The Skill Crisis

Assessment Tomorrow ConferenceBangalore

October 10, 2007

•Agony and Ecstasy

• India’s labour markets– Labour force and work force almost equalized– Misplaced Focus of education/ skills regime; Input rather than outcomes– Unemployability bigger problem than unemployment

•Einsteins exam– Only throwing money at the problem won’t solve it– Crisis and Tragedy; economic equivalent of a right to vote

Background

India’s labour market

Context

Demographics

Lopsided GDP

Unorganized Sector

Youthification

Employment elasticity;

labour saving bias

LowProductivity

Inability to afford social

security

Poor HRD Regime

India

Demand/ Supply Mismatch

High Drop out

Low penetration of

higher education

High variability within

qualifications

Unemployment highest among

graduates/ diploma holders

Low literacyLow returns to

education

What is the Urgency for Skill reform?

India

Unviable agriculture

Demographics

Employee Productivity

High forced self-

employment

Rising Inequality

Unemployability; working poor

Inflation; salaries, titles, responsibility

The Reform Agenda

Skills

Review labour laws that hinder learning while earning/ doing

Link financing to outcomes

Separate financing from delivery

Separate Repair from Prepare

Regulatory re-architecture

Vocational Training in India

•Missing skills– Functional/ Industry specific– English/ Communication– Soft Skills– Basic Computers

•3 kind of unemployability– Last Mile 6 months– Interventional 12 months– Structural 24 months

•Private Ecosystem– Only for last mile repair– Three financing risks– Manage; entry gate, exit gate, cost, co-pay, employer reimbursement

Closing Thoughts

•India; WSJ in 1994– But Indian journey far from over– Only fixed sins of commission not ommission– Skill deficit is worse than infrastructure deficit

•Labour vs. Education/ Skill reform– Mancur Olson; distributional coalitions– Complex change process; planning commission, CNBC– Not blue vs. white but farm vs. non-farm– Scratches on our minds; Harold Isaacs

Closing Thoughts

•Role of State

– Private ecosystem can complement but never substitute– Repair pipeline will run dry if prepare not fixed– Money without change will be wasted; leaky pipes

• India; tryst with destiny– Unique time in India– But equality of opportunity? 300 million– Only giving our youth skills will put poverty in the museum it belongs

The Skill Crisis

Assessment Tomorrow ConferenceBangalore

October 10, 2007