Transcript Slide 1

OVERCOMING SKILL CONSTRAINTS IN FAST
GROWING ECONOMIES:
A CASE OF INDIA
Rajendra Prasad Mamgain
Senior Fellow
Institute for Human Development
New Delhi, India
Annual Average Growth Rates of GDP
Period
Agriculture
Industry
Infrastructure
Services
GDP
1950-51- 1965-66
1.99
6.2
6.6
4.33
3.58
1965-66 - 1979-80
2.3
5.77
4.92
4.36
3.4
1979-80 - 1991-92
3.84
7.33
7.85
8.62
5.25
1991-92 - 2001-02
3.64
5.86
7.32
7.92
6.03
2001-02 - 2007-08
2.9
8.66
14.14
9.59
8.02
Source: CSO
Indian Economy moving to a ‘new’ and ‘higher’ growth trajectory
High growth in manufacturing, services and high-end products
Composition/ Structure of GDP - Broad Division (1999-00 prices)
Period
Agriculture
Industry
Infrastructure
Services
1950-51
55.11
10.31
7.92
26.36
1960-61
50.62
12.56
9.89
26.54
1970-71
44.26
14.31
12.24
29.07
1980-81
37.92
15.84
14.21
32.03
1990-91
31.37
17.63
14.58
36.43
2000-01
23.89
17.55
16.21
42.35
2007-08
17.8
17.1
21
44.1
• Rapid change in the structure of GDP
Compound Annual Growth Rate of Employment (UPSS)
Sectors
1983-94
1994-2005
1983-2005
Agriculture, Forestry & Fishing
1.19
0.63
0.90
Mining & Quarrying
3.91
-0.51
1.63
Manufacturing
1.79
3.00
2.41
Electricity
4.10
-1.00
1.46
Construction
5.15
7.23
6.21
Trade, Hotels & Restaurants
3.61
5.03
4.34
Transport, Storage & Communication
3.22
4.92
4.08
Finance., Real Est. & Business
5.35
6.97
6.18
Pub Admn.,Edu.,Health & Others
3.41
0.22
1.76
Total (1+2)
1.84
1.76
1.80
Relatively slow growth in employment during the period of economic reforms
Rapid increase in the share of manufacturing, construction, trade, transport and
financial services
Changing structure of employment. Declining share of Agriculture – 61% in 1994
to 52% in 2005. Rapid increase in the share of manufacturing
Growth in Employment
1999-00
Workers (in
Millions)
Total Workers
2004-05
CAGR 1999-00 & 2004-05
(%)
%
Workers (in
Millions)
%
396.4
100
455.7
100
2.83
Informal workers
362.8
91.52
420.7
92.32
3.01
Formal workers
33.6
8.48
35.0
7.68
0.84
Source: NCEUS, 2009
Comparatively very low growth of employment of formal workers. Growth
largely driven by informal workers.
Growth of employment in formal sector largely driven by informal workers.
In the formal sector, rapid increase in the share of informal workers—41.97%
in 1999-00 to 46.02% in 2004-05, growing at 2.26% per annum. Growth of
formal employment in formal sector marginally increased by nearly 1 per
cent
Workers by their Educational Levels (UPS)
Educational level
Illiterate
1993-94
Male
Female
2004-05
Total
Male
Female
Total
36.23
74.35
46.35
26.87
61.37
36.41
1.33
0.96
1.23
2.67
1.78
2.42
Below primary
12.70
6.91
11.16
9.39
7.25
8.80
Primary
14.30
6.98
12.36
15.74
10.03
14.16
Middle
14.84
4.36
12.06
19.11
8.84
16.27
Secondary
8.86
2.23
7.10
10.84
3.98
8.94
Higher secondary
4.16
1.01
3.32
5.81
1.88
4.72
Graduate General
4.34
1.74
3.65
6.11
2.79
5.19
Graduate-Technical
0.41
0.11
0.33
0.47
0.20
0.40
Technical Diploma
2.83
1.34
2.44
2.98
1.88
2.67
Agriculture
0.12
0.04
0.10
0.08
0.04
0.07
Engineering/technology
1.12
0.08
0.84
1.43
0.28
1.11
Medicine
0.23
0.17
0.21
0.21
0.26
0.22
Crafts
0.10
0.09
0.10
0.07
0.11
0.09
Other subjects
1.27
0.97
1.19
1.18
1.19
1.18
100.00
100.00
100.00
100.00
100.00
100.00
Literate without formal schooling
Total
Mean Years of Schooling of Workers by their Employment Status, 2004-05
Male
Female
Person
Agri. Labour
2.4
1
1.8
Self employed in agri
4.5
1.9
3.4
Casual
3.8
1.7
3.5
Regular
7.1
5
6.7
Self-employed
6.5
3.8
5.9
Unorganised-Total
6.1
3.7
5.6
Unorganised workers in
organised sector
6.4
5.5
6.2
Organised sector
9.1
8.1
9
All
6.9
4.9
6.5
Unorganised
REGRESSION RESULTS (POPULATION BASED)
DEPENDENT VARIABLE: PER-CAPITA NSDP, 1999-00
Educational Level
Intercept
Coefficient
t value
Illiterate
10.122
-0.024
-3.039***
Literate
9.436
-0.018
-0.4
Primary
8.117
0.076
3.352***
8.8
0.025
1.161
Secondary
8.469
0.083
3.221***
Hr. Secondary
7.899
0.347
3.806***
Graduate (General)
7.528
0.578
4.858***
Graduate-Agri
9.472
-3.109
-1.667
Graduate-Eng
8.77
2.863
2.786***
Graduate- Medicine
8.651
6.413
2.999***
Technical degree
8.608
1.627
1.980*
Diploma-Agr
8.917
5.571
2.147**
Diploma-Eng
8.831
0.761
2.614**
Diploma-Medicine
8.852
2.55
1.779*
Diploma-Crafts
8.854
2.792
3.098***
Diploma- Others
8.804
0.452
2.624***
Total Diploma
8.783
0.258
2.840***
Sec & above
8.113
0.07
4.088***
Middle
Skill Levels of Population in the Age-group 15-29 Years in 2004-05
In Millions
Percentage
Skill
Male
Female
Person
Male
Female
Person
Receiving formal training
2.7
1.2
3.9
1.79
0.87
1.35
Received formal training
4.1
3.1
7.1
2.72
2.24
2.45
Formal training
6.8
4.3
11.1
4.51
3.10
3.83
Hereditary
7.4
3.8
11.2
4.91
2.74
3.87
Others
6.8
4.3
11
4.51
3.10
3.80
14.2
8.1
22.3
9.42
5.84
7.70
Sub-total training
21.00
12.40
33.40
13.93
8.94
11.54
No training
129.8
126.3
256.1
86.07
91.06
88.46
Total
150.8
138.7
289.5
100.00
100.00
100.00
Informal
SKILL DEVELOPMENT CHALLENGE
•
Quantitative Dimensions
About 80% new entrants to workforce have no opportunity for skill training
•
Against annual 12.8 million new entrants to workforce, the existing training capacity is only 3.9
million per annum (2.2 million or 58.1% in formal education and training institutions
•
Only 2.4% of existing workforce and 3.7% of youth population has formal training as compared to
96% in Rep. of Korea, 75% in Germany, 80% in Japan and 68% in UK
•
Very high drop out—only 45.4% attending educational institutions in the age-group 15-19 years
•
Comparatively very low enrolment ratio at secondary and tertiary levels—12% as compared to
82% in USA, 59% in UK, 30% in Brazil and 23% in China
•
Industry facing shortages of skilled persons
•
Over 70% of global business executives in India see shortages of skilled persons a significant
constraint on the growth of their business
•
Growth strategy to result in rapid increase in high end skill intensive occupations and industries
•
The number of skills for which training is provided to be increased hundred fold—from 40 at
present to 4000 as provided in China
Industry
Extent of Shortage
Biotechnology
18% in production link to over 80% in innovation and R&D segments of
the industry
Food Processing
For plant operations, R&D, food safety and quality assurance, supply
chain, regulatory work and technical support
Health
Doctors, nurses and technicians/paramedics
Education
25 to 40% in central universities especially in disciplines like
engineering, management, economics, computer science & IT. In
private institution – 33 to 75%
IT
Demand for 3.5 lakh engineers against a supply of 1.5 lakh engineers
per annum. By 2010 shortfall by 5 lakh
Textiles
Textile engineer, fashion designer, CAD, management professionals,
retail sale professionals-over 1 million jobs to be created over a few
years
Engineering/heavy equipment &
machinery
Engineers in disciplines like industrial, mechanical, electrical,
instrumentation, geotech, designing, IT etc
Automotive Industry
Require 2.5 million workers. Automotive engineers, rubber
technologists, mechanical engineers, electrical and services engineers
Banking & Finance
Risk Managers-90% shortage, IT professionals-65% shortage, Credit
operations professional-75%, Financial analysts-80%, Economic &
Planning analysts-80% shortage
Retail
20% shortage of operations, shop floor executives, visual
merchandiser – 56% shortage, Purchase managers – 30% shortage
Industry
Extent of Shortage
Pharmaceuticals
30-55% shortage
Quality control, process development, R&D, IPR
and legal experts, packaging
Chemicals
15-40% shortage
R&D, TPR specialists, Regulatory affairs expert,
process engineers, executive managers
Rapidly increasing demand for high end skill intensive occupations and industries
Emerging Sectors
Demand (in '000 persons)
2008
2022
Automobiles
13000
35200
Building, construction and real estate services
35968
83270
Banking, Financial Services and Insurance
4000
8000
Construction Materials and Building Hardware
1140
1643
Education and Skill Development Sector
8006
112080
906
4129
Furniture and Furnishing industry
1455
4873
Gems and Jewellery sector
3335
7943
Healthcare Services sector
3146
16010
IT and ITES Industry
2200
7500
Leather and Leather Products Industry
2500
7139
Media and Entertainment Sector
1046
4040
Organised Retail
2838
176252
35400
61600
3530
7172
118470
536851
Electronics and IT Hardware Industry
Textile sector
Tourism
Total
Qualitative Dimensions
•
Mismatch in demand and supply
•
Very high unemployment rate among educated and technically trained labour force along with
shortages of such persons with employable skills
•
Rapid growth in the number of institutions imparting technical education and training with a larger
participation of private sector but their quality of education remains a matter of concern
•
Glaring regional disparities in the location of such facilities with limited access to rural areas and
poorer regions within the country
•
Abysmally lower participation of SCs, STs and poor
•
•
Inflexibility in the course/ curriculum leading to oversupply in some trades and shortages in others
Lack of modern infrastructural facilities, tool kits, faculty, etc.
•
A huge shortage of faculty in engineering colleges
•
Weak system of testing, certification and acceleration
•
Weak industry-institution interaction
•
Limited apprenticeship training
•
Firm-level in-service training is not widespread strategy in manufacturing firms—only 15.6%
offering such training as compared to 92.4% in China, 42.3% in Korea, 59.1% in Brazil and 57.9%
in Russian Federation. Severely constraining firms’ capacity to innovate
Unemployment Rate in according to Educational level 2004-05
Educational level
Largely educated
unemployment, more
in technical diploma
holders
Male
Female
Total
not literate
0.37
0.19
0.27
below primary
0.90
1.01
0.93
primary
1.15
1.14
1.15
middle
1.84
3.01
2.10
secondary
3.00
7.98
3.92
higher secondary
3.89
13.14
5.45
graduate
5.61
19.12
8.02
postgraduate and above
4.76
17.00
7.51
technical degree
5.79
9.31
6.32
Agriculture
9.36
24.44
12.21
Engineering/ technology
7.77
25.70
9.28
medicine
3.58
13.25
7.16
crafts
3.48
10.37
7.15
other subjects
7.70
15.80
10.58
Sub-total
7.27
16.80
9.47
Agriculture
9.36
24.44
12.21
engineering/ technology
9.32
34.93
13.61
medicine
2.86
8.29
4.28
crafts
8.47
13.73
10.03
other subjects
4.62
17.98
8.45
Sub-total
6.48
20.76
9.93
Total
1.71
1.84
1.76
Diploma/certificate (below degree)
Diploma or certificate (graduate and above level)
Growth of Technical Education in India
Indices
Total number
Year
Institutions
Enrolment
Institutions
Enrolment
1980-81
3729
854454
100
100
1984-85
4473
943765
120
110
1990-91
7121
1360419
191
159
1995-96
8934
1582546
240
185
2000-01
11426
2089345
306
245
2005-06
16570
3818882
444
447
Growth rate of Institutions and Enrolment
Year
CAGR of Institutions
1981-85
4.65
2.52
1985-91
8.06
6.28
1991-96
4.64
3.07
1996-2001
5.04
5.71
2001-06
7.72
12.82
CAGR of Enrolment
Shortage of Teachers in Engineering Education,
2006
70000
60970
60000
50000
40000
30000
34840
Santioned
In-position
26130
16897
20000
11035
10000
5862
0
Ph.D.
M.Tech.
Total
National Policy on Skill Development
•
Eleventh Plan attaching top priority to skill development as an engine for inclusive growth
•
Setting up of Skill Development Mission in the 11th Plan with an outlay of Rs. 22800 crore
•
National Policy of Skill Development launched in February 2009 with an objective to expansion of
present capacity of 9.3 million to 15 million during 11th Plan
•
Prime Minister’s National Council for Skill Development at the top level for policy directions and
lying broader strategies
•
National Skill Development Corporation (NSDC) created to support the private sector initiatives in
skill development on PPP model
•
Rs 1000 crore for NSDC in 2008-09 budget
•
Some private corporate sector making entry in the field of skill training