· The Hon'ble Minister for Human Resources Development (HRD) Dr M M Pallam Raju said India has the potential to become the worldwide hub for sourcing skilled labour, apart from meeting the country’s demand.
The Minister was speaking at the 6th HR Summit 2013, titled Reviving Economic Growth & Development: Leveraging Human Capital, organized by Confederation of Indian Industry (CII) in Mumbai.
The Hon’ble Minister said the greatest challenge for the nation is to make its large workforce more employable. He pointed out that of the 4 lakh engineering students who graduated every year, only 20% are employable. “Recognising that the future growth of India will depend on greater skill development, the National Policy for Skill Development aims to create a skilled workforce of 500 million by 2022. The 12th Plan has put a modest target of skilling 80 million by 2017,” he said.
The Minister said India’s average age by 2022 will be 29 years against 40 years in the US, 46 years in Japan, and 47 years in Europe. He said if India wished to earn from the demographic dividend, then India must provide education and skills to all its youth so that they can develop themselves into a human resource, not just for India but for the world.
· Dr Pallam Raju lamented that despite rapid growth over the last decade, there has not been a substantial creation of new jobs. He added that this was a cause for concern as nearly 12 million people would join the workforce every year. The Minister said the Indian workforce around 500 million. Of these, only 14% of our workforce in the formal economy, 86% of workforce are in the unorganized sector. He further pointed out that China moved 150 million people from agriculture to the manufacturing, whereas in India manufacturing has stagnated. “India needs a massive improvement in the manufacturing sector and much greater investment in education and skilled labour,” he averred.
He said the current economic downturn was a good time to focus on skill development and increase productivity, just as Indian industry had focused on productivity during the last slowdown to its benefit.
The Minister admitted that the current GDP growth was not what the government wanted, but drew the audience’s attention to the Prime Minister’s statement that the government was committed to get India back to 8-9% growth. “Key issues that have been troubling us are showing signs of decline. Public debt to GDP ratio was 66% in 2012-13 from over 73% in 2006-07. External debt is also at 21.2% of GDP, and we are looking to reduce the Current Account Deficit to 2.5% of GDP,” he said in a soothing note.
· Earlier, the ICICI Bank Ltd MD and CEO, Ms Chanda Kochhar, said every sector of India’s economy would have to perform if the country was to create 12 million jobs every year to absorb the rising numbers entering the workforce every year.
She pointed out that India must stay wary of the middle-income trap, wherein the country becomes old before it becomes rich. She said India must harness its demographic dividend over the next two decades, otherwise it risks getting trapped in the middle-income countries.
Ms Kochhar said at present more than 60% of India’s population was less than 30 years of age, and the media age was 25 years. Even by 2030, India’s median age would be about 30 years of age, which will give it a low dependency ratio. “India will continue to stay young even as the world ages. Over the next two decades, India will add 25% to the world’s workforce,” she pointed out.
· The ICICI Bank MD commented on India’s supply-demand paradox: the country has abundant supply of labour, but there is a huge demand for skilled labour. “We need to provide both education and skill development. We have to ensure that this young population gets educated, gets skills that are required,” she added.
· Indian Express Editor-in-chief Mr Shekhar Gupta complained that India had created a skewed skill set nation, with too few avenues for those not opting for medicine or engineering. “Even our RBI governor hails from IIT. This country doesn’t have enough economists, or political scientists or sociologists,” he said.
· Mr T K Srirang, Chairman, Western Region HR Sub-Committee, and Head, HR, ICICI Bank, who outlined the summit theme and objective, asked the delegates to look at questions about skills. He said India produced 20 lakh engineering graduates, but only 2 to 3 lakh were employable, forcing 7 lakh to migrate to other jobs.
· Mr Ninad Karpe, Chairman, CII Maharashtra State Council, and MD & CEO, Aptech Ltd, who inaugurated the Summit, said manufacturing needed to be revived so that it can start employing people. He also urged industry to be inclusive, and to look at blue-collar workers rather than just white-collar workers.
The global economy has been going through a prolonged period of uncertainty with varying concerns across regions. India has been no exception and is currently going through a challenging period of below potential growth, volatile financial markets, a high current account deficit resulting in pressures on currency and the need for policy reforms. Several policy decisions are being taken to address concerns and revive growth in the economy.
The Indian economy has seen a step change in growth rates from an average growth of 5.7% in the 1990s to a peak of 8.5% in the last decade. The per capita GDP in India has also tripled over the last ten years. Despite, the current slowdown in the investment activity in the economy, investment continues at a 35% of the GDP. Additionally an advantage that India continues to enjoy and has been projected as a driver of growth is its abundant human capital.
According to projections by the United Nations, India’s average age is projected to be below thirty for the next two decades and dependency ratios are estimated to decline for the next three decades. This has significant implications for demand and savings in a growing economy. The rising affluence and aspirations of a young population with increased access to media across all social strata implies growing demand for goods and services; which means a large consumer market demanding better infrastructure which in turn will feed into investments, job creation and growing household incomes, thus creating a virtuous cycle of growth.
This demographic advantage by all accounts, should accelerate economic growth. However, the promise of the demographic dividend is rapidly losing its sheen and is being eclipsed by a unique employment paradox – rising unemployment rate coinciding with the demand for skilled workers outstripping its supply.
The Economic Survey for 2012-13 has mentioned that employment growth in the organised sector, public and private combined, has increased only by 1.0 per cent in 2011 as against 1.9 per cent in 2010. The annual growth rate of employment in the private sector in 2011 was 5.6 per cent whereas that in the public sector was a negative 1.8 per cent. Every year about 12-15 million people enter the workforce, but job creation of economic value is not commensurate to the inflow. Additionally of India’s current workforce only about 14% are involved in the formal economy; 86% are in the ‘unorganised sector’ with the majority either self-employed or in jobs involving casual labour. Job creation has not kept pace with GDP growth and if the current trends in India’s labour participation and unemployment rate continue, many in the working age population will continue to be unemployed. Thus India's challenge is creation of productive jobs and deliver livelihood, to enable the youth to participate and contribute in growth.
Labour productivity is a matter of concern as currently there exists significant underemployment and disguised employment in the working age population. Low productivity and the dearth of skilled labour have brought into focus the need for vocational training and skill development among planners, and the government has set an ambitious target of training 500 million people by 2022. The challenge is to address both quality and quantity issues in skill development and training so as to correct the mismatch between employers who do not get people with requisite skills and millions of job seekers who do not get employment or remain underemployed. While efforts to achieving the envisaged vision are underway, there is a lot more to be done in terms of investments in building institutional capacities, rethinking our educational systems, creating awareness and developing skill training modules suited to industry requirements to leverage this demographic dividend as a significant strength for the economy.
Much of the dialogue on India’s demographic dividend has focused on developing skilled workforce and increasing productivity, however far less attention has been paid to understand the expectations and aspirations of Indian youth. It is pertinent to note that social inequalities notwithstanding, increased awareness and access to print and visual media is leading towards increased aspirations amongst the youth. Although the aspirations have been “democratized” access to opportunity and development still could be perceived to be in the hands of the privileged few. Therefore, if these aspirations are unrealized it will have social implications for employers engaging with them and for the society and nation at large.
While there are several critical challenges to be addressed, the economic potential of India cannot be either under-estimated or undermined considering the human capital we possess that can drive the economy to greater heights.
Disruptive innovative solutions are required to address the human capital challenges detailed above. One of the levers that can accelerate the economic potential is nurturing a “Culture of Innovation” as a more systematic framework of regular innovations rather than episodic events. India needs “thought leadership” across the spectrum who inspire new ideas and enterprise. While the Government has a key role to play in nurturing the culture of innovation, India Inc. needs to go beyond winning in the marketplace to partner in this transformation agenda in fostering the innovation DNA. It is in this context, technology can be a force multiplier that can provide innovative solutions in expediting the development of human capabilities.
The 6thHR Summit, hosted by CII Western Region aimed to take a fresh look in shaping and leveraging the human capital in the economic growth & development of the country on 1 October, 2013 at Mumbai. The Summit brought together eminent practitioners and thought leaders from various disciplines including the public and private sector, civil society and academics to share their perspectives on four crucial perspectives that underpin the theme of Reviving Economic Growth & Development - Leveraging Human Capital:
· Reviving Economic Growth: Challenges & Opportunities: The policy solutions available for forging the growth agenda, creation of productive jobs and the sectors those need to be leveraged to create opportunities.
· Demographic Dividend or Drag: Solutions to “harvest” the demographic dividend to accelerate economic growth & development
· The Innovation DNA : Focus on fostering culture of innovation to act as a force multiplier
· Emerging Social and Cultural landscape: Rising aspirations of the youth impacting the society
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