Tests (AITT) for tradeapprentices are conducted twice a year, and NationalApprenticeship Certificates (NACs) are awarded. Stipendis paid as per the Government notification. Six RegionalDirectorates of Apprenticeship Training (RDAT) atMumbai, Kanpur, Faridabad, Kolkata, Hyderabad andChennai, have been set up for implementing theApprenticeship Training in the Central GovernmentPSUs/Establishments.

5.17 Assessments of formal training systems in Indiaoften argue that the quality of vocational traininginstitutions is not very good. Evaluations of the ITIs haveshown that there is a great variability in the quality ofdifferent ITIs reflecting differences across states and alsothe characteristics of individual ITIs. Many states haveencouraged the creation of new ITIs to cover new areasbut without adequate preparatory work or resource inputor effective follow up action. The following deficiencieshave been noted, with different points being emphasizedin different reports, by the Special Group on TargetingTen Million Employment Opportunities per year overthe Tenth Plan period set up by Planning Commission,under the Chairmanship of Dr S P Gupta, Task force onEmployment Opportunities set up by PlanningCommission, under the chairmanship of Shri MontekSingh Ahluwalia, the National Knowledge Commission,the Eleventh Five Year Plan and the Task Force on SkillDevelopment.

• Much of the training provided in the ITIs isfor skills for which there is little demand. Thecurriculum has not been revised for many yearsand was therefore not attuned to current marketrequirements. Some revision has taken placerecently but a lot remains to be done. One reasonfor the lack of attention to market requirementsis the lack of involvement by the industry inthe management of the ITIs.

• The transfer of skills too needs improvementand the testing process at the end needs to bemade more reliable. All Government ITIs andprivate ITIs affiliated with the NCVT as wellas the private training institutes runningDOEACC accredited courses rely on formalcertification by an independent authority.However, there is widespread perceptionamongst employers that students obtaincertificates even though the actual skillsacquired are very poor.

• The facilities and infrastructure in most ITIsare inadequate, with obsolete equipment inlaboratories and workshops. Maintenance is alsopoor. These deficiencies reflect the scarcity ofresources with the state governments in India.

49

They have been exacerbated by the tendencyto create new institutions in places where theydo not exist, even though existing institutionsare under-funded and under- utilised.

• There is shortage of suitably trained faculty inmost ITIs.

• There is hardly any follow- up of the trainees,and the courses remain rather obsolete andpiecemeal. Placement of graduates is not acertainty.

• Most of the ITIs in the state sector and theinstitutes for advanced training and training ofinstructors under the Ministry of Labour, areorganised as subordinate offices of theGovernment. These training and trainingrelated establishments should be restructuredas “autonomous bodies”.

• The apprenticeship scheme too has its own shareof problems. The major problem relates to thequality of training, which varies according tothe nature of the firm. Bulk of the apprenticeshipplaces are in public sector firms. Private sectorfirms generally do not comply with therequirements. One of the problems that havearisen is that apprentices view apprenticeshipprimarily as an avenue for subsequentemployment rather than a mode of training.Although the law clearly does not entitle themto employment, the courts have interpreted thelaw to mean that apprentices must get preferencein employment opportunities within thecompany where they were trained. This tendsto discourage employers from fulfilling theirobligations under the Act. The WorldEmployment Report (ILO, 1998-99, p.70)notes that training systems in India are a typicalexample of Central Government driven, supply-led ones, with the Government taking on theprime responsibility for the formal sectortraining in training institutions. There is littleor no pressure on employers to train. TheGovernment of India too accepts this position(GOI, 2001, p.6.23). It has been noted by theSecond National Commission on Labour thatthe apprenticeship system has inadequate

coverage of skill requirements, mismatchbetween demand and supply and lack offlexibility in the engagement of tradeapprentices within the same trade group. It hasalso been argued that a predominant proportionof the educational and training resources of theformal institutional structure is somehowdirected to the formal sector and the ‘upper end’of medium and small-scale enterprises, manyof them in the informal sector. There is a strongorientation towards the use of machines, a verymarked gender division of training and curricula(an assumption that girls will go for beauticiancourses whereas boys will be fitters and motormechanics). Further, the numbers trained arevery low, as chapter 3 showed.

5.18 Several initiatives have been taken to strengthenthe ITI system. These include: (i) Establishment andupgradation of ITIs in North-Eastern States, Sikkim andState of Jammu and Kashmir, (ii) Upgradation of 500ITIs (100 from domestic funding and 400 from WorldBank assistance) into Centres of Excellence and (iii) Up-gradation of the remaining 1396 Government ITIsthrough Public Private partnership by providing interestfree loans up to Rs. 2.5 crores per ITI.

5.19 The government training/skill-building efforts,such as the ones outlined above, have not been directedexplicitly towards the informal sector, or at least nottowards the most vulnerable informal workers. The abovereview of the governmental system of formal trainingdemonstrates this. This has also been emphasized by theSecond National Commission on Labour, which notesthat the structural characteristics of the informal sectorrequire specific interventions that take on board thesecharacteristics. However, the district level studiesconducted by the Commission show that very largenumbers of people who pass out of ITIs, i.e., those whoreceive formal training either start their own enterprisesor go for wage employment in informal sector. However,what is required are training schemes that take on boardstructural characteristics of the informal sector and targetthose at the lower ends.

5.20 Initiatives that target the informal sector arediscussed in the following paragraphs.


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Informal Government Training Programmes

5.21 A large number of ministries / departments,commissions, councils, autonomous bodies andinstitutions as well as such bodies where there is a public-private partnership undertake informal skill developmentprogrammes which are targeted at either the smallerformal sector enterprises or the informal sector workers.Most of these schemes and programmes are administeredat the field level by the respective departments andagencies of the Central/state governments or other non-government organisations identified for the purpose. Thefunds flow downwards and the state governments areusually assigned the task of implementing as wellmonitoring the skill formation programmes on a routinebasis. Alternatively, there are a number of programmesfor which the voluntary organisations are also entrustedthe task directly by the Central Government departments.

5.22 The multiplicity of ministries, institutions andagencies that cater to skill development presently resultsin a plethora of initiatives that run independently withlittle coordination or standardisation. The initiatives bydifferent ministries vary depending on their mandate, butthe effect often remains piecemeal, although in theaggregate, the system is very large. There needs to be acoordinating system that attempts to dovetail and consolidatethese seemingly disparate programmes with common objectives.Recent policy responses have moved in this direction.

5.23 Some of the major programmes/schemes underthe aegis of different ministries under the governmentalsystem that focus on skill development based principallyon the needs of the informal sector are summarized below.

Ministry of Human Resource Development

5.24 Community Polytechnics as a scheme started in1978-79 under direct Central assistance by Governmentof India to harness the scientific / technical knowledgeavailable with the polytechnics to secure community /rural development. Community Polytechnic activities area part of an existing AICTE approved polytechnic. Thepolytechnic is entrusted to undertake rural / communitydevelopment activities in its proximity through theapplication of science and technology, making use ofinfrastructure available in polytechnics. Presently, 669diploma level institutions are implementing the scheme

of Community Polytechnics training about 3,31,000trainees a year. The main activities of CommunityPolytechnics are:

a) To provide training in need based, non-formalskills/trades to unemployed youth, women, SCs/STs, minorities, school dropouts and otherdisadvantaged sections of the community toenable them to obtain gainful self/wageemployment .

b) To develop and implement innovative andeconomical ideas for rapid adoption of the latesttechnology by the community in and aroundthe community polytechnic (TechnologyTransfer).

c) To provide technical/support services to therural community.

d) To disseminate information and createawareness regarding latest technology and itsapplications among the community.

e) To undertake survey for ascertaining the feltneeds of the community with regard tomanpower training and adoption of affordabletechnology by the community.

5.25 There is no age and qualification bar for thetrainees under the scheme. The skill development isimparted through short term training courses of 3- 6months duration. However, no course fee is charged fromthe trainees.

5.26 Jan Shikshan Sansthan (JSS) is an institutionalframework for offering vocational training programmeto disadvantaged groups of adults such as neo-literates,less-educated slum dwellers, SC and ST and women etc.to raise their efficiency and increase their productiveability. It also provides academic and technical resourcesupport to District Literacy Societies (Zilla SakshartaSamitis). NGOs having a three year old track record areidentified for the implementation of such programmesas may be needed. Based on their location and pastperformance, JSSs are grouped in three categories andprovided financial assistance accordingly.

5.27 National Institute of Open Schooling (NIOS)[Continuing Education and Distance Learning]: was set upin 1989 as an autonomous organization with a view to

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provide a flexible educational opportunity for persons whowish to study and qualify for a better tomorrow. NIOSdesigns its own curriculum, prepares instructionalmaterials in print and electronic modes, conductsexamination and certifies students up to pre-degree level.

5.28 Keeping in view the needs of target groups, thethrust is on providing more vocational and community-oriented courses in addition to general and academiccourses. NIOS offers several vocational courses up topre-degree in the broad areas of Agriculture, Engineeringand Technology, Health and Paramedical, Home Science,Computer Science and Information Technology, Libraryand Information Science, Business and Commerce,Secretarial Practice and other general, vocational and lifeenrichment areas. The NIOS operates its VocationalEducation Programme through Accredited VocationalInstitutes (AVIs) and Special Accredited Institution forEducation of the Disadvantaged (SAIED) catering tothe disadvantaged sections of the learners.

5.29 There are two types of Vocational Educationcourses offered by NIOS: (a) Package courses consistingof two or more modules / papers/subjects, a certificatewhich can only be given after passing all the modules /papers of a package course. The course is of a certificateor diploma level having duration of 6 moths and more;(b) Stand-alone vocational subjects / courses are primarilyoffered through Accredited Vocational Institutes (AVIs)and can be combined with academic subjects along witha facility of credit transfer in lieu of one academic subject.However, a stand-alone subject can also be offeredindependently as a vocational course. As on February, 2007,the country had 999 vocational NIOS.

Ministry of Labour and Employment

5.30 Skill Development Initiative (SDI) is a recentscheme , initiated in 2007, as a five year project. Duringthis period one million persons would be trained or theirexisting skills tested and certified under ModularEmployable Skills (MES) framework. The objectivesof the scheme are (i) to provide vocational training toschool leavers, existing workers, ITI graduates, etc. toimprove their employability by optimally utilizing theinfrastructure available in govt., private institutions andthe industry. Existing skills of the persons can also be

tested and certified under this scheme, and (ii) to buildcapacity in the area of development of competencystandards, course curricula, learning material andassessment standards in the country.

5.31 MES would benefit different target groups like:(i) workers seeking certification of their skills acquiredinformally, (ii) workers and ITI graduates seeking skillupgradation, (iii) early school drop-outs and theunemployed, and (iv) previously child labour and theirfamilies. The minimum age limit for persons to takepart in the scheme is 14 years but there is no upper agelimit.

5.32 The key features of the scheme are:

• Demand-driven short term training coursesbased on Modular Employable Skills (MES)decided in consultation with industry. MES isthe ‘minimum skills set’ which is sufficient forgainful employment.

• Central Government will facilitate and promotetraining while industry, private sector and stategovernments will train the persons.

• Optimum utilisation of existing infrastructureto make training cost effective.

• Flexible delivery mechanism (part time,weekends, full time, onsite/ offsite) to suit needsof various target groups.

• Different levels of programmes (foundation levelas well as skill up-gradation) to meet demandsof various target groups.

• The services of existing or retired faculty orguest faculty to be utilized.

• Courses would also be available for personshaving completed 5th standard.

• Testing & certification of skills acquiredinformally.

• Testing of skills of trainees by independentassessing bodies, which would not be involvedin training delivery, to ensure that it is doneimpartially.

• The essence of the scheme is in the certificationthat will be nationally and internationallyrecognized.


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5.33 The training under SDI scheme will beprovided by various VTPs under Central Government,state governments, public and privates sector andindustrial establishments. VTPs will providecounselling and vocational guidance, training facilitiesas per norms, impart good quality training, post trainingsupport to trainees in getting employment, maintaindata base on trainees trained and the outcome of thetraining. They will track the trainees for three yearsor till they get gainfully employed. VTP will also berequired to have close networking with the industryfor immediate placement of the trainees. Followingcategories of Educational and Training Instituteshaving requisite facilities for conducting trainingcourses would be eligible for becoming VTP forconducting MES courses: (i) Institutes (includingautonomous institutes) set up by Central Government/ State Governments / UT Administrations, (ii) PrivateInstitutes of repute affiliated/ accredited to a Board /University / Council (NCVT, AICTE etc.) set up byCentral Government / State Governments / UTAdministrations, and (i i i) Any other type ofinstitutions/ bodies approved by Apex committee

5.34 The training fee has been set as follows: i.Rs. 500 per module for modules having duration upto 90 hrs; ii. Rs. 1000 per module for modules havingduration from 91 to 180 hrs; iii. Rs. 1500 per modulefor modules having duration from 181 hrs to 270 hrs;v. Rs. 2000 per module for modules having durationmore than 270 hrs. Candidates belonging to SC/STcategory and women will be given relaxation of 25per cent in training fee. In order to motivate traineesto take the training programme seriously, training feesof all those trainees who successfully complete thetraining would be refunded to them. Training cost @Rs 15/- per person per hour will be reimbursed toregistered VTPs in respect of those successful personswho got training from it. VTPs will reimburse trainingfee to the successful candidates. A one time advanceof Rs. 3.00 lakhs will be paid to each govt. ITI sothat they can start courses under the SDI scheme.Testing fee will be Rs 500/800. The testing fee willbe reimbursed to all the successful persons who havereceived training from approved VTPs.

Ministry of Micro, Small and MediumEnterprises

5.35 Over the last several decades, the Ministry ofMicro, Small and Medium Enterprises (MSME) andits field institutions have been imparting training tothe new entrants to the workforce aimed at developingskills, entrepreneurship and managerial capabilities.Some of these programmes are discussed below.

5.36 Entrepreneurship Development Programmes(EDP) are being organised by MSME-DIs as aregular training activity to educate the youth on variousaspects that need to be taken into consideration whilesetting up small scale enterprises. The duration ofthese training programmes varies from 2-4 weeks arenecessary with training fee at Rs 100/-. Trainees fromweaker sections are given a stipend of Rs 500/- pertrainee per month. No fee is charged from SC andST candidates.

5.37 Entrepreneurship Skill DevelopmentProgrammes (ESDP) are targeted at training unskilledand semi-skilled workers employed in small-scaleindustrial units in new skills and/or up-grading theirtechnical skill and knowledge. However, some fresheducated unemployed youth also participate forlearning the traits/skills of various trades in order tofind employment opportunities or for starting theirown ventures. Efforts are made to organise tailor madeprogrammes for the skill development of the sociallydisadvantaged groups, particularly in less developedareas. The target group for these programmes areSC, ST, OBC, women, minorities and other weakersections. These are also cal led ‘Out-reachProgrammes’ as they are conducted in the rural/lessdeveloped areas. Training programmes are of 6 weeksduration with training fee at Rs 200/-. Trainees fromthe weaker sections are given a stipend of Rs 500/-per trainee per month. No fee is charged from SCand ST candidates. 46,418 persons were trained underEDP/ESDP in 2007-08. Training programmes arebeing conducted in 60 disciplines under EDP/ESDP.An amount of Rs 20 crores has been kept for skilldevelopment programmes for 2008-09 for training90,000 persons.

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5.38 The Ministry of MSME has decided toimplement the scheme of Entrepreneurship DevelopmentCentres (EDCs) through Partner Institutes (PIs) in thePPP mode through the National Institute forEntrepreneurship and Small Business Development(NIESBUD). The scheme aims to develop such EDCsin each block to cover about 15 lakhs youths every yearin addition to the 5 lakhs that the Ministry intends totrain through the existing programmes. The idea is toidentify institutes that can impart training by becomingthe Partner Institutes to provide Skill DevelopmentTraining in at least one identified product for each block.

5.39 The Ministry of MSME has proposed topromote skill development by setting up District SkillDevelopment Centres (DSDCs) in 6000 blocks of thecountry. The DSDCs may be run by the Governmentwhile 6000 block level SDCs may be run by PIs.

5.40 The various training programmes run by theMinistry and the MSME-DIs are significant. However,the linkage of these programmes with markets and theprivate sector is yet to be fully achieved. Further, in manyof the targeted industries, industrial organisation ischaracterised by clustering, which are administered bythe cluster development programmes whose linkages withthese schemes are often not clear. Existing clusterdevelopment programmes focus more on helpingenterprises realise the importance of establishing linkageswith each other, on evolving common marketing facilitiesand have relatively weak focus on skilling of the mostunskilled workforce.

5.41 Apart from the institutional training programmesoutlined above, there are several schemes that incorporateelements of skill development. These are discussed below.

5.42 Prime Minister’s Rojgar Yojana (PMRY) waslaunched on 2nd October 1993 to assist educatedunemployed youth to set up self-employment ventures.Initially, the scheme was implemented only in the urbanareas of the country. Since 1994-95, it is in operation inboth urban as well as rural areas. The Scheme also seeksto associate reputed non-governmental organisations inthe implementation of PMRY Scheme especially in theselection, training of entrepreneurs and preparation ofproject profiles.

5.43 KVIC’s Rural Employment Generation Programme(REGP) was launched with effect from 1st April, 1995for generation of two million jobs in the rural areas ofthe country. The scheme is applicable to all villageindustries projects set up in rural areas. The eligibleagencies under the scheme are (i) individuals (ruralartisans/entrepreneurs) ii) institutions cooperativesocieties, trusts & SHGS for projects up to Rs. 25.00lakhs.

5.44 PMRY and REGP have been merged formingPrime Minister’s Employment Generation Programme(PMEGP) which is expected to increase the participationby and coverage of rural beneficiaries by KVIC and stategovernments in a more focused manner throughrationalized implementation, training, monitoring andverification procedures to be piloted and coordinated byKVIC.

Ministry of Housing and Urban PovertyAlleviation

5.45 Swarna Jayanti Shahari Rozgar Yojana (SJSRY)provides gainful employment to the urban unemployed/underemployed by encouraging self-employment venturesor provision of wage employment. The programme waslaunched in 1997 with a fund support on 75:25 basisbetween the Centre and the states. The programme isapplicable to all urban towns in India and is implementedon a whole town basis with special emphasis on urbanpoor clusters. The scheme consists of two majorcomponents, viz. (i) The Urban Self EmploymentProgramme (USEP), (ii) The Urban Wage EmploymentProgramme (UWEP). Salient features of the Urban SelfEmployment Programme are:

• Assistance to individual urban poor beneficiariesfor setting up gainful self-employment ventures

• Assistance to groups of urban poor women forsetting up gainful self-employment ventures.This sub-scheme has been titled as “TheScheme for Development of Women andChildren in the Urban Areas (DWCUA)”

• Training of beneficiaries, potential beneficiariesand other persons associated with the urbanemployment programme for upgradation andacquisition of vocational and entrepreneurial


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skills. Training is imparted in the ITIs,polytechnics, Jan Shikshan Sansthans,engineering colleges or other training institutes.

• There is no minimum educational qualificationfor beneficiaries under this program. However,this scheme is not applicable to the personseducated beyond the 9th standard. The trainingand infrastructure support is as stated below:

- Training cost per person Rs. 2,000/-

- Training period 2-6 monthssubject to am i n i m u m300 hours

- Tool kit worth Rs. 600/-

The annual targets under self employment under USEP/DWCUA and skill development training under trainingcomponent have been fixed as 1,20,000 persons and1,50,000 persons respectively in recent years.

Ministry of Rural Development

5.46 The Swarnajayanti Gram Swarozgar Yojana(SGSRY) aims to bring the assisted poor families(Swarozgaris) above the poverty line by providing themincome-generating assets through a mix of bank creditand government subsidy. The programme aims atestablishing a large number of micro enterprises in ruralareas based on the ability of the poor and potential ofeach area. The SGSY is financed on 75:25 cost sharingbasis between the Centre and the states.

5.47 Training and capacity building of Swarozgarisis an important component of SGSY, under which 10per cent of the financial allocation is earmarked for trainingand skill development. During 2007-2008 on an average8.59 per cent of SGSY funds have been utilized fortraining of Swarozgaris. At the national level, 15 per centof the funds under the programme are set apart for specialprojects having far reaching significance and which canact as indicators of possible alternative strategies.

5.48 As special projects, an innovative interventionfor demand-based skill development training projects forincreasing employability of rural BPL youth leading totheir placement or self employment has been taken up atthe national level. The emphasis of these projects is on

identifying demand driven skill sets in consultation withthe industry/potential employers in and around the projectareas and imparting training to rural BPL youth leadingto their placement on completion of training courses. Theprocesses involved in the model are partner / clientidentification followed by market scan and curriculumdevelopment, mobilisation, selection and training of ruralpoor and their placement and tracking.

5.49 Realizing the great potential in this strategy, 12Placement Linked Skill Development Projects have beensanctioned with total project cost of Rs. 147.70 croresand beneficiary coverage of 2.79 lakhs rural youth. Theaverage skill development training cost to be borne bythe Government in these projects is about Rs. 5,000/-per head. Out of about 36,610 youth trained so far inthese projects, more than 27,465 have found employmentthrough successful placement at salaries ranging fromRs. 3000 to 4000 per month bringing them above povertyline. By March 2012, a total of about 2.5 million ruralpoor are planned to be covered by the Ministry of Ruraldevelopment through similar skill upgradationprogramme/projects with guaranteed placement.

5.50 The Ministry has successfully initiated a SkillDevelopment Programme for uneducated/low educatedunemployed BPL rural youth through partnershipprogramme with industry associations. A pilot projecthas been initiated for garment industry in association withIL&FS. To implement this programme, an SPV hasbeen formed called APTEX, which is managed byindustry representatives and professionals. Thegovernment. plays only a supportive role. After the pilotphase, the programme would be expanded to cover atleast 5 lakhs BPL youths with 100 per cent placementguarantee. Similar initiatives are being worked out forother sectors like textiles, leather, footwear, retail, etc.The Ministry also partners with banks for theRUDESETI model as discussed in the next para.

5.51 The Department of Rural Development hadproposed setting up Rural Development and Self-Employed Training (RUDSETI) type institutes in allthe districts in the country to provide skill training torural poor. The first RUDSETI was established at Ujire,Karnataka, in 1982 jointly by Sri DharmasthalaManjunatheshwara Educational Trust, Syndicate Bank

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and Canara Bank. It chalked out an innovative approachto help the rural youth stand on their own feet byidentifying opportunity avenues, train participants indeveloping the desired skills and assist them in theirentrepreneurial activity. RUDSETI has developed ahighly successful training module benefiting over 150,000trainees. Over 66 per cent of the trainees have allsuccessfully established entrepreneurial ventures. In thepre-training phase of the programme, candidates areselected on a scientific assessment of their abilities. Theselected candidates are then given inputs on motivation,conviction, entrepreneurial competence and technical skilland know-how in the selected fields. Later, the trainingfamiliarizes them with the steps needed to set up theirown business. The final phase covers several aspects ofmanagement. Apart from their educative and qualitativeprogramme, the organisation is in constant touch withits students and is willing to support them for 2-3 yearseven after their training. RUDSETI also provides ahelping hand to the candidates to come through theirinitial struggles in their ventures. The trainees maintaina good rapport with the RUDSETI even after theirtraining and constantly seek guidance. Keeping in viewthe fact that most of the unemployed youth are frompoor/middle class rural families, entire training is providedfree of cost including free boarding and lodging.

5.52 Some of the typical EDPs for first generationentrepreneurs are:

• Agricultural EDPs - Agricultural and alliedactivity, dairy management, bee-keeping,horticulture, mushroom cultivation etc.

• Product EDPs - Dress designing for men andwomen, rexin based utility articles, agarbattimanufacturing, woollen knitting, bag making,fabricating cane furniture, bakery products etc.

• Process EDPs - Repairs of two-wheelers, pumpsets, radio, TV etc., motor rewinding, multi-purpose mechanic, beautician course,photography and videography techniques,screen printing and photo lamination, watch andmobile repair, repair of domestic electricalappliances, computer and desk top publishing(DTP) etc.

5.53 The above are only a synoptic view of the existingschemes for skill development and training that have been

initiated by Government of India. As mentioned earlier,a number of other ministries/departments are alsoassociated with skill development programmes which arecatering to the requirements of specific sectors and targetgroups. For instance, the Development Commissioner(Handlooms) under Ministry of Textiles provides trainingto the handloom weavers. It has a number of WeaversService Centres in various parts of the country whichprovide services to the handloom weavers. Similarly,Development Commissioner (Handicrafts) is conducting/supporting various promotional programmes for thehandicrafts sector which include skill development /upgradation of artisans. Nehru Yuvak Kendra Sangathan(NYKS) under Ministry of Youth Affairs and Sports has500 district level offices which, among others, conductprogramme to improve the vocational skills of rural youth.

5.54 The Ministry of Women and ChildDevelopment is implementing a number of programmesaimed at training women in marketable trades and enablethem to access remunerative employment opportunitiesor help them in setting up their own businesses. TheDepartment of Science and Technology had initiatedVocational Training for Employment Generation(VoTEG) in January 2000 with support from UNDP totarget the informal sector for training. The project evolvedinto SKILLS Project which takes a lead in adapting andimplementing the ‘franchise model’ to skills required bythe target segment of resource poor communities andless educated persons. The Ministry of Agriculture istraining in the fields of agriculture/extension services,horticulture, animal husbandry, dairying and fisheries.The National Rural Health Mission and otherprogrammes of Ministry of Health and Family Welfarehave skill formation components built in to the overallschemes. The Ministry of Tourism is associated withtraining activities in areas of hotel management andcatering. The Ministry of Food Processing Industriesorganizes training programmes relating to foodpreservation and food packaging to impart vocationalabilities to the youth. Institutions like APEDA, NID,Coffee Board under Ministry of Commerce and Industryhave skill development components embedded in to theirprogrammes. Ministry of Social Justice andEmpowerment and Ministry of Minority Affairs havetraining programmes to train people from their target


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groups. In addition to these, a large number of trainingprogrammes are supported by NABARD for theagricultural sector and institutions such as NDDB whichwork with informal sector workers.

State Government Initiatives

5.55 As mentioned earlier on in the chapter, asignificant part of the implementation of national levelschemes takes place at the state level. In addition, severalstate governments have also initiated specific programmesfor skill development in the informal sector. In AndhraPradesh, for example, an Employment GenerationMission has been set up in the last few years by the StateGovernment that works in a public-private partnershipmode with the Collectors and Project Directors of DRDAsin the districts. Companies such as G-4 Securitascollaborate with the Mission in various ways rangingfrom mentoring, providing human and financial resources.A specific initiative that trained the rural youth in marketlinked opportunities for entry level jobs in the servicesector resulted in placement with companies such as McDonald’s, Café Coffee Day, Food World and so on.Training programmes for self-employment that focus onthe informal sector are undertaken by schemes run bythe governments of several states such as Rajasthan,Tripura and Maharashtra. States such as Orissa andJammu and Kashmir have specific training programmesin the handicraft and artisanal sectors.

Conclusion

5.56 Our review demonstrates that the governmentalsystem for skill development and training, while vast, isdispersed and characterised by overlaps and multiplicity ofschemes. Further, the system that is in existence for the informalsector, while recognising some obvious needs of the sector suchas certification of trainees, accreditation of trainers, broadbasing and making flexible the actual training imparted andlinking training to jobs, is again not conceptualised in acomprehensive manner. The Second National Commissionon Labour focuses its critique of existing systems on thesecharacteristics, which this Commission also seeks toemphasise. Specifically, it is stressed that the formal andinformal systems of skill development need to be integratedwith training being competency based, flexible, allowing easyentry and exit to trainees at different points in their lives andbeing subject to formal systems of accreditation and certification.

5.57 At the level of implementation, the district levelstudies conducted by the Commission in Sehore,Allahabad, Shillong and Imphal show that, in spite ofall the above mentioned schemes, both formal andinformal, being in operation to different degrees indifferent places, the present facilities to impart skilldevelopment to workers are grossly inadequate. Forexample, in Allahabad, it was seen that at present only12 - 15 thousand workers are trained every year with thecontribution of the government system being about 55per cent and private sector about 30 per cent while NGOsprovide training to about 15 per cent workers. In Sehore,of an estimated 2.18 lakhs workers, who require training,the existing capacity can cater only to a few thousands.

Part B:Part B:Part B:Part B:Part B: Private and NGO InitiativesPrivate and NGO InitiativesPrivate and NGO InitiativesPrivate and NGO InitiativesPrivate and NGO Initiatives

5.58 Review of governmental initiatives towards skillbuilding, both in the formal and informal sector in theprevious section, revealed the contours of the largestsystem of skill development in India. As was pointed outin chapter 2 a significant proportion of the workforcealso gets trained in the private sector. The present sectionreviews some of the initiatives of the private and NGOsectors. The focus is on drawing out the salient featuresof such initiatives.

Private Sector Initiatives for Skill BuildingPrivate Sector Initiatives for Skill BuildingPrivate Sector Initiatives for Skill BuildingPrivate Sector Initiatives for Skill BuildingPrivate Sector Initiatives for Skill Building

5.59 Broadly, the private sector initiatives can becategorised into four types. First is where privateentrepreneurs or corporates establish training centres/institutes on a for-profit basis. Second, private corporationsimpart training to people who are absorbed as skilledworkforce in their own production units. Third is wherethey enter into partnerships with public agencies andbecome the vehicles for training delivery and sometimesfinance. Fourth, corporate houses set up public trusts orfoundations with a development agenda to build thecapacities of local communities to be self reliant systemsthat utilize human and physical capital in a sustainablemanner as an integral part of their ‘corporate socialresponsibility ’ (CSR) mandate. Here, we brieflysummarise some of the major initiatives taken by theprivate sector.

5.60 Examples of the second kind of initiative, whereskilled manpower trained by a private company is

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absorbed within the company itself, are by companiessuch as Group 4 Securitas, Reliance and Kingfisher.Kingfisher runs a training academy (Kingfisher TrainingAcademy) that caters to the hospitality industry, includingaviation, tourism and hotels. It runs training modules ofroughly a year’s duration that train young people asairhostesses, flight stewards, and workers in the hospitalitysector. Reliance Industries has started an initiative calledReliance Global SReliance Global SReliance Global SReliance Global SReliance Global Sererererervicesvicesvicesvicesvices to provide job oriented callcenter training. Group 4 Securitas conducts a two-weektraining programme for security guards before they areinducted into the workforce.

5.61 Examples of the third kind of initiative, involvingpublic-private partnerships, are of the ConstructionIndustry Development Council (CIDC), which has beenset up jointly by the Planning Commission, Governmentof India and the Indian construction industry. CIDC, agroup of industry and government representatives, hasundertaken a programme to assess, build and certify skillsin the construction trades so that the overall industry canhave access to skilled labour of certified quality. TATAMotors has developed a training model in partnershipwith the CIDC. This partnership has effectively becomea source of training for an entire automotive supply chainlinked to their branded vehicles. Though it was originallydeveloped as a closed programme that simply trainedstudents to build quality vehicles, TATA soon realizedthe need to also train those who supplied the parts, soldand repaired their cars. The unique feature of theseprogrammes is that they are private sector led, but notdesigned exclusively for the benefit of the designers orthe funding organizations of the programme.

5.62 In the previous chapter, we referred to aninitiative by the Andhra Pradesh Government involvinga public-private partnership for training the rural youthfor service sector jobs. This initiative, coordinated by theState Government, has the private sector undertakingtraining of youth for employment in the private servicesector in companies such as McDonalds, Café CoffeeDay, Food World, Futures Group, Pizza Hut, Microsoft,Dell, Wipro and so on.

5.63 There are also several initiatives where privatefoundations undertake training programmes as part ofcorporate social responsibility of corporations. The

Ambuja Cement Foundation (ACF) is the developmentinitiative of the Gujarat Ambuja Cement Company andworks at 11 locations covering nearly 700 villages of eightstates. While some youth groups have been impartedtraining on bamboo crafts and furniture making, otherswere trained for repairs of TVs & mobile phones, driving,masonry, electrician, motor mechanic, welding andfabrication, carpentry and plumbing. Some others wereprovided training on small-scale enterprises, so as toenable them to establish their own small business. Theefforts of ACF are to go beyond just imparting trainingin skills that the work market requires; training them inentrepreneurship is also provided. The youth are alsosupported to learn the procedures of approaching banksfor loans and setting up their own enterprises.

5.64 The training initiative by the Confederation ofIndian Industry (CII) is another example of the above.With the focus on shifting training from employment toemployability perspective, the CII is presently pilotingthe ‘Skills Development Initiative’ as a solution to delivera structured and scalable framework to impart skills tothe unemployed / underemployed / uncertified workers,so that they develop as a quality human resource to meetthe dynamic needs of the growing economy. This hasbeen piloted initially in 6-7 urban as well as rurallocations. The trades in which skills are imparted arechosen in response to the local demand requirements andthe growth potential. There is no condition in regard tothe social, economic or educational background of thetrainees, who are selected on the basis of their aptitudeand potential. Under this initiative, the skill-demandassessment is carried out, then the programme moduleformulated, along with identification of training centresand trainers, and finally, delivery of the capsule modulestargeted to help the candidates gain employable skills.The skill trades are classified into blue skills (agriculture,health care, security services) / rust collar skills(construction, minor engineering, transportation) / andgrey collar skills (ICT) etc. The existing traininginfrastructure, such as that available at ITIs, engineeringcolleges and vocational training institutes after regularhours, is sought to be utilized optimally. Services offaculty members of these institutions are utilized on anhonorarium basis. The duration of the training course is3-6 months. The contents of the training can be


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customized to meet the requirements of an employer, whogives a firm commitment of employment.

5.65 A universal certification process is an importantcomponent of this initiative. There is an independentverification and a joint certification of the proficiencyacquired by the trainees for which the CII has partneredwith City & Guilds. The certificate given by City &Guilds is expected to have wide acceptability nationallyand internationally and the CII is negotiating anarrangement with banks for underwriting a smart cardto be given to the successful candidates to help them getfinancial linkages.

5.66 Another example of a CSR initiative by acorporate foundation is that of the Byrraju Foundation,set up by the Satyam group of companies, which seeks toproviding training services in the areas of healthcare,environment, sanitation, and adult literacy. TheFoundation currently works to transform 156 villages in5 districts of Andhra Pradesh and impacts 800,000 people.

5.67 Dr. Reddy’s Foundation, which is the CorporateSocial Responsibility wing of Dr. Reddy’s Laboratories,a leading pharmaceutical company of India, has started aprogramme called Livelihood Advancement BusinessSchool (LABS) which is a vocational and life skillstraining model that provides job-based skill developmenttraining to the poor youth in the age of 17-25 yrs over aperiod of 3-4 months. It is custom-designed for schooldropouts, unemployed secondary school graduates, streetyouth, retrenched workers, migrant youth andresettlement community members from the poorestsections of the community. This demand-drivenprogramme has trained over 36,000 youth (between theages of 17 and 25) from the economically weak and placedthem in the salaried formal employment sector. Over100 major national and international corporations andbusiness organizations and over 4,000 local smallbusinesses and medium enterprises have provided entrylevel positions to the LABS alumni till date.

5.68 Private sector initiatives in skill building, asdemonstrated above, tend to be more linked to industrydemand and hence avoid the wastages associated withsupply-led initiatives. However, as has been mentionedin chapter 2, these are likely to be forthcoming only inresponse to existing demand and where skilling is likely

to have a direct link with profitability. For a large segmentof workers in the informal sector, these considerationsare not enough and their skilling needs go far beyondthose that are likely to be addressed directly by the privatesector. Some of these concerns are taken up through NGOinterventions which are described below.

NGO Initiatives in Skill Building

5.69 NGO interventions range from offering NCVTapproved formal ITI courses to a wide range of non-formal courses. Typically, NGOs devise their owncurricula, provide their own training and have their owncertification procedures. Very often, they have contactswith employers in the neighbourhood areas whichprovide placements for the trainees. It is often alsoreported that placement in jobs for those trained are highand that trained workers earn higher wages. A review ofthe working of the activities of the major NGOs initiativesreveals that there are two types of approaches beingfollowed: (a) training only on basic or upgraded skillsand then leave the trainees to seek wage employment orstart their own enterprise, and (b) a ‘holistic’ package ofskill development, basic entrepreneurship training andassistance in availing credit facilities etc. Some NGOseven `handhold’ the trainees for a certain period. Someof the major initiatives are summarised below.

5.70 Goodwill International Association: GoodwillInternational Association, based in Bangalore, wasestablished in 1971 and imparts ‘earning skills’ tounemployed youth and school dropouts in variousdisciplines (at least 10

th pass). Formal courses offered

for training are of the ITIs affiliated to the NCVT, whichcomprise the fitter trade for boys and cutting and tailoringfor girls. The non-formal vocational courses includefitting, welding, turning (boys), electrical and plumbing.The non-engineering courses include literacy, healtheducation, craft (girls), medical attendant, machinemechanism, electrical etc. Around 60 per cent of thetrainees under non-formal courses have been successfulin obtaining jobs in various industries either on their ownor through Goodwill’s association. With regard to formaltraining for boys, the success rate in placement is 100 percent. Goodwill has contacts with a number of engineeringand garment industries and hospitals which help traineesto secure a job after completion of training. Attempts are

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made by the Association to find placements for traineesin the industry as apprentices. Multi-skilling of thetrainees provides them with ample opportunities to learnand move upward in employment hierarchy.

5.71 The training manual for formal courses isprovided by the Directorate General of Employment&Training where as for non-formal courses the manualis prepared by Goodwill which has its own trainers anddoes not depend upon outsiders. For formal courses,certificate is provided by the government and for non-formal courses it is provided by the Association.

5.72 Gram Vikas: Gram Vikas is a secular, non-profitvoluntary organization working in Orissa with the needyand weaker sections of the society to facilitate theirdevelopment. It engages in activities aimed at improvingthe living conditions and the economic standards of thepoorest of the poor. Gram Vikas provides training tolandless unskilled labourers in masonry, stone dressing,wire binding, painting and plumbing. The target groupis the landless village youth working as unskilled labour.Trained barefoot engineers and skilled masons contributetowards projects implemented by Gram Vikas itself onshelter related constructions works and also manage toget gainful employment in and around the villages oncethe project gets over. Skill training helps the people tobargain and secure better wages for themselves. It hasbeen observed that most of the skilled masons managedto double their daily wage earning capacity over a periodof two years.

5.73 Gram Vikas has its own trainers to providetraining to the target group. Gram Vikas provides thetechnical back up support and the necessary credibilityto trainees to establish their own micro enterprise.Follow-up surveys are conducted by Gram Vikas after atleast two years of the completion of the trainingprogramme. Gram Vikas awards Certificate to eachtrainee on the completion of training.

5.74 An interesting NGO intervention that targetsthe informal sector is that of Movement for Alternativesand Youth Awareness (MAYA Organic..... Maya Organic is anot-for-profit company based in Bangalore working withinformal workers in about 52 slums. It provides accessto the working poor to skills up-gradation and learning.It recognizes that the unorganised sector, the organised

industry and the markets - each has specific needs aswell as opportunities to offer and share with each otherfor growth and development. The model takes advantageof the large number of individuals operating in theinformal economy by bringing them together as collectiveenterprises of 30-50 members / owners each to accessthe work opportunities available and by makingcontinuous learning, social security and decent workconditions as inherent part of the organizational structure.It distinguishes itself from the existing member-basedorganizations in that all these collectives are profit centresof a particular sub-sector enterprise, which in turn ensuresa certain visibility and organizational structure, thus farmissing in the unorganised sector.

5.75 Maya Organic has been working in 4 sub-sectorsand has registered four enterprises: lacquer ware,construction (painting, masonry, and carpentry),hospitality and services (domestic work, food industryand public place maintenance as well as gardening andwaste management) and garments (home based garmentworkers and embroidery workers). Maya Organicencourages different kinds of vital networking betweenthe collectives and markets. One central activity is theinteraction with clients in the areas of information aboutchanging market demands and quality feedback relatedto the products and services offered by the collectives.Equally important is the continuous interaction withresource pool (persons/ institutions/ material) whichsupport the collectives in the areas of training, marketing,product and brand building and social protection; thisensures continuous product and service upgradation forbetter marketability. This form of networking andmaking the resource pool accessible to the collectivesnot only facilitates the process of continuous reflectionon market trends and changes but also enhancesempowerment.

5.76 As an active marketing agency, Maya Organicrepresents the various collectives under a brand in themarket, ORGANIC, that represent not just products/services but rather a development brand. It implies thatevery product/ service bearing the ORGANIC label hasa developmental objective and connotes good workpractices, high quality and professionally run collectives.It is responsible for developing and promoting the brandidentity across different markets and clientele through


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building networks with clients. Maya Organic also hasa process of monitoring the collectives to ensurecompliance with what the brand stands for.

5.77 In addition, LabourNet, an institutional networkof markets and informal sector workers is a facilitatingstructure that routes jobs to workers, encourages skilldevelopment, influences policy and facilitates access tosocial security schemes for the construction workforceetc. It has evolved from the experiences of Maya Organic.

5.78 Self Employed Women’s Association (SEWA) is anorganisation of poor and self-employed women workersfrom the unorganised sector of the economy. SEWA’smain goal is to organize women workers for fullemployment and self reliance and believes in capacitybuilding as a strategy for making the poor women self-dependent. SEWA has the experience of skill formationin a variety of livelihood creation and supportive activitiesby imparting training on technical, managerial andbehavioural skills. For more than 32 years now, SEWAhas been working for poor, self-employed women in theunorganised sector of rural and urban areas. Today morethan 9.6 lakhs poor women from five states of India areorganised in the forms of Self-Help Groups (SHGs),co-operatives, associations, federations and even corporateentities. It has formed producer federations in each ofthe districts it works in.

5.79 The various sectors where SEWA works isconstruction (masonry, brick work, plumbing etc),production of traditional craft work, management of watersupply by women, repairing & maintenance of hand pumpsand pipelines, provision of health related services, basicskills in electrification, food processing and assemblingof solar energy equipments.

5.80 SEWA’s approach to organizing women for aparticular trade has been demand driven and need-based.Even before designing the training modules, surveys areconducted to study the member’s needs and skillassessment exercises are carried out to identify the areaswhere training is required. As a policy, SEWA usestraining modules and curriculum for training throughthe SEWA Academy - the focal point for workers’education and capacity-building. Similar inputs are alsoavailable from relevant sister institutions of SEWA.Moreover, SEWA has district level teams of trainers and

coordinators who interact regularly and keep upgradingthe training modules.

5.81 So far as technical skill training is concernedSEWA makes arrangements with external resourceorganizations and individuals, e.g. NIFT, GujaratAgriculture University, CIDC etc. SEWA has establishedinstitutional linkages for various aspects of managingwomen’s micro enterprises. Some of the institutionsinclude Mahila SEWA Sahakari Bank, ICICI Prudential,Gujarat Alkalies and Chemicals Ltd., Central Marineand Salt Research Laboratory.

5.82 The above review shows that the non-governmental initiatives, whether by the private sectoror by NGOs, address some of the deficiencies that existin existing government-led systems. They provide trainingthat is demand-led with signals being provided by themarket. However, as was noted earlier, going purelythrough market signals will not address a lot of problemsof the informal sector. NGOs adopt a more integratedapproach, with emphasis across different kinds oforganisations, but their interventions are too small anddispersed to make a significant impact in terms of numberstrained. Further, they suffer from the problems ofinconsistent curriculum, lack of certification andstandardisation that were noted earlier.

5.83 The focus of the Commission’s work andrecommendations in this report is to critically evaluatethe extent to which the skilled workforce needs of theeconomy can be met through existing schemes andapproaches. It must be mentioned here that in recentyears, there have been several agencies and institutionsthat have undertaken similar reviews, underlined severalinadequacies in existing systems and recommendedreforming the system. Our review therefore evaluates theexisting system keeping in mind other evaluations,critiques and recommendations. The salient features ofthese evaluations are described below.

Skill & Training System in India: CriticalEvaluation & Salient Proposals

5.84 Recently, the role and performance of the existingtraining system has been extensively reviewed and anumber of proposals have been made to strengthen andexpand it. These proposals readily recognize the

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importance of skill development of workers in theunorganised sector but focus on the skill requirementsfor the organised sector. It is recognized that the presenttraining system is supply-oriented and is not linked toemerging demand (by the organised sector) for skilledmanpower. The proposals, therefore, make varioussuggestions for strengthening and expanding the presentvocational educational and training system in the country.

5.85 The main proposals which we have examinedin this report have been made by the PlanningCommission’s Task Force on Employment Opportunitiesand Task Force on Skill Development (subsequently alsoin the Eleventh Plan) and the MOLE Draft SkillDevelopment Policy. In addition, the National KnowledgeCommission, the World Bank and 2008-09 union budgetalso spells out some proposals. The targets proposed inthe various documents perused by the Commission arequite general and range from about 15 million to 50million annually. But in some cases only public sectortraining capacity or only organised sector worker coveragehave been specified. There is general lack of clarity onthe extent of coverage of unorganised sector workers.These reports have mentioned various financingmechanisms and have different emphases on the respectiveroles of the public and private sectors. Besides, thesereports have suggested different apex level organizationalstructures to address the VET requirements. From theCommission’s point of view, a major lacuna of thesereports, as pointed out above, is that they focus mainlyon the training needs of the organised sector (whetherformal or informal). They also do not assess the existingtraining systems for the unorganised sector workers. Asfar as the Commission is concerned, we find that ourbroad approach as well as some of our keyrecommendations are similar to that of the SecondNational Labour Commission. We have gone beyond therecommendations of the Second National LabourCommission in several important respects.

5.86 Reports of most of the above mentionedcommissions and committees characterize India’s systemof skill development and training as being governmentled on the one hand and supply driven and not linked toemerging demand (by the organised sector) for skilledmanpower on the other. Most of them argue for reducing

the government’s role and gradually allowing the privatesector to take over the training delivery or reorientingsystems of training in the PPP mode. The government’srole is envisaged as a facilitator and for creating a largerframework for certification and accreditation. Within thisbroad approach, proposals vary among greater stress ongeneral education in comparison to vocational education(World Bank), government’s complete withdrawal fromtraining delivery (Task Force on EmploymentOpportunities) and training to be necessarily paid for inthe form of user fees by trainees.

5.87 Most of the proposals focus on the skillrequirements of the organised sector. Issues of trainers’accreditation, certification of training, autonomousstructure for skill development etc. that affect the qualityof training for the organised sector are addressed byvarious reports. Informal sector characteristics,highlighted in Chapter 2 of this report, are consideredonly briefly by the Second National Commission forLabour and the MOLE’s report. The fact that the informalsector’s workers and entrepreneurs require formal trainingin order to improve productivity in both the formal andlarge informal sector is hardly recognised. That skilldevelopment for the informal sector has to be structurallydifferent, on which this Commission lays great emphasis,does not receive serious attention by most critiques andproposals.

5.88 The Task Force on Employment Opportunitiesunder the chairmanship of Shri Montek Singh Ahluwaliasubmitted that the Central Government should completelywithdraw from delivery of vocational training services.It felt that the Central Government’s role should be tomonitor the institutions that set up standards of training,and evaluating and assigning rating to the private trainingestablishments. It called for the ITI system to berestructured and additional resources provided to improveits output. Selected ITIs chosen for joint managementwith industry should be converted into autonomous bodiesreceiving government funds. Moreover, it felt that theexisting policy of restrictions on charging fees should beremoved. It also called for a centrally sponsored schemeor an aid institution like the UGC to be set up for theITI’s. It was in favour of imposing a small levy oncompanies to raise a skill development fund to finance


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the ITIs with industry associations also having a say inallocations. It wanted graduates of ITIs and othervocational training institutions to be eligible for entryinto polytechnics and +2 level medical and engineeringcourses. The Task Force recommended that all enterprises,irrespective of size and status, should be brought underthe purview of Apprentices Act. It opined that the privatesector involvement in training has been discouragedbecause of highly subsidized training services providedby the public sector which should change.

5.89 The Second National Commission on Labourrecommended a new modular approach to vocationaltraining, which would aid multi-skilling, impart skillsattuned to the needs of the labour market, and inconsonance with the latest technology. It called for thesetting up of an independent regulatory authority to setthe standards for skills required for a particularcompetency, programme implementation andaccreditation of institutions imparting trainingprogrammes. It also favoured establishment of Blocklevel vocational educational institutions in a phasedmanner in each block and emphasized that trade unionsat the national, regional, industry and plant level shouldall have a say in the running of workers’ educationprogrammes. The Labour Commission recommendedthat for better matching of demand and supply a labourmarket intelligence system needs to be put in place forforecasting of marketable skills in both the organisedand unorganised sectors. In order to provide for retrainingof workers rendered surplus/obsolete by lay-offs,retrenchment and voluntary retirement schemes/earlyseparation schemes, and training of labour in theunorganised sector, the Second National Commission onLabour recommended the establishment of a SkillDevelopment Fund (SDF).

5.90 The World Bank in its recent report on VET inIndia has taken a different approach. It has argued that,going by the international experience, India would dowell to not expand its vocational education system butfocus on strengthening its general education system. Asfar as vocational training in public sector is concerned,,,,,major reforms at the policymaking and institutional levelswould be required. The report emphasized that involvingprivate sector in management would be critical if

institutions are to be responsive to labour market needs.The World Bank was of the view that the diverse trainingneeds of the informal sector operators cannot be met bysimply reorienting public training institutions. Instead ofdelivering training themselves, governments could focuson creating an environment to support non-publicproviders. While emphasizing the importance ofinformal apprenticeships for training in the unorganisedsector, it suggests that the quality of such apprenticeshipshould be improved through a strategy revolving aroundtraditional form of training, by upgrading the technicaland management skills of the masters as well as theirskills in pedagogy. Further, traditional apprenticeshipsshould be linked with specialized training providers ormaster craftsmen, with the governments acting asfacilitators. To assist the growth of private trainingprovision, the report emphasized that the governmentshould remove constraints on setting-up traininginstitutions.

5.91 The National Knowledge Commission, in itsrecommendations on the vocational education and trainingsystem, favoured placing vocational education entirelyunder the Ministry of Human Resource Development(MHRD). It called for increasing the flexibility of VETwithin the mainstream education system and establishinglinks between the vocational education stream and schooleducation as well as higher education, and makingvocational training available in various literacy and adulteducation schemes. The National KnowledgeCommission recommended that the government shouldaim to spend at least 10 – 15 per cent of its total publicexpenditure on education, on vocational education. It calledfor expanding VET capacity through innovative modelssuch as public private partnerships, decentralized delivery,distance learning and computerized vocational training.It also called for enhancing the training options availablefor the unorganised and informal sectors. It also suggestedthat the skills required by the unorganised sector shouldbe formally introduced in the curricula and practicaltraining courses. The government should act as a facilitatorand provide financial support for such courses. Theexisting Industrial Training Institutes (ITIs) and IndustrialTraining Centres (ITCs) should be improved throughincreasing their functional autonomy. An independentregulatory agency for VET should be established.

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5.92 The Task Force on Skill Development set up bythe Planning Commission has asked for a paradigm shiftin the national policy on skill development with theprivate sector playing a lead role instead of thegovernment.. The government’s role would have tochange from being a vocational training provider to apartner and facilitator. Moreover, the Task Force’semphasis is on a shift from the supply-led to a demand-driven approach. For vocational education, the Task Forcehas suggested that the nodal agency would be the Ministryof Human Resource Development but an interfacebetween Vocational Education and Vocational Trainingwould be provided at different levels. Recognizing theimportance of skill development in agriculture and itsvast potential, it has recommended that agriculturetraining institutes can be set up all over the country, inthe PPP mode wherever possible, to empower personsdependent on agriculture. It called for a National Missionon Skill Development to be set up. As part of the Mission,the National Council of Vocational Training (NCVT)should be reconstituted and become the sole regulatoryauthority for Vocational Training..... New institutions orSkill Development Centres (SDCs) could be opened ondemand by the state governments in collaboration withthe industry on a PPP basis. The Task Force left the issueof training in the unorganised sector, (where it wassuggested that training centres be set up in clusters ofvillages, linked with rural business hubs and thedevelopment programmes of the local bodies, PPPs andindustry) to be looked at by the Mission.

5.93 The Eleventh Five Year Plan has called for a“Skills Development Mission”,”,”,”,”, with an outlay of Rs.22,800 crores. The Mission will, among others, realignand reposition existing public sector infrastructure ITIs,polytechnics and VET in school to get into PPP modeand to smoothen their transition into institutions managedand run by the private enterprises or industry associations.It will encourage a move away from the system of fundingtraining institutes to supporting the candidates. As a result,institutional funding could be limited to an upfront capitalgrant while recurring funding requirements could be metby appropriate disbursement to the institute at the end ofsuccessful certification. Public Private Partnership Modewill be the major vehicle for absorption of publicexpenditure in skill development in the Eleventh Five

Year Plan. Apart from the financial contribution fromthe government, the Plan calls for creating an enablingenvironment for private investment in skill training.

5.94 The Draft National Policy on Skill Development,prepared by the Ministry of Labour & Employment, hastargeted to expand significantly the capacity of the nationalskills development system. The Policy envisages settingup of State Skill Development Councils, State SkillDevelopment Boards and State Skill DevelopmentCorporations on the lines of their national counterparts.The Policy places the Ministry of Labour andEmployment as the nodal Ministry for coordinating theefforts of skill development. The Ministry will also guidethe formulation of a programme of action forimplementing the Policy.

5.95 As part of the institutional restructuring, thePolicy calls for the National Council of VocationalTraining (NCVT) to be strengthened and reengineeredwith a broader mandate and expanded activities to play apivotal role in skill development. A State Council forVocational Training is to be remodelled in each State,which has similar functions as NCVT at the nationallevel. The Policy envisages establishment of Sector SkillsCouncils (SSCs), in coordination with NCVT, as aninstitutional mechanism to facilitate greater and activeparticipation of the social partners. Sector specific LabourMarket Information Systems are to be established atnational and state levels, and area specific LMISs at locallevels.

5.96 The Policy aims to introduce ‘competency focus’in the national skills development system. The Policy willfocus on equalization of skills development opportunitiesfor the socially disadvantaged communities with thoseof the rest of the population. Special efforts will bemounted to promote establishment of training facilitiesin deficient regions. The scheme of ModularEmployment Skills would be expanded greatly to caterto the large size of the target group of drop-outs andout-of-school youth, including child labour. All effortswill be made to improve and strengthen informalapprenticeship arrangements in the unorganised sectorand to upgrade and diversify their activities into modernskill areas. A special funding support scheme will be setup, which, among others, will help meet direct and


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opportunity cost of skills training and lifelong learningin the unorganised sector.

5.97 It is clear from the above that almost all recentassessments (with the exception of the World Bankreport) have favoured large expansion in India’s skilldevelopment capacity. They have also all favoured asubstantial increase in skill development capacity forinformal sector workers. Some of the reports envisagedthat this could be done by setting up 5000 SkillDevelopment Centres. There are considerable differencesbetween the recommendations in the management andfinancing models envisaged, with some of the reportsvisualising that the government will only play the role offacilitator, financier and coordinator.But their major focusis on the organized sector, which has a clear articulationof skill requirements and well established market links.

District Level Studies of Skill DevelopmentSystem

5.98 The NCEUS’s assessment of the needs of skillexpansion in the informal sector makes it clear that theseefforts will have to be sufficiently decentralized andgrounded on smaller institutions at the local level. Wehave earlier shown that training institutional capacity isextremely limited in precisely those regions wheredemographic dividend is the highest. However, we havevery little precise information on issues such as non-governmental formal and informal training capacity, itsquality, the felt-need for training among potential trainees,employers, service demanders, and ground level viewson how to expand a training system which can cater tothis segment. In order to fill this gap, the Commissionmade an attempt to independently evaluate the existingsystem of skill development at the district level bycommissioning four district level studies in Sehore districtof Madhya Pradesh, Allahabad district of Uttar Pradesh,East Khasi Hills district of Meghalaya and Imphal WestDistrict of Manipur. The aim of these district levelassessments was to estimate the existing training capacityfor unorganised sector workers in the districts, includingthose run by the government, private sector and NGOs.These studies also tried to evaluate the quality andsuitability of the training already available for informalsector workers, estimate the training needs of the district,suggest suitable ways for expanding training capacity in

the district in order to cover about half the workforce by2025 and develop a blueprint for new institutions thatmay need to be supported, including the role of the publicand private sectors, management and governance structuresetc. The studies also tried to indicate the nature of publicfinances that may be required for different purposeincluding subsidies to private trainers or training facilities,direct provisioning of training services, and subsidies totrainees. The main conclusions emanating from these aresummarized in the following paras.

5.99 These studies have emphasised the totalinadequacy of training facilities for unorganised workersat the district level. Moreover, the quality of trainingalso leaves much to be desired. The unorganised workersare acquiring training mainly through informalapprenticeships, with some contribution by governmentsponsored programmes and, to a lesser extent, by privatecourses which are designed principally for educated youth.

5.100 The studies have emphasized that the need forup-grading skills is felt acutely in both the rural as wellas urban areas. Training strategies may, therefore, haveto be formulated separately for the rural and urban areas.A training strategy for rural entrepreneurs / workers mayinvolve a careful selection of the subjects for whichtraining is to be imparted through non-conventionalinstitutions. The potential for various skills in the ruralareas may be identified and the entrepreneurs selectedaccordingly for imparting training. Certification of skillsmay be an integral part of the strategy so that the trainedyouth may use the certificate for getting employmentelsewhere. A well though-out strategy for marketingthe produce of the unorganised sector entrepreneurs/workers, especially rural entrepreneurs, must be a part ofthe overall skill development strategy. In urban areasalso, MES should be identified for imparting both shortand long term training in such identified skills along withcertification. Non-formal training programmes may alsobe initiated where the boys/girls pursuing their educationmay join after their study hours [usually in the evening]to learn certain specific skill which may help them ingetting employment after completion of their studies.

5.101 The studies have called for setting up trainingfacilities at a decentralized level, at least at the blocklevel, to enable such workers to access them. Moreover,

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they feel that the NGOs, PRIs and private sector shouldbe actively associated if the desired expansion in trainingfacilities is to be achieved. In respect of quality of training,it is felt that skills being imparted through the existinginformal system should be certified and linkages betweenformal and informal institutions should be established tothe extent possible.

5.102 The various studies have stressed identificationof master trainers at village, block and district level,incentivising their training and linking them with formaltraining institutions. There is a felt need for a welldesigned training of trainers programme at formalinstitutions where these master craftsmen could be trained.Provision could be made for a one time grant to mastertrainers to upgrade their workshops.

5.103 The studies have also called for a nodal agencyat district level to be set up to coordinate, implement,evaluate and follow up the skill development programmes.It has been suggested in the Allahabad Report that allthose functions that has been stated in the SDI schemeof Ministry of Labour & Employment for the StateCommittee to be executed at state level may be assignedto the suggested District Skill Development Agency.. Thisarrangement could substitute the role of the nodal ITIsas proposed in the SDI scheme. The nodal agency at thedistrict level may manage, monitor and evaluate theongoing training programmes in the district. It may alsoact as a Labour Market Information Centre, prepare atraining map for the district and maintain a directory ofpotential trainers and trainees. It may also undertakeperiodic need / demand assessment of skills to help futureexpansion of training activities. The nodal agency mayalso co-ordinate between different line departments ofthe Central and state governments engaged in trainingand employment activities.

5.104 The Sehore Report suggested that at state levelthe nodal agencies for rural and urban sectors may be theRural Development and Commerce and Industriesdepartments respectively with the authority ofcoordination resting with State Planning Boards/Commissions/Departments assisted by the Directorateof Economics and Statistics [DES]. At divisional level aCommittee headed by the Revenue Commissioner maybe constituted with collectors and other divisional level

officers as members to determine the strategy forimplementing training programmes. A few NGOs ofrepute may also be incorporated as members. At districtlevel, the District Planning Committee may be entrustedwith the function of implementing the trainingprogrammes. A few sarpanches from strategic GramPanchayats may be co-opted for suggesting skills keepingin view the grass–root realities. Similarly a few urbanward members may be involved for identifying specificskills for urban areas.

5.105 The two studies on the North Eastern regionhave also suggested setting up of training institutions inspecific areas of interest to the two states. The study onEast Khasi Hills district recommended setting a newtraining institution for the construction trades in the districtas there is a large demand for construction workers inthe North Eastern Region in general and in Meghalayain particular. The study on Imphal district suggestedsetting up of an institution like the National Institute ofFashion Technology for the development of the handloomand handicraft sector in Manipur. It has also called forestablishment of an institution for providing training inthe food processing sector. The study also feels that theState Institute of Rural Development (SIRD) in Manipurcould be promoted as a full fledged training centre in theform of an autonomous body.

5.106 Based on stake holder consultations, the studieshave identified areas in which skill training of theinformal sector workforce could take place. The MadhyaPradesh study identified the following skills in whichtraining could be organized in the rural areas: animaland poultry rearing, repair and fabrication of agriculturalimplements, T.V. repair, preparation of bricks, plasticmolded items and plastic cord, preparation of soyabeanmilk, preparation of tomato sauce, papad, bari, pickles,etc and masala grindings, manufacturing of wooden toys,training in computer operation, preparation of biscuit,sweets etc. decoration items, fancy jute bags, making ofbangles etc. For urban areas, skills like auto repair, cellphone [mobile ] repair, furniture making and repairtailoring, tyre remoulding, zari work, repair of tractortrollies beauticians, preparation of gunny bags,manufacturing of cement products like tiles, pipes, securityservice etc have been identified.


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5.107 The various studies have noted that there isstrong gender bias in the existing training systems forinformal sector workers. For example, apprenticeshipsystems were male oriented. They have, therefore, stressedthe promotion of gender sensitive training strategies. TheMadhya Pradesh study has specifically recommended thatspecial training facilities may be arranged for girls sothat the training venue may either be the same village orat most some nearby village. Similarly, post training workmay be made available to women trainees near their placeof residence.

5.108 An important recommendation emerging fromthe studies is that financial support may be provided tosubsidise wage losses of unorganised sector workers duringtheir training. Moreover, as part of the training strategysoft skills like marketing, communication, attitudinal andbehavioural changes should also be imparted.

5.109 It thus emerges from these studies that the needfor upgrading skills is felt widely among both the ruraland urban workforce. For women, even more than men,it is important to establish training facilities which canupgrade skills close to their door-step in a flexible manner.As far as possible, skill development should be linked tocertification (formal skills) and improved livelihoods/jobs.The decentralised training facilities can emerge inalternative ways but their development may need to beencouraged by a district nodal agency, which will alsoserve as a Labour Market Information Centre keepingrecords of potential trainees and trainers. The districtagency would also be the appropriate body to do a need/demand assessment in order to guide skill expansion inthe area. The nature of this nodal agency could be statespecific and could link with the state level coordinatinginstitution.

Recent Government Initiatives for Expansionof Skill Training

5.110 We note that, on the recommendations of thedifferent reports discussed earlier, Government of Indiahas recently initiated a major restructuring of the skilldevelopment system in the country. The Prime Minister’sNational Council on Skill Development (NCSD) hasbeen set up for giving policy directions and periodic reviewof skill development efforts to address the issue of skilldevelopment by expansion of training capacity in a mission

mode. The Council includes seven Union Ministers,Deputy Chairman, Planning Commission, Chairman ofthe NMCC, Chairman of the NSDC and six non-officialexperts in the area of skill development. The Councilwill be responsible for vision setting and laying downbroad strategies for skill development.

5.111 The Council will be supported by a National SkillDevelopment Coordination Board (NSDCB) which willbe charged with the coordination and harmonisation of theGovernment’s initiatives for skill development spread acrossthe seventeen Central ministries and state governments withthe initiatives of the National Skill Development Corporation(NSDC). The Board has been set up in the PlanningCommission under its Deputy Chairperson. The NSDCBhas thus emerged as the main body in the three tier structureput into place by Government of India which will overseeits skill development policies and bring about an acceleratedgrowth of formal skill acquisition in the economy throughthe public and private sectors. At present the NSDCB hasbeen allocated a sum of Rs. 300 crores to support innovativeideas by the ministries to expand skill training in the PPPmode.

5.112 The National Skill Development Corporationhas been created by Ministry of Finance as a non-profitcorporation to support the expansion of private sectorinitiatives in skill development. The Corporation will havean initial corpus of Rs. 15,000 crores, to which theCentral Government has already contributed Rs. 1000crores. The corporate sector, international developmentagencies and others are expected to contribute theremaining amount. At a meeting on the NSDC held inAugust 2008 and chaired by the Finance Minister, theprivate corporate sector has already announced its decisionto provide 51 per cent of the equity base.

5.113 The principal function of the Corporation willbe to provide financial support to private sector initiativesin skill development. The operational details andobjectives of the Corporation have not yet been detailed.But it is proposed that the NSDC also be given some ofthe functions related to formulation of courses andcertification; accreditation of training institutions, andcreation of sector skill councils. The first meeting on theNSDC presided over by the Finance Minister has takenthe decision to create fifty sector skill councils in high

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growth sectors. It appears that the NSDC is beingenvisaged as a large body with several functions apartfrom financing private sector initiatives.

5.114 Given the urgency of skills development at awide scale, the Commission welcomes the setting up ofthe NSDC. The Prime Minister’s National Council onSkill Development has adopted a document outlining theVision, Strategy and a set of Core Principles fordeveloping skills in India.

5.115 The vision envisages designing an inclusive skillsystem for creating 500 million skilled people by 2022and bridging the divides of gender, rural/urban, organized/unorganized employment, and traditional home-based andcontemporary work place-based occupations. The systemwould focus on the outcomes, consumer choice andcompetition and will ensure dynamic adjustment of supply(trained candidates) to changes in demand (employment).

5.116 Overall, the strategy would focus on ‘folding thefuture in’ which would lead to innovative solutions beingfound for the issues faced. As part of the strategy, skillswould be made fungible and bankable. The system wouldbe made more open/flexible that allows individuals toaccumulate knowledge and skills and convert themthrough testing and certification into higher diplomasand degrees. Making the process of skills acquisitionbankable, especially for the poor will result in a demand-driven approach. Given the asymmetry in developmentacross India, the strategy will focus on co-createdsolutions by working with the states, civil society andcommunity leaders and not concentrate only on public-private partnership. The strategy would also emphasizegame-changing delivery by, for example, making publicinstitutions above high school levels available for skilldevelopment by private sector after school hours. Thiscombination of public investment with private sectorcapacity would lower the cost of skill generation.Accelerated English learning classes would be includedin vocational training curriculums and attempts made toincentivise English instruction.

5.117 The core operating principles for skill buildingprogrammes emphasize targeting market failure,decentralization, maximum use of existing physicalinfrastructure, focus on modularity, open architecture and

short-term courses, linking financing to outcomes, on-job-training and expanding formal employment.Government programmes must target the massive marketfailure in vocational training for labour market outsiders(less skilled, less educated, people from small towns,women, etc.) mostly via funding innovations. Financingof skill building must be separated from delivery andgovernment money should be available for both privateand public delivery thereby promoting choice andcompetition. All government financing should be linkedto placement ratios and outcomes instead of input metricsas at present. Moreover, the bulk of financing must bemade available directly to candidates as scholarships, skillvouchers, outcome-based reimbursements etc.Apprenticeships will be encouraged as these are powerfulvehicles for skill development because of ‘learning whileearning’ and ‘learning by doing’. A large number ofgovernment buildings are available which could be putinto an asset bank (with no transfer of title or ownership)and used for private and public skill delivery. Vocationaltraining at present should focus on short, relevant andeffective courses that get candidates into the workplacelike the MES of Ministry of Labour & Employment.Skill building efforts must be accompanied by educationreforms. The core principles must also include creationof a framework and infrastructure for informationdissemination around key metrics for public and privatetraining institutions including a voluntary rating andparticipatory ranking system. This should be accompaniedby an effective assessment and credible certification system.Employment exchanges need to be restructured as careercenters who will channelise candidates into jobs,apprenticeships and training.

Conclusion

5.118 As shown in this chapter, the emphasis of theGovernmental training system has mainly been on formalVET and training facilities show regional concentrations,with the southern and western region being better served.The training capacity is also very limited in comparisonto the requirements. A large number of ministries andprogrammes are, however, also involved in providinginformal training but due to lack of standardisation andquality, their impact is also limited. There are a varietyof NGO and private sector initiatives in the area of skill


68


development. However, private sector initiatives aremainly focused on educated youth and both NGO andprivate sector initiatives currently have a very limitedoutreach and their spread is weaker in precisely thoseregions which are likely to witness faster labour forcegrowth in future.

5.119 Recent changes introduced by government havebeen made with the purpose of providing greater cogencyand coordination to skill development policies andprogrammes and to provide greater finance to worthy

private sector initiatives. The greater challenge is to assess“demand” and to make the right kind of training availableat the grass-roots where informal sector workers live andwork. The findings of the district-level studies sponsoredby the Commission emphasize the importance of adecentralized training system going down to the districtand the block levels. This approach is in consonancewith the recommendation of the Second NationalCommission for Labour calling for block level vocationaleducational institutions.

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Appendix A5.1Appendix A5.1Appendix A5.1Appendix A5.1Appendix A5.1

Skill Development Programmes being Organised/ Funded by Ministries /Skill Development Programmes being Organised/ Funded by Ministries /Skill Development Programmes being Organised/ Funded by Ministries /Skill Development Programmes being Organised/ Funded by Ministries /Skill Development Programmes being Organised/ Funded by Ministries /Departments of Central Govt. (Nos.)Departments of Central Govt. (Nos.)Departments of Central Govt. (Nos.)Departments of Central Govt. (Nos.)Departments of Central Govt. (Nos.)

TTTTTotalotalotalotalotal 38683003868300386830038683003868300

FFFFFororororormal mal mal mal mal TTTTTrrrrrainingainingainingainingaining 2248100 (58.12 per cent)2248100 (58.12 per cent)2248100 (58.12 per cent)2248100 (58.12 per cent)2248100 (58.12 per cent)

1.1.1.1.1. MinistrMinistrMinistrMinistrMinistry of Human Resoury of Human Resoury of Human Resoury of Human Resoury of Human Resource Dece Dece Dece Dece Devvvvvelopelopelopelopelopmentmentmentmentment 12950001295000129500012950001295000

-Vocationalisation of Secondary Education 1000000

-Polytechnics 295000

2.2.2.2.2. Ministry of Labour & Employment (DGET)Ministry of Labour & Employment (DGET)Ministry of Labour & Employment (DGET)Ministry of Labour & Employment (DGET)Ministry of Labour & Employment (DGET) 895000

-Craftsmen Training Scheme (CTS) 406000*

-Apprenticeship Training Scheme (ATS) 258000

-Short Term Courses based on Modular Employable Skills (MES) (Target) 200000

-Crafts Instructor Training Scheme (CITS) 1000

-Advanced Vocational Training Scheme 30000

-Hi-tech Training Scheme

- Women Training Programme

3.3.3.3.3. MinistrMinistrMinistrMinistrMinistry of Ry of Ry of Ry of Ry of Rururururural Deal Deal Deal Deal Devvvvvelopelopelopelopelopmentmentmentmentment 30003000300030003000

-National Institute of Rural Development (NIRD) 3000

4.4.4.4.4. HUDCO & others in Construction sectorHUDCO & others in Construction sectorHUDCO & others in Construction sectorHUDCO & others in Construction sectorHUDCO & others in Construction sector 25002500250025002500

-Training by Construction Industry Development Council (CIDC) 2500

5.5.5.5.5. MinistrMinistrMinistrMinistrMinistry of Heavy Industry of Heavy Industry of Heavy Industry of Heavy Industry of Heavy Industries & Pies & Pies & Pies & Pies & Public Enterublic Enterublic Enterublic Enterublic Enterprprprprprisesisesisesisesises 1000010000100001000010000

-Counseling, Retraining and Redeployment of Rationalized Workers of

CPSEs (Formerly NRF) 10000

6.6.6.6.6. DeparDeparDeparDeparDepartment of Infortment of Infortment of Infortment of Infortment of Informatiomatiomatiomatiomation n n n n TTTTTececececechnologhnologhnologhnologhnologyyyyy 4150041500415004150041500

-DOEACC - ‘O’ level 41500

7.7.7.7.7. DeparDeparDeparDeparDepartment of tment of tment of tment of tment of TTTTTourourourourourismismismismism 11001100110011001100

-Food Craft Institutes under State Governments 1100

InforInforInforInforInformal mal mal mal mal TTTTTrrrrrainingainingainingainingaining 1620200 (41.88 per cent)1620200 (41.88 per cent)1620200 (41.88 per cent)1620200 (41.88 per cent)1620200 (41.88 per cent)

1.1.1.1.1. MinistrMinistrMinistrMinistrMinistry of Human Resoury of Human Resoury of Human Resoury of Human Resoury of Human Resource Dece Dece Dece Dece Devvvvvelopelopelopelopelopmentmentmentmentment 517700517700517700517700517700

-Community Polytechnic Scheme 331000


70


-Jan Shikshan Sansthan 180000

-National Institute of Open Schooling – 6700

Distance Vocational Education Programmes

2.2.2.2.2. MinistrMinistrMinistrMinistrMinistry of y of y of y of y of TTTTTextilesextilesextilesextilesextiles 4000040000400004000040000

-Decentralized Training Programme

-Weavers’ Service Centres

-Cooperative Training

-Powerloom Centres

-Indian Jute Industries Research Association

-Central Wool Development Board

-Central Silk Board

-Training Centres for Handicrafts

-North –eastern Handicrafts and Handlooms Development Corporation

Apparel Export Promotion Council (AEPC)

3.3.3.3.3. MinistrMinistrMinistrMinistrMinistry of y of y of y of y of WWWWWooooomen & Child Demen & Child Demen & Child Demen & Child Demen & Child Devvvvvelopelopelopelopelopmentmentmentmentment 247000247000247000247000247000

-Support to Training and Employment Programme for Women (STEP) 87000

-Swalamban (previously NORAD) 53000

-Training in Home scale preservation of fruits and vegetables(by Community Food and Nutrition Extension Units) 23000

-Central Social Welfare Board 24000

-Kishori Shakti Yojana, etc.

-Other Programmes 60000

4.4.4.4.4. Ministry of AgricultureMinistry of AgricultureMinistry of AgricultureMinistry of AgricultureMinistry of Agriculture 200000200000200000200000200000

-Training in Agricultural Extension

-Training in use of Agricultural Implements & machinery

-Soil Conservation Training Centre

-CFQC&TI

-NPPTI

-Cooperative Education and Training

5.5.5.5.5. MinistrMinistrMinistrMinistrMinistry of Fy of Fy of Fy of Fy of Food Pood Pood Pood Pood Prrrrrocessing Industrocessing Industrocessing Industrocessing Industrocessing Industriesiesiesiesies 25002500250025002500

Food Processing & Training Centres (FPTCs)

Institutions like Central Food Technology Research Institute

Paddy Processing Research Centre

Council of Entrepreneurial Development Programme (EDP)

6.6.6.6.6. Ministry of Social Justice & EmpowermentMinistry of Social Justice & EmpowermentMinistry of Social Justice & EmpowermentMinistry of Social Justice & EmpowermentMinistry of Social Justice & Empowerment 1500015000150001500015000

-National Institute of Mentally Handicapped

-National Institute for the Orthopedically Handicapped

71

-Institute for Physically Handicapped

-National Institute for the Hearing Handicapped

-National Handicapped Finance and Development Corporation

-National Scheme of Liberation and Rehabilitation of Scavengers andtheir Dependents

-National Scheduled Castes and Scheduled Tribes

Finance and Development Corporation

-Rehabilitation Council of India

7. MinistrMinistrMinistrMinistrMinistry of Ry of Ry of Ry of Ry of Rururururural Deal Deal Deal Deal Devvvvvelopelopelopelopelopmentmentmentmentment 200000200000200000200000200000

-Swarnjayanti Gram Swarozgar Yojana (SGSY) 200000

8. MinistrMinistrMinistrMinistrMinistry of Housing & Uy of Housing & Uy of Housing & Uy of Housing & Uy of Housing & Urrrrrban Pban Pban Pban Pban Pooooovvvvverererererttttty Aly Aly Aly Aly Alleleleleleviatioviatioviatioviatioviationnnnn 150000150000150000150000150000

-Urban Self Employment Programme under Swarna 150000

Jayanti Shahari Rozgar Yojana (SJSRY)

9. Ministry of Micro, Small and Medium EnterprisesMinistry of Micro, Small and Medium EnterprisesMinistry of Micro, Small and Medium EnterprisesMinistry of Micro, Small and Medium EnterprisesMinistry of Micro, Small and Medium Enterprises 180000180000180000180000180000

10. HUDCO & others in Construction sectorHUDCO & others in Construction sectorHUDCO & others in Construction sectorHUDCO & others in Construction sectorHUDCO & others in Construction sector 1300013000130001300013000

Building Centres of HUDCO 13000

11.11.11.11.11. MinistrMinistrMinistrMinistrMinistry of Health & Fy of Health & Fy of Health & Fy of Health & Fy of Health & Familamilamilamilamily y y y y WWWWWelfarelfarelfarelfarelfareeeee 3600036000360003600036000

Basic Training of multipurpose health workers 20000

Promotional training of Female Health Assistants 16000

12.12.12.12.12. MinistrMinistrMinistrMinistrMinistry of y of y of y of y of TTTTTrrrrribal Affairsibal Affairsibal Affairsibal Affairsibal Affairs 1900019000190001900019000

Vocational Training Centres (VTC) in Tribal Areas 19000

*Excludes 5.27 lakh seats in ITCs


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Summary &Recommendations

6Introduction

6.1 This Commission has reviewed the roleof knowledge based inputs acquired (i.e.education, skills and technical education). Theseinputs clearly play a very significant role inpromoting growth, especially in the emergingknowledge economy. As shown by theCommission’s earlier report (NCEUS 2007) theseinputs are also important from the individual’spoint of view as they provide a basis for incomeand productivity growth.

6.2 The deficiencies with regard to educationand skill development in India have beenconsidered by the Commission in chapters 2 and3 of this report. A large part of the Indianworkforce has low educational attainment andeven lacks basic foundation skills in the form ofliteracy and numeracy, although this maygradually change with improved access toelementary education. The skill base in India ismostly informal and thus difficult to adapt tochanging market and technological environments.As far as formal skill training is concerned, thepresent system suffers from a number ofdeficiencies. Besides, the proportion of trainedpeople is far below those achieved by a host ofdeveloping and developed countries. This, nodoubt, has profound developmental implicationsboth for the workers as well as the economy as awhole. From the demand side, with the economyexperiencing rapid growth, skill shortages are

being experienced across the board and drawattention to skill development by industryfederations, international organizations andnational bodies.

6.3 The issue of skills has to becontextualized in India in terms of the specificcharacteristics of the workforce which ispredominantly informal and engaged in theunorganised sector. More than three-fifths of thisworkforce is self-employed while of theremaining who are regular or casual wage workers,only half are employed in the organised sector. Inthe years to come as well, the bulk of employmentis likely to be in the unorganised sector of theeconomy. Therefore, the skill requirements of theunorganised sector will have to be visualized quitedifferently from that of the organized sector. Thisreport is an attempt in that direction.

Approach of the Report

6.4 The present report has focused upon anddiscussed the skill-related issues of theunorganised workers in some detail. Formaltraining (i.e. training in a structured manner) hasmainly been accessed by students / workers withsecondary and post-secondary education. Thechances of acquiring formal training are currentlymuch lower for women, those with less thansecondary education, the poor, and those fromsocially deprived backgrounds. Training capacityis currently located in a few Southern and Westernstates whereas the increase in labour force will

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be in the eastern and northern.states. The empirical,analytical and practical issues that pertain to skilldevelopment and training for the informal sector areindeed quite different from what is documented by thereviews by earlier commissions/committees. Some ofthese issues are briefly summarised as below, followedby a set of concrete recommendations for addressing them.

6.5 This Commission has underscored the need tounderstand the heterogeneity of the informal sector inIndia, which leads to a wide range of training needs,requiring analysis and policy that is different from thatof the formal sector. At the same time, we recognize thataddressing and attending to the training needs of thosewho operate in the informal sector will eventually leadto the generation of a pool of manpower that can cater tothe priorities and structures of the formal sector as well.It is from this standpoint that we address the issues thatcome up when we discuss training in the informal sectorand the suggested rubric of a structure for skilldevelopment in the economy.

6.6 The informal sector is highly heterogeneous,encompassing production units of different features andin a wide range of economic activities, as well as people(i.e. workers, producers, employers) working in serviceactivities or producing under many different types ofemployment relations and production arrangements.

6.7 Some basic questions regarding training andskill-building or upgrading as applied to the informalsector are: for whom, for what, of what kind and howbest it can be provided. As far as the motivation fortraining is concerned, those working in the informal sectormay not immediately see the need for further skillsacquisition. They may have little knowledge about whereto go even if the skills are seen to be required. Theprincipal problems of poor literacy and numeracy oftenprevent informal sector workers from participatingsuccessfully in the conventional training programmes,even if they perceive the need for training. Training canalso be prohibitive in terms of costs – both direct andindirect. Even token fees for the training can form a realbarrier for participating in training. Working hours areoften long and any time off from the productive workmeans loss of income, which would affect the willingnessof workers to join a training programme, even if it is

relevant and easily available. The training needs ofdifferent segments of the informal workers also have tobe factored in. For example, the expansion of trainingneeds to be gender equitable and gender sensitive, whichcan not be in the nature of stereotyped expansion aloneor left entirely to the market. These issues, therefore,has to be kept in mind when designing trainingprogrammes for the informal sector.

6.8 Coming to the content of training, thecompetencies that are required in the informal sector ina range of activities or also in micro-enterprise basedproduction are a combination of ‘social competencies’,including basic literacy and numeracy and the ability toseek out markets and negotiate as well as technical skillsthat might be industry or trade based.

6.9 A further set of issues relates to identification ofrelevant demand for training for unorganised sectorworkers. It is often suggested that the training should beresponding to market demand with a greater role for theprivate sector and for enterprises. This is a very pertinentissue as state run vocational education and training systemstend to be too supply driven and far-removed from marketdemand. There is an assumption that by virtue of theircloser contact with the market, an employer-operatedtraining could be more efficient with private firms andsmall enterprises at their centre, coordinated throughbusiness associations and other such intermediaryinstitutions. However, it is seen clearly that the impulsesgenerated from the market to the products and servicesof the informal sector are often indirect. To use existingpatterns of market demand alone to signal what thetraining needs of the economy are and also determinethe outcomes of training initiatives will by-pass mostmembers in the informal sector. Nor can it be expectedthat private enterprises would be forthcoming for skillupgradation for a large part of this sector. In fact, marketdevelopment in a number of sectors is likely to followthe skill development initiatives for workers in this sector.Thus, expansion of skill upgradation of unorganised sectorworkers needs to follow an assessment of the socialdemand rather than existing market demand. This beingthe case, skill expansion in this sector will require theactive participation of public agencies, while giving amplescope and opportunity to the private and non-

Summary & Recommendations

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governmental actors, who wish to provide expandedopportunities for training to such workers.

6.10 This requires coordination between publicagencies and private actors at all levels, including thedecentralized ones, particularly at the district-level, inorder to be able to arrive at realistic assessments of thetraining needs of those in the unorganised sector on theone hand and that of different areas and sectors, on theother.

6.11 Finally, even as we recognize the diversity oftraining needs and the differential perceptions and abilitiesto undertake training in the informal sector, it is necessaryto assert that the skills that are perceived or foundnecessary in the informal sector have to be ‘formally’provided as this involves processes of accreditation,certification and standardization that are essential forenhanced productivity, both in the informal and formalsectors.

6.12 Keeping the above issues in mind, theCommission has put forward recommendations belowfor building a skill development and training system thatexplicitly focuses on the expansion of VET for theinformal sector workers who generally also have lowlevels of education. It may be noted that in doing so, wehave deliberately not focused upon systems of formaltraining which are primarily intended for organised sectorworkers with a reasonable level of education. Thesesystems of training are a subject of reform and have beendiscussed extensively in other reports.

Recommendations

I. Proposed Target

6.13 The share of persons having formal training isjust 2.6 per cent of the labour force as per the NSS 2004-05 Survey. Based on the studies sponsored by theCommission which have assessed the demand for skillupgradation and the existing training systems, theCommission’s review of VET experience and the linkbetween VET and development, the Commission wouldlike this rate of formal training to reach a level of 50 percent of the labour force by 2021-22. The persons whowould be targeted would include potential entrants intothe labour force as well as the existing pool of workerswhose skills require to be upgraded.

6.14 The 11th Plan has assumed vocational education

to increase from 1 million to 2.5 million per year andvocational training capacity to increase from about 2.5million to 10 million, to a modal mix of 12.5 million peryear. This will raise the annual VET capacity to 15 millionper year. The Commission estimates that if by scaling upthe skill development programmes, the training capacitycan be increased to 18 million by the beginning of theXII plan, the target of 50 per cent of formally trainedlabour force can be achieved by 2021-22 or within threeplan periods. Although this is a long time frame, giventhe vast size of the untrained labour force as well as itsother characteristics, this time frame is realistic.

6.15 The total labour force at that point is projectedto be 623 million by 2021-22. Our assumptions imply anincrease of formal trained labour force from 11 millionin 2004-05 to around 310 million in 2021-22.

6.16 It may be noted that in the long run (by 2021-22), the annual increase in labour force would be about 8million. Since the training programmes would havesucceeded in covering the backlog, the long run VETcapacity in the country may not exceed 12 million.

II. Organisational Structure

6.17 Given the urgency of development of adequateskills in the economy at a wide scale, the Commissionwelcomes the setting up of the Prime Minister’s NationalCouncil on Skill Development (NCSD) to address theissue of skill development by expansion of training capacityin a mission mode.

6.18 As mentioned in para 5.111, a National SkillDevelopment Coordination Board (NSDCB) has alsobeen set up in the Planning Commission under the DeputyChairperson, Planning Commission to coordinate skilldevelopment programmes in the public and privatesectors. The NSDCB has thus emerged as the main bodyin the three tier structure put into place by theGovernment of India which will oversee its skilldevelopment policies and bring about accelerated growthof formal skill acquisition in the Indian economy throughthe public and private sectors. At present the NSDCBhas been allocated a sum of Rs. 300 crores to supportinnovative ideas by the ministries to expand skill trainingin the PPP mode.

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6.19 Given the enormity of the task and thedeficiencies in the present institutional infrastructure forskill development in the unorganised sector, thisCommission is of the view that the NSCDB shouldlaunch a National Mission for Development of Skills in theUnorganised Sector, to support skill development in theunorganised sector. Apart from coordinating the expansionof skill development in the unorganised sector in a missionmode, a certain quantum of funds should be at the disposalof the mission to support skill development in a responsivemode, focusing upon strengthening of institutionalinfrastructure, creation of labour market informationsystems etc. in a manner that is detailed below.

6.20 The principal function of the National SkillDevelopment Corporation that has been created by theMinistry of Finance as a non-profit corporation is tosupport the expansion of private sector initiatives in skilldevelopment. While the private sector initiatives havegreater capacity to undertake skill training in a self-financing mode and cater principally to educated youth,the Commission has shown that a number of NGOinitiatives are underway which seek to provide skilldevelopment to unorganised sector workers in innovativeways. In the Commission’s view, the main purpose of theCorporation should be to provide financial support toNGOs and non-profit organizations engaged in thetraining of informal sector workers, while the financialneeds of for-profit training organizations should becatered to by banks and other existing financial institutions.The Corporation has also been given some other functionswhich we discuss later in this chapter.

Vocational Training

6.21 The key requirements in a national skilldevelopment system are the identification, developmentand accreditation of the training providers and traininginstitutions; development of suitable courses based on acareful assessment of needs and demands; ensuring thatsuch a system meets the needs of potential trainees, andthe certification of trainees. The expansion of formaltraining as envisaged in the targets mentioned above willrequire a manifold expansion in each of these tasks alongwith the development of fresh approaches which willincrease the relevance of training both for the trainees

and the potential employers or users of services andproducts of the trained workers.

6.22 At present, the National Council for VocationalTraining (NCVT) has been set up to advise thegovernment on matters relating to vocational training,for accreditation of institutes and prescribing of standardsand curricula under the Craftsmen Training Scheme (forthe ITIs/ITCs). Courses under the CTS cater mainly toorganised sector requirements. There is presently a voidas far as training in short term courses for the unorganisedsector is concerned. The MOLE has sought to fill thisvoid through its modular employable skills (MES)programme and skill development initiative (SDI). TheCommission views the SDI as a commendable initiativeunder which there is a positive effort to expand relevantskill training for school drop-outs and by backing thisthrough the development of modular courses, registrationof vocational training providers and certification by thirdparty agencies. However, these developments are stilllimited and are within the framework of a nationalscheme. There is therefore the need for a national levelstructure that can provide the backbone to skilldevelopment in lagging areas and address the needs ofcourse development, recognition and accreditation oftraining providers, and certification. These functions maybe performed by the NCVT with enlarged scope andfunctions which will continue to play a pivotal role inproviding a framework for formal skill development inthe country. In other words, the NCVT may be identifiedas the primary agency charged with setting of standards,certification of skills and accreditation of providers forall certificate based training for which the minimumeligibility is less than higher secondary education.Alternatively, a new body with well defined statutoryresponsibilities may be charged with these functions.

6.23 In performing these functions, the NCVT willhave to work closely in coordination with the privatesector, with employer bodies as well as those who haveexperience in assessing training requirements of theunorganised sector. The DGET is developing aframework in which these stakeholders are closelyinvolved with the expansion of training. Given thecomplexities of the task, the DGET has proposed thesetting up of Sector Skills Councils. These Councils


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should have adequate representation of stakeholders whounderstand sector-specific training needs for the informalsector as well.

6.24 The overlap of functions such as the formulationof courses and certification; accreditation of traininginstitutions, and creation of Sector Skill Councils betweenthe NCVT and the NSDC should be avoided, and the latterbody should focus on financial initiatives as discussed earlier.

6.25 The Commission also recommends that a statelevel structure should be established in the states whichwill perform the same coordinating functions at the statelevel which the NSDCB will perform at the nationallevel, within the overall framework provided by the PrimeMinister’s Council and guidelines set by the latter. Thisbody should be fully responsible for making andimplementing a training plan at the state level andcoordinating and monitoring skill and training initiativesin the states. The Commission is of the view that giventhe vast nature of the task and the heterogeneous natureof the unorganised sector, training initiatives need to bedecentralized to the State and sub-state levels. The SCVTsshould have full responsibility for evolving a frameworkfor curricula development which meets the local needs,developing a certification framework. Thus, in theCommission’s view, while the NSDCB/NCVT will beresponsible for overall co-ordination and the developmentof guidelines and curricula at the national level, the statelevel bodies and the SCVTs will undertake the relevantactivities at the state level.

6.26 In the Commission’s view, the expansion of skilldevelopment involving millions of people will requirecoordinated action between public and private agenciesat the local level. The Commission is of the view thatthe skill development programmes for the unorganisedsector should be operationalised by a District SkillDevelopment Council (DSDC) which would be the mostcrucial link in the entire skill development framework.The DSDC will function under the District PlanningCommittee or Zilla Parishad and will be managed by anexecutive committee consisting of the major stakeholdersin the skills arena at the district level. These would,typically, be employer’s associations, prominent NGOsworking in the district, representatives of artisans andmembers of the district administration. The main

executive of the district skill development agency shouldbe a professional who is devoted full-time to the activitiesof the agency. The Commission envisages that the DSDCwill be staffed with competent professionals and technicalpersons. In order to give greater operational flexibility tothe DSDC, they could be registered as societies or non-profit companies. However, the exact organizationalmodel for the DSDC including its management andpattern of stakeholder involvement may be kept flexibleand may be decided by the state governments.

6.27 The DSDC will create a database of existingskills by undertaking skill mapping, assess training needson the basis of existing as well as potential industrial andemployment trends, formulate a district training planinvolving all stake holders, ensure convergence of varioustraining programmes, coordinate training activities ofgovernment departments as well as other trainingproviders, monitor and evaluate training programmes,provide handholding to the trainees, and keep track ofthe trainees after completion of their training. The agencywill assess the infrastructural needs for training and helpin its proper maintenance. The agency will help developa labour market information system which will consistof a data bank of training and training providers, alongwith requisite details of trainees, compilation ofinformation of skill requirements in sectors and sub-sectorsand also put into place a computerised MIS.

Vocational Education

6.28 At the apex level, the Ministry of HumanResource Development will continue to coordinate thedevelopment of vocational education in the country.However at the district level, the DSDC may be giventhe task of dovetailing VE with training requirements.The capacity for vocational education needs to beincreased significantly. This will have to be accompaniedby making the course content more responsive to marketdemand. The industrial associations may be associatedwith formulation and revision of course curricula. Linksshould be established between the vocational educationstream and school education as well as higher education.Students should be able to move between vocational andgeneral education streams by providing them withmultiple entry and exit options. Public expenditure onvocational education needs to be increased significantly.

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The NSDCB can perform the task of coordination betweenvocational education and vocational training components.The State may design their own variants taking regionalspecifics into account.

III. Expansion of Skill Development

6.29 In the existing training systems for the unorganisedworkers the government system finances and provides (onits own or with the assistance of private providers), eitherformal or informal training; or different types of privateproviders offer formal or informal training. The expansionof skill development for unorganised workers have to beformulated to reflect the needs of the economy and thestrengths and weaknesses of the different types of trainingsystems on the one hand and the realities of the unorganisedsector on the other. This needs to be done through acombination of public and private sector initiatives, the latterterm being defined broadly to include all types of non-governmental providers, (trainers, and others) involved incertification, accreditation etc. In the public sector, expansionof training can be done through consolidation, strengtheningand expansion of the existing schemes that are already inexistence and have been functional at the district level forsome time now, by undertaking new initiatives, and also byintegrating initiatives such as the cluster developmentprogramme of the MSME under it.

Consolidation & Strengthening of TrainingProgrammes

6.30 The training system should link skilldevelopment with livelihood promotion. Skilldevelopment for the unorganised sector workers has tobe seen as an integral part of livelihood support whichincludes a number of elements including identificationof activities, credit and technological support, capacitybuilding and backward/forward linkages.

6.31 The governmental system is a very large sourceof skill training for unorganised sector workers. Almostall large government livelihood promotion anddevelopmental programmes have a training component;e.g. the rural development programmes involve trainingfor SGSY beneficiaries. Some training is also built intothe NREGP. The MSME trains under the PMRY andREGP and also through the MSME-DI. The Ministryof Health has training programmes for Anganwadi

workers and Accredited Social Health Activists (ASHAs)and so on. The stress is on providing short durationfunctional training. The advantage of this training is thatit is linked to a specific livelihood based activity beingundertaken or likely to be undertaken by the individualand often with different types of assistance/handholding.Government programmes rely on formal as well asinformal trainers. Moreover, these programmes also reflectPPP mode as training in a number of instances is impartedby NGOs / private providers.

6.32 Further, there are many other livelihoodpromotion activities which are being carried out withthe support of banks and NGOs. Prominent among theseare the micro-finance based activities supported throughthe NABARD-SHG linkage programmes which alsosupport training initiatives.

6.33 The main problems associated with these trainingprogrammes are that they are not linked to any standards,the quality is highly variable, there is no standardcurriculum and usually there is no certification. In addition,the Government also extends informal sector trainingthrough the SSKs and Nehru Yuvak Kendras. However,the training under these programmes is also neitherstandardised nor certified. It is recommended that the qualityof training imparted under them should be improved andstandardized and these schemes be integrated under the trainingplan of the DSDC. These schemes should also involve formalcertification procedures to ensure standardization and minimumstandards of quality. Over time, training under theseprogrammes should be linked to the MES framework.

The Skill Development Initiative (SDI) & theEntrepreneurship Skill DevelopmentProgrammes (ESDP)

6.34 The Skill Development Initiative (SDI) schemeof the Ministry of Labour & Employment is a five yearproject during which one million persons would betrained or their existing skills tested and certified underModular Employable Skills (MES) framework. TheMES offers many elements which are appropriate to thedevelopment of training initiatives for the informal sector.Under the SDI, workers can be trained in formalinstitutions, or informally trained workers could take upa certification examination. Such workers could be offeredfacilities to go through a “finishing school” before taking


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such an examination. Since the SDI and the MESframework can be adapted for training of all informalsector workers, the Commission is of the view that theSDI should be gradually strengthened and target underthe scheme significantly increased along with budgetaryallocations. Larger number of training providers andassessing bodies should be brought under its ambit.

6.35 Similarly, the Ministry of Micro, Small andMedium Enterprises is focusing on EntrepreneurshipSkill Development programme (ESDP) in theunorganised sector conducted through MSME-DIs.Emphasis is on conducting outreach training programmesin backward areas, particularly for weaker sections of thesociety. Trainees from weaker sections are given a stipend.No fee is charged from SC and ST candidates. Trainingprogrammes are being conducted in 60 disciplines underESDP. The Commission is of the view that thisprogramme should be steadily expanded as it has thepotential to provide relevant skills to a large number oftarget group beneficiaries in the unorganised sector.

Focused Approach towards Improvementin Training in Clusters

6.36 The UNIDO and the MSME have identifiedabout 6400 clusters in the country, of which more than6000 are classified as low-tech and are certainly likely tobe requiring skill upgradation. The following specificrecommendations are being made with regard todovetailing of the existing cluster developmentprogrammes in India and the proposed district level skillagency. First, it has to be recognized that an importantcomponent of development in the unorganised sector isthat of clusters and a process of skill development focusedat the district level has to explicitly take into account theneeds of clusters in the district. Effective partnershipneeds to be established between the DSDC and all clustersin the district. The DSDC should consist ofrepresentatives from different stakeholders in the clustersthat exist in specific districts and district cluster skilldevelopment plans should be evolved and dovetailed withcluster programmes run by different agencies such asUNIDO, NABARD, MSME, KVIC and so on.Alternatively, if cluster development programmes indistricts are managed by a cluster officer, she/he has tobe part of the DSDC along with the representatives from

different agencies that run cluster developmentprogrammes.

6.37 Second, in order to motivate cluster actorsregarding the desirability of expanded skill developmentprogrammes, the methodology evolved by the UNIDOand the MSME’s cluster initiatives to generate theconditions for concerted joint action amongenterprises,and recognize the interdependencies betweenthem and the advantages of joint initiatives, need to beexpanded into the skills and training arena. Such initiativesare already in place for marketing and financing and canbe easily extended to skills. This involves convincingentrepreneurs, artisans, industry associations and othercluster stakeholders about the desirability of investing inand undergoing training for sectoral upgradation and alsoevolving a system of incentives for participating in trainingprogrammes.

6.38 Third, there are several sectoral skilldevelopment programmes that are being conducted bydifferent agencies that function as part of the industriesthat are organised in the form of clusters. For example,in the leather industry, institutes such as the FootwearDesign and Development Institute and the CentralLeather Research Institute conduct training programmesaimed at providing skilled manpower for the exportsegment of the leather industry. Many of these initiativescater to the limited number of trainees and are oftentargeted at higher ends of the training spectrum, whereasthe upgradation requirements of the industry need trainingat low value added levels in the chain, as in raw hide andskin collection or the production of semi-finished leather,where very large numbers of unorganised sector workersare employed. Such integration of training requirementsof workers in the lowest level in the value chain with themore overtly perceived need for skilled workers at higherlevels can take place only with more active interventionby state agencies working together with the cluster levelorganizations. District level subsidized institutions to trainsuch lower level workers, set up under the DSDC incollaboration with cluster actors, can perform this role.

6.39 Fourth, the incentive structures and costs to beincurred by potential trainees have to take intoconsideration differences between clusters, i.e., artisanal,micro-enterprise based or mixed firm ones. For example,

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purely artisan clusters will require co-ordination amongartisans and recognition or education about the benefitsof training, but costs will have to be borne by the stateagencies under one of the programmes. Expenses andinfrastructure for training of trainers can come undercluster based artisan improvement programmes that arelocated in clusters, again jointly under the clusterdevelopment programme and the DSDC. In the case ofclusters where some larger firms dominate through valuechain or subcontracting relationships, a method to dividecosts of training by size of firm might need to be evolvedalong with positive incentives for firms that undertaketraining.

Provision of Formal Training to InformallyTrained Workers

6.40 The largest system of skill development forunorganised workers that is in vogue today is the informaltraining system in which workers learn some skills onthe job from skilled workers/master craftsmen. Ouranalysis in this report shows that such training is spreadacross all major activity categories, includes workers withlow levels of education and across the poorer segments.In other words, should the productivity and earningpotential of such workers be raised through appropriateformal training, it would also have a major pro-poorimpact.

6.41 The main advantage of the system is that workerscombine learning with earning. The passage of skills fromskilled worker to unskilled worker varied depending uponworker background (family or hired worker, male orfemale), type of industry or trade etc. A major potentialconstraint in this system is the static skill level of theworker with limited adaptations in a world of changingtechnologies/demand. No ‘schooling’ of the skilled workeris possible and he/she only learns while doing.

6.42 In order to address the existing problems withinformal apprenticeship systems at the district level, crucialattention has to be paid to the issue of awareness andincentives to those who impart training (master craftsmen)as well as those that receive training (apprentices) ininformal apprenticeship systems. First, it is essential thatthe formal certification systems being developed underthe SDI are able to reach out to the informal training

system through the district level structure suggested earlier,or through specific schemes such as the SDI, the ESDPetc. The formal apprenticeship can be supplemented byincluding a component of specific training, for instance,on technical and theoretical skills that could be providedat the workplace or in a supporting centre, again using asystem of incentives and possibly coordinated by boardssuch as KVIC, HHDC and so on. Formal training inputscan also be offered at the workplace through mobile unitsor trucks equipped with complete workshops thatregularly visit workplaces and provide instructions onproblems at hand. There can be incentives for theapprenticeships in the form of reimbursement of feescharged on completion of the course, low or no feescharged for those from SC/ST backgrounds, and so on.

6.43 Second, it is necessary to continuously upgradeskills of master craftsmen/trainers themselves in order tobe able to cope with changing technology, fashion andshifting markets. This will involve sectoral initiatives thatcombine skill upgradation at a higher level with othersector-specific interventions such as technologicalupgradation and initiatives for expansion of scale undercluster development programmes. Some of these issuesare dealt with by the SDI. But the Commission hasrecommended a full-fledged programme for takinginformal training to the next level, while providing someform of employment assurance for a period during trainingto the trainee. The Commission has, therefore, proposeda programme for employment assurance and skillformation which are discussed below.

Proposed Programme for EmploymentAssurance & Skill Formation

6.44 The Commission recommends that in order tooperationalise the suggestions given in the earlier parasto strengthen and upgrade (formalize) the systems ofinformal training, a massive Programme for EmploymentAssurance and Skill Formation with the aim to develop humancapital through on-job-training be launched. The schemewill provide employment to poor individuals for aboutsix months and provide them formal marketable skills.This will help the trainees realize the importance oftraining. The proposed scheme is discussed in detail inthe following paras.


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Goals and Objectives

6.45 Given the need to expand formal training in ademand oriented fashion and to provide some incentivefor formal skill training to unorganised sector workers,the Commission proposes a scheme for EmploymentAssurance and Skill Formation to meet the twin purposeof skill development in a practical fashion, and for meetingemployment needs of these workers.

6.46 The purpose of the scheme is to develop humancapital through on-job training, while providingemployment to poor persons for about six months; totrain them and to provide them with formal marketableskills, so that at the end of this period, having beenemployed at least at the minimum wage, they qualify forregular employment or self-employment at higher wagesutilizing the skills acquired. In that sense, the proposedscheme may also be considered as a programme for skillformation through apprenticeship and the six months’job at minimum wages may be regarded as “on jobtraining”.

Eligibility

6.47 All young persons will be eligible under thescheme who: a) are in the age group 18-29, (b) are withat least primary, but not more than secondary level ofeducation; and (c) have an economic eligibility dependingupon location, as discussed below under the heads“Coverage” and phasing. Subject to this, and subject totraining slots being available, the scheme may be seen asproviding an entitlement to all registered youth to receivetraining through placements.

Programme of Training

6.48 The scheme envisages dovetailing training / wageemployment with existing schemes of the Ministry ofLabour and Employment (Skill Development Initiative)and other schemes of Self- Employment andEntrepreneurship Development.

6.49 All employers willing to provide on-job trainingwould be registered by the proposed SDS in its MIS.These employers could include all micro and smallenterprises, master craftsmen and other skilled self-employed workmen, self-help groups, cooperatives,municipalities, government departments, public sector

undertakings and any other urban agency, whosebonafides in providing on-job training in designated skillscould be easily accepted.

6.50 All workers seeking training in specific areas oftheir choice would also be registered under the scheme.

6.51 The allotment of workers to employers/trainerscould be by mutual agreement or through employmentexchange/placement centres in the district.

6.52 All employers/trainers would provide on-jobtraining to the worker and a daily stipend not less thanthe declared minimum wage for unskilled workers. Thedaily working hours shall not be more than 8 hours andworkers will be allowed weekly off.

6.53 Every worker under the scheme would beexpected to undergo certification in the designated skill.For this purpose, this programme would be dovetailedwith the Skill Development Initiative which is developingcourse curricula under the Modular Employable SkillsProgramme and certification norms for a wide variety ofskills.

6.54 It will be the responsibility of the employer toprovide employment for at least six months to the eligibleworker. A mechanism will have to be set up to quicklyarbitrate any possible infringement of the terms of thisscheme by any of the parties involved.

Coverage

6.55 The scheme is intended for youth with at leastprimary but less than higher secondary levels of education.Further, it is largely intended to cover poor youth. Inurban areas, eligibility may be limited to those whosehousehold income is less than Rs 7000 per month as onMarch 1, 2008. In rural areas, the scheme may coveryouth from landless poor, marginal and small farmerhouseholds who are about 80 per cent of the total withthe requisite educational eligibility. During 2004-05, anestimated 104 million youth in India had educationalqualifications as per this scheme. Of them, about 30 percent (33 million) were in urban areas and the rest (71million) were in rural areas. About three-quarters of theurban youth were in smaller towns (less than one millionpopulation). About two-thirds of the youth in thiscategory are in the labor force.

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Phasing of the Scheme

6.56 At present, employment and incomeopportunities are distinctly higher in large towns. Onthe other hand, the training capacity is weaker in ruralareas, particularly in poorer states. Since the schemerequires building up of administrative capacity in thedistricts, in the first phase we may start with urban areaswith poorer employment opportunities and cover some50 non-metropolitan smaller towns with populationbetween 50,000 and 5 lakhs, as pilots. This may befollowed by the other segments of the eligible population,such as the eligible youth in the rural areas and largertowns.

Financing requirement

6.57 The total financial provision per worker wouldbe Rs 10,000/- which would cover (a) about six monthsof pre- or post-certification on job-training/employmentfor which the employer be provided Rs. 50 per day assubsidy towards stipend being paid to the worker (b) Rs500 as the cost of certification, as provided under theSDI; (c) Rs. 1000, as cost of training/incentive to theprovider/employer. The worker would have the flexibilityof receiving training either pre or post-certification, orboth. However, the subsidy towards the stipend wouldbe back-ended in the case of the former; i.e. the employerwould receive the stipend subsidy only if the worker iscertified.

6.58 As indicated above, the programme requires aone time financial outlay of Rs. 10,000 per worker, whichis the same as that provided under the NREGA. Aprovision of Rs 10,000 crores over five years for thisproject would thus ensure additional training-cum-employment to one crore persons through thismechanism, expanding the present training capacity by 2million per year under the programme. A largerbudgetary allocation would provide larger job creation.However, it will require galvanizing the existing and newlycreated administrative mechanisms to effectivelyimplement this proposal.

Benefit and Impacts

6.59 The proposed programme will provide formalskills to those youth who are from the poorer sectionsand who have dropped out of school without achieving

higher secondary education. The scheme would providethe following principal benefits:

• Allow the hitherto unskilled and poorestindividuals to acquire skills for employment andincrease their employment potential and thewage earning capacity.

• Enhance the sourcing of certified skilledmanpower in line with workplace requirementsand customize skills, education and training tothe requirements of the industry.

• Integrate unemployed poor into the mainstreamof an expanding economy who can be fullyemployable on a sustainable basis without anyfurther sop or subsidy.

• Further, the programme is quite flexible andcan be applied differently in different contexts,within the same overall financial parameters.

6.60 The scheme envisages a demand driven trainingwherein the employers/industry would determine theskills required for their manpower.

IV. Training Providers

6.61 Availability of quality trainers is generallyperceived to be one of the main bottlenecks to expansionof skill development programmes. Hence a major effortis required to enhance their availability. A register oftraining providers should be prepared and updated as apart of the labour market information system. To providetraining at block-level, the trainers will have to be fromthe local areas so that they would be willing to resideand provide training in those areas. Industry associationscan help in training the trainers in their respective fields.MOUs could be signed by the NSDCB/NCVT withexisting training institutions and industry associations forthis purpose. Master crafts persons would also be a partof the mission to create a larger universe of trainers.

V. Training Infrastructure

6.62 It has been observed that with devolvement oflarge number of functions and funds to the panchayati rajinstitutions, physical infrastructure is available at the blocklevel which could be used for skill developmentprogrammes. However, the availability of infrastructurevaries between blocks and may not be adequate for the


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potential target trainees in particular blocks. Funds couldbe given by the DSDC for meeting deficiency of availableinfrastructure at block level. Such financial help couldbe linked to the number of potential trainees in that block.

VI. Course Development and Assessment

6.63 Under the MES/SDI framework, modularcourses are being developed in association with industryassociations. These courses are available for adoption byany training provider. This process should be strengthenedand the list of courses available for training be significantlyenhanced. Such course material will have to be providedin local languages if skill development programmes’outreach has to expand.

6.64 Under draft NSDP of Ministry of Labour, whileSector Skills Councils are to assess the training needs ofthe organised sector Partnership Development Councilsare to perform a similar function for the unorganisedsector, at least initially. However, such an arrangementmay create unnecessary confusion. Skill Sector Councilsmay look after the training needs of the unorganised sectoralso from the beginning.

VII. Labour Market Information System

6.65 It is necessary to set up a Labour MarketInformation System (LMIS) at the national, state anddistrict levels linking various trainers and the trainees.Such a system will help in linking the trainers and thetrainees and also help in monitoring the trainingprogrammes. The DSDC will be performing the task atthe district level. For this purpose, the states may considerremodelling the existing employment exchanges so thatthese can also take up the functions of tracking trainees,listing formal and informal training providers, andproviding relevant placement information to both traineesand potential employers. Over a period of time, the LMISsystems could sell their services and be made financiallyviable. The systems at the state and national level willhave to aggregate the inputs from the districts to arriveat the national scenario.

VIII. Support to & Synergy with PrivateInitiatives

6.66 There are a vast number of private initiatives tosupport skill training. These include in-house training

by corporates, private for-profit training initiatives andprivate non-profit initiatives by foundations, trusts, NGOsetc. The government’s approach towards these initiativesshould be to provide them the maximum opportunityand flexibility for growth. While the public sector will,no doubt, like to rely on NGO/private agencies to front-end its training initiatives, special effort should be madeto preserve the autonomy of those institutions which aretrying to develop innovative models of training forunorganised sector workers. Support may be providedfor such initiatives as well as other non-profit initiatives,in the form of subsidies for capital costs or coverage offinance, with proper incentives to expand their outreachamong the weaker sections of the unorganised sectorworkers. The Commission had already envisages such arole for its proposed National Fund for the UnorganisedSector. This function must also be extended to the NSDC.

IX. Addressing Gender Issues in SkillDevelopment

6.67 The prevalent education and training systemreinforce the cumulative disadvantage faced by womenin the labour market. As shown in this report, women inthe unorganised workforce have much lower levels ofeducation and training than men. Further, in theunorganised segment, existing training is concentrated incertain gender stereotyped vocations, such as tailoring.There often a structural bias against women in the existingtraining systems. This is because gender stereotyping anddiscrimination results in their facing several obstacles suchas lack of time and heavy domestic workload, distance toclasses, male teachers/trainers, opposition from familymembers, and poor linkages with other developmentinputs, such as income generating programmes. Further,in situations where training provision is subject tominimum educational requirements as in the formaltraining system in India, this discriminates against womeneven more than men. In addition, since genderdiscrimination in the labour market restricts access toemployment and results in lower remuneration in mosttypes of employment, women themselves might not bemotivated to enter training programmes. All the issuesthat affect workers in the informal sector, therefore, affectwomen within it even more intensively.

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6.68 The Commission believes that the proposedexpansion in training systems should pro-actively fostergender sensitivity and gender equity in training throughproper design, advocacy, and incentives. Four broad setsof issues may be addressed here. First, the content oftraining programmes for women may need to integratecomponents of literacy, numeracy, business skills,confidence skills in a bigger way. Second, training forwomen is likely to more effective when done in a formal,participatory way through groups. In a range of activitiessuch as street vending, city cleaning services and domesticservices, such interventions have resulted in betterremuneration to those who organise in groups and thisshould include training. In fact, in urban areas, thesegroups can function as employment exchanges wherewomen can be encouraged to register to undergo trainingand in turn be placed in employment at given terms. TheKudumbashree initiative in Kerala shows that this canbe coordinated fairly effectively at the district or blocklevel, without running into difficulties with fraudulentagencies. Third, programmes should address the specialconstraints faced by women in participating in training.This includes absence of mobility, need for child careand gender segregation. The training itself should mainlycomprise modular, short-term courses with flexible entryand exit options and mobile training provision. Fourth,training women only in gender stereotypes activities hasboth specific and general ramifications, since such trainingnot only would perpetuate gender segmentation, but alsooften leads to over saturation of trained women in lowpaid work. This does not mean that skills training shouldno longer be provided in areas around women’sreproductive or conventional care role, but that the mainconsideration is for women to gain access to work whichis better paid and with better conditions. Hence, womenmust also be encouraged to train for “hard” technical skillsas well in areas such as agriculture, where there role asproducers is far more significant today. Admittedly, NGOsmay have a better niche in doing this.

X. Financing

6.69 The significant expansion in VET will requirea considerable up-scaling of financial resourcecommitment by the government and by the private sectorand both these entities have signaled their commitmentto increase their spending on skill training. The present

commitment of the Central government is to increaseexpenditure on VET to Rs. 22,800 crores during the11

th Plan. In addition, a sum of Rs. 300 crores has been

committed to the NSDB and Rs. 1000 crores has beenallocated to the NSDC. A large part of this allocationwill go to support strengthening of VET infrastructurefor training of workers for the organised sector throughITIs and Polytechnics.

6.70 This Commission has advocated that (i) a sumof Rs. 5000 crores be allocated to the NSDB for a NationalMission for Skill Development in the Unorganised Sectorfor supporting the cost of setting up and operating theproposed institutional infrastructure for expansion oftraining initiatives at the district level and, (b) at least adoubling the existing training schemes under the SDIand MSME (Rs. 1000 crores; and (iii) Rs. 10,000 croresfor the proposed Employment Assurance Scheme. Ineffect, the Commission’s proposal imply a significantincrease (to about Rs 40,000 crores) in the financialallocation for VET over the next five years. Given thestrong positive externalities emerging from expansion oftraining, especially of the unorganised sector workers,this increase can be considered necessary. Moreover, ifnecessary, the resources can be raised through a levy onthe turnover of companies to help partially meet the costof skill development programmes. Tax concessions mayalso be extended for making contributions for skilldevelopment

XI. Conclusion

6.71 This Report of this Commission has focused onthe formal training of workers who are either employedin the unorganised sector, or are likely to join theunorganised sector as waged or self-employed workers.These are typically workers with low levels of educationand economic wherewithal, a proportion of whom haveacquired skills through informal training. We have shownin this report, that formal training has focused so far onthose with better educational attainments (at least highersecondary education), coming from better-off segmentsof society. Although a majority of these trained personsare not absorbed in the organised sector, they would stilltend to constitute an upper stratum of workers in theunorganised sector. Due to perceived skill shortages inthe organised sector (for formal as well as informal


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workers), most recent proposals have focused on higherend formal training, while recognising the need fortraining of unorganised sector workers. This Report, onthe other hand, has based itself on the premise that thereis also a very significant developmental need to improvethe skill level of unorganised sector workers (both self-employed and waged) who are at the lower segment. Wefurther showed that the characteristics and training needsof this segment of the workforce are quite different fromthe upper segment requiring significant differences inapproach – in terms of content, institutional delivery etc.

6.72 Expanding the training for such workers wouldrequire active participation of different types of

stakeholders – government departments, trainers, privatetraining providers, NGOs and employers. The financingand cost recovery models for such training would also bequite different. The Commission is of the view that if itsrecommendations, including the proposed NationalMission, a fresh instiutional approach and theEmployment Assurance Programme are adopted, it wouldbe possible to expand training to cover 50 per cent of thelabour force within a reasonable time frame. This, inturn, would not only provide a firm anchor to the growthprocess, it would also help in spreading the benefits ofgrowth to a much wider cross-section of the workforce.

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Abbreviations & Acronyms

ACF Ambuja Cement FoundationADB Asian Development BankAEPC Apparel Export Promotion CouncilAICTE All India Council of Technical EducationAITT All India Trade TestsAPEDA Agricultural and Processed Food Products Export Development AuthorityASHA Accredited Social Health ActivistATI Advanced Training InstitutesATS Apprenticeship Training SchemeAVI Accredited Vocational InstitutesBPL Below Poverty LineCFQC&TI Central Fertiliser Quality Control & Training InstituteCIDC Construction Industry Development CouncilCII Confederation of Indian IndustriesCITS Craft Instructor Training SchemeCL Casual LabourCPSEs Central Public Sector EnteprisesCSR Corporate Social ResponsibilityCTI Central Training InstituteCTS Craftsmen Training SchemeDES Directorate of Economics & StatisticsDGE&T Directorate General of Employment & TrainingDIC District Industries CentreDOEACC Department of Electronics Accreditation for Computer CoursesDRDA District Rural development AgencyDSDC District Skill Development CouncilDSDCs District Skill Development CentresDTP Desk Top PublishingDWCUA Development of Women and Children in the Urban AreasEDC / EDP Entrepreneurship Development Centres / ProgrammeESDP Entrepreneurship Skill Development ProgrammesFPTC Food Processing & Training CentresGOI Government of IndiaHHDC Handicrafts & Handlooms Exports CorporationHRD Human Resource DevelopmentHS Higher SecondaryHUDCO Housing and Urban Development CorporationICT Information and Communication Technologies

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IDA International Development AsociationIIT Indian Institute of TechnologyIL&FS Infrastructure Leasing and Financial ServicesILO International Labour OrganisationITC / ITI Industrial Training Centres / InstituteJSS Jan Shikshan SansthanKVIC Khadi and Village Industries CommissionLABS Livelihood Advancement Business SchoolLMIS Labour Market Information SystemMAYA Movement for Alternatives and Youth AwarenessMES Modular Employable SkillsMHRD Ministry of Human Resource DevelopmentMIS Management Information SystemMITI / MTI Model Industrial Training Institutes / Model Training InstitutesMoLE Ministry of Labour and EmploymentMOU Memorandum of UnderstandingMSME Ministry of Micro, Small and Medium EnterprisesMSME-DI Micro, Small and Medium Enterprises-Development InstituteNABARD National Bank for Agriculture and Rural DevelopmentNAC National Apprenticeship CertificateNCEUS National Commission for Enterprises in the Unorganised SectorNCSD National Council on Skill DevelopmentNCVT National Council for Vocational TrainingNDDB National Dairy development BoardNGO Non-Governmental OrganisationNID National Institute of DesignNIESBUD National Institute for Entrepreneurship and Small Business DevelopmentNIFT National Institute of Fashion TechnologyNIOS National Institute of Open SchoolingNIRD National Institute of Rural DevelopmentNMCC National Manufacturing Competitiveness CouncilNOAS National Open Apprenticeship SchemeNORAD Norwegian Agency for Development CooperationNPPTI National Plant Protection Training InstituteNREGA National Rual Employment Gurantee ActNRF National Renewal FundNSDCB National Skill Development Coordination BoardNSDP National Skill Development PolicyNSS / NSSO National Sample Survey / OrganisationNTC National Trade CertificateNVTI National Vocational Training Institute

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NYKS Nehru Yuvak Kendra SangathanOBC Other Backward ClassOECD Organisation for Economic Co-operation and DevelopmentPI Partner InstitutesPMEGP Prime Minister Employment Generation ProgrammePMRY Prime Minister’s Rojgar YojanaPPP Public Private PartnershipPSU Public Sector UnitsRDAT Regional Directorates of Apprenticeship TrainingREGP Rural Employment Generation ProgrammeRS Regular SalariedRUDESETI Rural Development and Self Employed Training InstituteRVTI Regional Vocational Training InstitutesSAIED Special Accredited Institution for Education of the DisadvantagedSC Schedule CasteSCVT State Council for Vocational TrainingSDC Skill Development CentreSDF Skill Development FundSDI Skill Development InitiativeSE Self EmployedSEWA Self Employment Women’s AssociationSGSY Swaranjaynati Gram Swarozgar YojanaSHG Self Help GroupSIRD State Institute of Rural DevelopmentSJSRY Swarna Jayanti Shahari Rozgar YojanaSOE State Owned EnterpriseSPV Special Purpose VehicleSSC Sector Skills CouncilST Schedule TribeSTEP Support to Training and Employment Programme for WomenTVET / VET Technical and Vocational Education and TrainingUCEP Underprivileged Children’s Education ProgrammeUGC University Grants CommissionUNDP United Nations Development ProgrammeUNIDO United Nations Industrial Development OrganisationUPSS Usual Principal and Subsidiary StatusUSEP Urban Self Employment ProgrammeUT Union TerritoryUWEP Urban Wage Employment ProgrammeVE Vocational EducationVoTEG Vocational Training for Employment GenerationVTP Vocational Training Provider

Abbreviations & Acronyms

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Annexure 1Annexure 1Annexure 1Annexure 1Annexure 1

TTTTTerererererms of Refms of Refms of Refms of Refms of Referererererence of the Commissionence of the Commissionence of the Commissionence of the Commissionence of the Commission

The Government of India, constituted the NationalCommission for Enterprises in the Unorganised Sector(NCEUS) vide Ministry of Small Scale IndustriesResolution No. 5(2)/2004-ICC dated 20

th September,

2004, under the Chairmanship of Professor ArjunSengupta. The Terms of Reference of the Commissionare as follows:

i. Review the status of unorganized/informalsector in India including the nature ofenterprises, their size, spread and scope, andmagnitude of employment;

ii. Identify constraints faced by small enterpriseswith regard to freedom of carrying out theenterprise, access to raw materials, finance, skills,entrepreneurship development, infrastructure,technology and markets and suggest measuresto provide institutional support and linkages tofacilitate easy access to them;

iii. Suggest the legal and policy environment thatshould govern the informal/unorganized sectorfor growth, employment, exports andpromotion;

iv. Examine the range of existing programmes thatrelate to employment generation in the informal/unorganized sector and suggest improvementfor their redesign;

v. Identify innovative legal and financinginstruments to promote the growth of theinformal sector;

vi. Review the existing arrangements for estimatingemployment and unemployment in theinformal sector, and examine why the rate ofgrowth in employment has stagnated in the1990s;

vii. Suggest elements of an employment strategyfocussing on the informal sector;

viii. Review Indian labour laws, consistent withlabour rights, and with the requirements ofexpanding growth of industry and services,particularly in the informal sector, andimproving productivity and competitiveness;and

ix. Review the social security system available forlabour in the informal sector, and makerecommendations for expanding their coverage

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P P P P Past and Past and Past and Past and Past and Prrrrresent Compositesent Compositesent Compositesent Compositesent Composition of the Commissionion of the Commissionion of the Commissionion of the Commissionion of the Commission

The composition of the Commission is as follows:

DDDDDrrrrr..... Arjun S Arjun S Arjun S Arjun S Arjun Senguptaenguptaenguptaenguptaengupta ChairmanChairmanChairmanChairmanChairmanChairman, [From 20.09.2004 to 01.07.2005Centre for Development and Human Rights, and from 17.11.2005 till date]New Delhi

PPPPPrrrrrofofofofofessor K.essor K.essor K.essor K.essor K. P P P P P..... K K K K Kannanannanannanannanannan Full-time MemberFull-time MemberFull-time MemberFull-time MemberFull-time MemberFellow, [From 01.11.2004 till date]Centre for Development Studies,Ulloor, Thiruvananthapuram 695011, Kerala

Professor Ravi S. SrivastavaProfessor Ravi S. SrivastavaProfessor Ravi S. SrivastavaProfessor Ravi S. SrivastavaProfessor Ravi S. Srivastava Full-time MemberFull-time MemberFull-time MemberFull-time MemberFull-time MemberProfessor, [From 01.05.2006 till date]Centre for Studies in Regional Development,Jawaharlal Nehru University, New Delhi 110067

SSSSShrhrhrhrhri i i i i VVVVV.K..K..K..K..K. Malhotr Malhotr Malhotr Malhotr Malhotra,a,a,a,a, IAS (Retd.) IAS (Retd.) IAS (Retd.) IAS (Retd.) IAS (Retd.) Member SMember SMember SMember SMember Secrecrecrecrecretaretaretaretaretaryyyyy[From 01. 03.2006 till date]

SSSSShrhrhrhrhri Bi Bi Bi Bi B.N..N..N..N..N. YYYYYugandharugandharugandharugandharugandhar Part-time MemberPart-time MemberPart-time MemberPart-time MemberPart-time MemberMemberMemberMemberMemberMember,,,,, [From 05.11.2004 till date]Planning Commission,New Delhi 110001

PPPPPrrrrrofofofofofessor essor essor essor essor TTTTT.S.S.S.S.S..... P P P P Papolaapolaapolaapolaapola Part-time MemberPart-time MemberPart-time MemberPart-time MemberPart-time MemberDirector, [From 06.04.2005 till date]Institute for Studies in Industrial Development,Vasant Kunj Institutional Area, New Delhi.110070

DDDDDrrrrr..... K. K. K. K. K. Jaishankar Jaishankar Jaishankar Jaishankar Jaishankar Full-time MemberFull-time MemberFull-time MemberFull-time MemberFull-time MemberFormer Vice Chancellor, Warangal University, [From 01.12.2004 to 9.03.2006]Andhra Pradesh

SSSSShrhrhrhrhri Bibek Debri Bibek Debri Bibek Debri Bibek Debri Bibek Debroooooyyyyy,,,,, Part-time MemberPart-time MemberPart-time MemberPart-time MemberPart-time MemberDirector, [From 27.10.2004 to 20.12.2005]Rajiv Gandhi Institute for Contemporary Studies,New Delhi 110001.

Shri K.K. Jaswal, IAS (Retd.)Shri K.K. Jaswal, IAS (Retd.)Shri K.K. Jaswal, IAS (Retd.)Shri K.K. Jaswal, IAS (Retd.)Shri K.K. Jaswal, IAS (Retd.) Member SMember SMember SMember SMember Secrecrecrecrecretaretaretaretaretaryyyyy[From 01.11.2004 to 18.02.2006]

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CompositCompositCompositCompositComposition of the Advisorion of the Advisorion of the Advisorion of the Advisorion of the Advisory Boary Boary Boary Boary Boarddddd

1.1.1.1.1. PPPPPrrrrrofofofofofessor Bhalcessor Bhalcessor Bhalcessor Bhalcessor Bhalchandrhandrhandrhandrhandra Mungekara Mungekara Mungekara Mungekara Mungekar,,,,,Member, Planning Commission,Yojana Bhavan, New Delhi.

2.2.2.2.2. Swami Agnivesh,Swami Agnivesh,Swami Agnivesh,Swami Agnivesh,Swami Agnivesh,President, Bonded Labour Liberation Front,13, South Avenue, New Delhi.

3.3.3.3.3. Professor Sheila Bhalla,Professor Sheila Bhalla,Professor Sheila Bhalla,Professor Sheila Bhalla,Professor Sheila Bhalla,(Formerly Professsor of Economics,Jawaharlal Nehru University, New Delhi)Institute of Human Development,

Old IAMI Building (3rd Floor).I.P.Estate, Mahatma Gandhi Marg,New Delhi-110002.

4.4.4.4.4. PPPPPrrrrrofofofofofessor Mahendressor Mahendressor Mahendressor Mahendressor Mahendra Dea Dea Dea Dea Devvvvv,,,,,Director, Centre for Economic and Social Studies,Begumpet, Hyderabad.

5.5.5.5.5. Ms.Ms.Ms.Ms.Ms. Madhu Kishwar Madhu Kishwar Madhu Kishwar Madhu Kishwar Madhu Kishwar,,,,,Editor, ManushiC-1/3 Sangam Estate, 1, Underhill Road, Civil Lines,Delhi-110054.

6.6.6.6.6. Ms. Mirai Chatterjee,Ms. Mirai Chatterjee,Ms. Mirai Chatterjee,Ms. Mirai Chatterjee,Ms. Mirai Chatterjee,Self-Employed Women’s Association (SEWA)Opposite Victoria Garden, Bhadra, Ahmedabad-380001.

7.7.7.7.7. SSSSShrhrhrhrhri Joginder Ki Joginder Ki Joginder Ki Joginder Ki Joginder Kumarumarumarumarumar,,,,,President,Federation of Tiny & Small Scale Industries of India (FTSSI),General Metal Industries, B-189, Industrial Estate,Ludhiana, Punjab.

8.8.8.8.8. Professor Jean Dreze,Professor Jean Dreze,Professor Jean Dreze,Professor Jean Dreze,Professor Jean Dreze,Delhi School of Economics, Department of Economics,Delhi University, Delhi-110007.

9.9.9.9.9. Professor Amit Bhaduri,Professor Amit Bhaduri,Professor Amit Bhaduri,Professor Amit Bhaduri,Professor Amit Bhaduri,Council for Social Development,53, Lodhi Estate, New Delhi - 110003

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CompositCompositCompositCompositComposition and ion and ion and ion and ion and TTTTTerererererms of Refms of Refms of Refms of Refms of Referererererence of theence of theence of theence of theence of the

TTTTTask Fask Fask Fask Fask Forororororce on Sce on Sce on Sce on Sce on Skilkilkilkilkill Fl Fl Fl Fl Fororororormatmatmatmatmation in the Unorgion in the Unorgion in the Unorgion in the Unorgion in the Unorganised Sanised Sanised Sanised Sanised Sectorectorectorectorector

A-25024/9/2005-NCEUS

Government of IndiaNational Commission for Enterprises in the Unorganized Sector

16th

/19th Floor, Jawahar Vyapar Bhawan,

1 Tolstoy Marg, New Delhi 110001Dated the 9

th June, 2005

ORDERORDERORDERORDERORDER

Subject: Constitution of Task Force on Skill Formation in the Unorganised Sector.

It has been decided to set up a Task force on Skill Formation in the Unorganised Sector.

2. The composition of the Task Force shall be as follows:Shri K.K.Jaswal, Member Secretary, NCEUS Chairman

Shri B.N.Yugandhar, Part Time Member, NCEUS Member

Dr.Madhav Chavan, Director, PRATHAM Member

Lt.General (Retd.) S.S.Mehta, Principal Adviser,CII Member

Ms.Nalini Gangadharan, Executive Director, MemberDr.Reddy’s Foundation

Shri K.K.Mittal, DGE&T, M/o Labour & Employment Member

Dr.S.D.Awale, Joint Education Adviser (Technical), MemberD/o Secondary & Higher Education

Shri Sharda Prasad, Labour Commissioner, MemberGovernment of Uttar Pradesh

Smt.Neelam Nath, Joint Secretary, NCEUS Member Secretary

Shri J.D.Hajela, Director, NCEUS will provide administrative and secretarial support to the Task Force.

3. The Terms of Reference of the Task Force shall be as follows:

3.1 Identify the characteristics and specificities of skill formation in the Unorganised Sector.

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3.2 Review the existing arrangements for skill formation in the Unorganised Sector at the Central andState levels.

3.3 Examine the adequacy of the training and skill development component of the current programmesof wage employment and self-employment and recommend measures for improving theireffectiveness.

3.4 Recommend measures for optimally utilizing the existing infrastructure for training and skillformation for addressing the needs of the Unorganized Sector.

3.5 Identify the unmet as well as emerging demand for skill sets in an expanding and globalisingeconomy and devise an institutional framework to rectify the mismatch between demand andsupply of skills.

3.6 Study the characteristics of urban employment and under employment and assess the potential ofprogrammes of skill development as a strategy of employment generation in urban areas.

3.7 Identify the best practices in the programmes of skill formation in the Unorganised Sector operatedby Government and Non-government organizations.

3.8 Design a National Skill Development Initiative for the Unorganised Sector and suggest a strategyfor its implementation.

3.9 To consider any other matter related with or incidental to the above Terms of Reference.

4. The Chairman of the Task Force may co-opt any other person as Member of the Group.

5. The Chairman may invite specialists to particular meetings of the Task Force.

6. The Task Force shall submit its draft report within six months of the issue of the Order and its finalreport within eight months.

7. The expenses towards TA/DA of the official members of the Task Force shall be met by the GovernmentDepartments/Institutions to which they belong. The TA/DA of non-official Members and invitees tomeetings will be paid by NCEUS as admissible to Grade I Officers of the Government of India.

( J.D.HAJELA)Director (NCEUS)

To

1. Shri K.K.Jaswal, Member Secretary, NCEUS19th Floor, Jawahar Vyapar Bhawan,1 Tolstoy Marg, New Delhi 110001Telfax 011-23701234E mail : [email protected]

2. Shri B.N.Yugandhar, Part Time Member,NCEUSMember, Planning Commission,Yojana Bhawan, Sansad Marg,New Delhi 110001Ph:011-23096566, Fax:011-23096567Email : [email protected]

95

3. Dr.Madhav Chavan, Director, PRATHAMB3/3, Safdarjung Enclave, 1st Floor,New Delhi 110029Ph :011-26716083/84, Email: [email protected]

4. Lt.General (Retd.) S.S.Mehta, Principal Adviser,CIIIndia Development Foundation249F, Sector 18, Udyog Vihar,Phase IV, Gurgaon 122015Tel :95124-5014055/4535

5. Ms.Nalini Gangadharan, Executive Director,Dr.Reddy’s Foundation6-3-668/10/77&78, Durganagar ColonyPunjagutta, Hyderabad-82Tel :040-23414603/3186Fax :040-23404607Email : [email protected]

6. Shri K.K.Mittal, DGE&T, M/o Labour & Employment108, Shram Shakti Bhawan,Rafi Marg, New Delhi 110001Tel: 011-23710446, E mail : [email protected]

7. Dr.S.D.Awale, Joint Education Advisor (Technical), D/o Secondary& Higher Education, Ministry of Human Resource Development,Shastri Bhawan, New Delhi 110 001

8. Shri Sharda Prasad, Labour Commissioner,Government of Uttar Pradesh, G.T.Road, Kanpur

9. Smt.Neelam Nath, Joint Secretary, NCEUS16th Floor, Jawahar Vyapar Bhawan,1 Tolstoy Marg, New Delhi 110001Telefax 011-23701069, E mail : [email protected]

Copy to:Copy to:Copy to:Copy to:Copy to:1. Secretary, Ministry of Labour and Employment

Shram Shakti Bhawan,Rafi Marg, New Delhi 1100012. Secretary, Department of Secondary & Higher Education,

Ministry of Human Resource Development,Shastri Bhawan, New Delhi 110001

3. Chief Secretary, Govt. of Uttar PradeshLucknow, Uttar Pradesh.

Copy for information to:Copy for information to:Copy for information to:Copy for information to:Copy for information to:1. PPS to Chairman2. PPS to Member Secretary3. PPS to Member (K)4. PPS to Member ( J)5. Director (MS)6. Director ( JDH)7. Director (MK)8. Deputy Secretary (SVRM)

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Summary of Comments by Central Ministries, State Governments, NGOs,Summary of Comments by Central Ministries, State Governments, NGOs,Summary of Comments by Central Ministries, State Governments, NGOs,Summary of Comments by Central Ministries, State Governments, NGOs,Summary of Comments by Central Ministries, State Governments, NGOs,Academia and others on the Draft Report on Skill Formation & EmploymentAcademia and others on the Draft Report on Skill Formation & EmploymentAcademia and others on the Draft Report on Skill Formation & EmploymentAcademia and others on the Draft Report on Skill Formation & EmploymentAcademia and others on the Draft Report on Skill Formation & Employment

Assurance in the Unorganised SectorAssurance in the Unorganised SectorAssurance in the Unorganised SectorAssurance in the Unorganised SectorAssurance in the Unorganised Sector

S.No.S.No.S.No.S.No.S.No. OrganisationOrganisationOrganisationOrganisationOrganisation CommentsCommentsCommentsCommentsComments


I. Central MinistriesCentral MinistriesCentral MinistriesCentral MinistriesCentral Ministries

1. Ministry of Micro, Small and Medium Enterprises

1. The Ministry is in agreement with the Commission's view thatformal systems of skill imparting are essential for the growth ofthe informal sector.

2. Commission may explore the possible avenues/models throughwhich skills development could be imparted in the informal sectorand provide a framework for such programmes in the report.

2. Ministry of Communications and Technology,Department of Technology

No specific comments.

3. CMinistry of Tourism 1. The Ministry of Tourism is alive to the need of upgrading theskills and building capacities of service providers of the industry.To this end, the Ministry has commenced the scheme of CapacityBuilding for Service Providers under which training are undertakento cover a wide range of services. For the promotion of ruraltourism, the Ministry extends assistance for capacity building inselected villages.

4. Ministry of Youth Affairs and Sports 1. The Ministry has formulated a new scheme of National Programmefor Youth and Adolescent Development. One component of thisscheme is Youth Leadership and Personality Development whichprescribes various skill development programmes for adolescentyouth through NGOs. Nehru Yuvak Kendra Sangathan alsoconducts various personality development programmes to guideand empower the village community.

II. State GovernmentsState GovernmentsState GovernmentsState GovernmentsState Governments1. Madhya Pradesh 1. Employment Exchanges, by virtue of having a very systematic and

classified database available with them, can function with closecollaboration with proposed district level link of informal skilldevelopment plan. They can very well take up the role of asponsoring agency in the scheme proposed by the Commission.2.Though Employment Exchanges have their own employmentmarket information system which works reasonably well with publicsector but is not very effective as far as private and unorganizedsector is concerned. The present system will have to be modified,strengthened and revamped to enable it to take up additionalresponsibilities.

2, Punjab Programme for Employment Assurance and Skill Development

1. Incentive of wage subsidy is attractive

2. On-job training/employment should be post certification underSDI

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3. Pre-certification on job training/employment may be allowed wherethe VTP and the employer are the same unit.

4. Monitoring of the training programme needs to be worked out

5. Provision for certification need not be made under the scheme asit is already provided for under the SDI.

3. Uttar Pradesh 1. The unorganized sector has to be provided with basic education, skilldevelopment, vocational training and credit facilities for itsdevelopment, as has been correctly identified by the Commission inits report. The machinery responsible for this at the central, State anddistrict levels needs to be effectively mobilised with the cooperationof the central and State Governments and the banking system. SHGs,and micro finance institutions should also be made a part of it.

2. The unorganized sector is not the responsibility of a single Ministrybut is the collective responsibility of all the Ministries/Departments.

3. In UP the Industries department is implementing a number ofschemes for skill upgradation and employment generation in theunorganized sector.

III. NGOs, Academia and OthersNGOs, Academia and OthersNGOs, Academia and OthersNGOs, Academia and OthersNGOs, Academia and Others

1. Ms. Swaminathan, MIDS, Chennai 1. While the report has brought out very well the complex characterof the unorganized sector, the recommendations do not reflectthis complex understanding of the sector. The skill developmentprogramme to be instituted and operationalised has to beorganically linked to the findings of the NCEUS.

2. The Commission should do a minute scanning, scheme by scheme,of the GOI programmes to decipher whether, how far and whichsegment/category of the unorganized sector the GOI programmes,when operationalised , will address.

3. NCEUS's recommendations should explicitly engage with thetheme of monitoring, supervision and accountability of all skilldevelopment programmes that it recommends for the unorganizedsector.

4. The Chapter on International Experiences would have been moreenriching if it had stressed in particular the authority structure,delivery mechanism, systems of incentive /disincentives, etc. thatcountries such as Germany, Japan and South Korea have put inplace to operationalise their vocational education programmes.

5. The report has very little to say on the issue of certification. Since,very rightly, the report stresses the need for formal certification oftraining for the unorganized sector, the operationalisation of thetheme and scheme of certification merits elaboration.

6. The report has very little to say, explicitly, on the role of the privatesector in vocational training.

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2. Ms Jeemol Unni 1. Good report. However, the overall flavour in the recommendationsis that the Commission accepts the broad contours of the SkillPolicy and organizational structure which is being set up by theGovt.]

2. The only new thing about Commission's recommendations is theProgramme for Employment Assurance and Skill Formation.This is an innovative idea. However, the very bureaucratic emphasison defining the employers and beneficiaries/trainees and the modusoperandi of the programme is not likely to let this system bloom.

3. It might be useful to scatter the report with examples of women'swork and how would women fare in the new scheme.

4. To get over the excessive emphasis on bureaucratic control it maybe useful to give some specific role to NGOs, informal tradeunions etc in the setting up or in helping the system reach thebackward areas, poor, disadvantaged, women, etc.

3. Dr. Sandra Rothboek, ILO, Delhi 1. The report could add a few things, particularly in the context ofthe informal and how learning within such a framework and withthese groups is distinct from the typical root learning of othereducational systems.

2. Skills cannot be isolated from a) health, b) livelihood/income andc) literacy and numeracy and d) empowerment. This frameworkis important to be added.

3. Capability approach is crucial. The key to learning is to make useof the learning acquired for a) productive purposes and b) life byitself. This might be important also in the context of poorenterprises and unorganized sector per se.

4. The Lifelong learning concept, policy and overall framework ofPhilippines may be studied in the context of the report

4. Federation of Tiny & Small Industries of India 1. The Distance Education Programmes are very useful as thestudents can learn while they earn.

2. Skill Development Programmes of Department of Science andTechnology needs to be strengthened.

3. The outcome of the scheme of training of retrenched workersshould be examined. The scheme needs to be strengthened andcoverage extended to more areas.

4. The National Board may launch the mission for expansion of skillnot only in the unorganized sector but also in the micro/smallenterprise sector.

5. A National level body should be created for accreditation of skilldevelopment training centres.6. Concrete steps may be taken forupgradation of skills of the micro-enterprise sector.

Skill Formation and Employment Assurance in the Unorganised Sector

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