The Challenge of

Skilling India for Global

Competitiveness

Bornali Bhandari New Delhi

July 12, 2016

Outline

• Program Description

• What is Skills?

• Measuring Skills

– Supply Indicators

– Demand Indicators

• Challenges to the Skilling Story

• The 3-E Challenge

Program Description

Program Description

• NCAER Labour Economics Research Observatory and New Skills at Work launched

• 2 years and 3 phases

• Phase 1: A Review

– Literature Review

– Secondary Data Analysis

• Phase 2: Baseline survey of skills in Delhi of education, employment and employability

– Why Delhi?

• Mix of Manufacturing and Services in the NCR Region

• Phase 3: Baseline survey of skills of Urban India

Program Objectives

• Baseline of skills based on a large nationally representative survey

– Employers Survey

– Employees

• Need to measure cognitive skills, socio-emotional skills, and job-relevant

• Potentially benchmark India against other countries

• Identify job-relevant skills and policies and institutions to enhance job mobility and job matching

What is Skills?

What is Skills?

• Green (2013) defines Skills as personal qualities with three key features:

– Productive: using skills at work are productive of value

– Expandable: skills are enhanced by training and development

– Social: skills are socially determined

– Excludes qualities relevant to domestic labour, leisure time, or activities as citizens – indirectly connected to paid work

– Attributes that cannot by their nature be enhanced are not considered as Skills

– Economist – cognitive and non-cognitive skills. Both equally important.

Skills Measurement

Skills Supply Indicators

• Green (2013)

– Years of Education

– Educational Qualifications or Certificates

– Literacy, numeracy and other tests

– Self-assessed Skills

– Behavioural Indicators

This we can measure

Started the Process

76% literate and..

44.6

30.1

1.4

15.6

3.6

Distribution of Literate Population as per Education Level, 2011

Literate but belowmatric/secondary

Matric/secondary butbelow graduate

Technical diploma orcertificate not equal todegree

Graduate and above otherthan technical degree

Technical degree ordiploma equal to degree orpost-graduate degree

Source: Census 2011

86.7% main workers, 77.4%

marginal workers literate and..

32.8

31.2

2.3

22.6

5.9

Distribution of Literate Main Workers as per Education Level, 2011

Literate but belowmatric/secondary

Matric/secondary butbelow graduate

Technical diploma orcertificate not equal todegree

Graduate and above otherthan technical degree

Technical degree ordiploma equal to degree orpost-graduate degree

Source: Census 2011

National Skills Quality

Framework

Levels (1-10) 2

Process

Prepares person to/carry out processes that are repetitive, on a regular basis, with little application of understanding, more of practice.

Professional Knowledge Material, tools and applications in a limited context, understands context of work and quality.

Professional Skill

Limited service skills used in limited context; select and apply tools; assist in professional works with no variables; differentiate good and bad quality.

Core Skill

Receive and transmit written and oral messages, basic arithmetic, personal financing, understanding of social, political, and religious diversity, hygiene and environment.

Responsibility No responsibility; works under instruction and close supervision.

Qualifications Pack –Occupational

Standards for Capital Goods Industry

Course Materials for Welding

Skills Demand Indicators

• Green (2013)

– Occupational Classification in Major Groups

– Wage Rate

– Domain/subject of training and education requirement

– Occupation Classification at 4-digit or higher level measures occupation specific job skills – O*NET

– Prior Education, Training, and Experience Levels Required to do Jobs

– Generic tasks performed

– Domain/subject of training and education requirement

These we can measure

ASPIRATIONS

Challenges

Education Aspirations of Chief

Wage Earners

All-India

Distribution of

CWE Satisfied

Illiterate 26.8 42.1

literate but without formal schooling 3.6 40

up to 4th standard 8.3 44.6

primary (completed 5th–7th) 15.5 48.4

middle(completed 8th–9th) 16.2 51.9

matric (completed 10th–11th) 14.3 62.5

higher secondary (12th) 6.8 67.2

technical / diploma/ vocational 1.2 81.4

graduate 5.1 83.7

post–graduate 1.7 87.7

professional & higher research degrees 0.6 95.4

Total 100 53.1

Source: NCAER-NSHIE 2010-11

Returns to investment in education

and skill or perceptions

• Delhi Distribution of CWE Satisfied

Illiterate 7 66.3

literate but without formal

schooling 1.6 64

up to 4th standard 2.1 80.2

primary (completed 5th–

7th) 8.1 77.7

middle(completed 8th–9th) 13.2 80.5

higher secondary (12th) 14.3 93.5

technical / diploma/

vocational 1.4 96.6

Total 100 88.6

Source: NCAER-NSHIE 2010-11

Aspiration for a Graduate degree

dominates

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

illiterate literate butwithoutformal

schooling

up to 4thstandard

primary middle matric highersecondary

Aspired Education level of Chief Wage Earners without a graduate/technical degree: All India, %

technical / diploma/ vocational graduate/professional and above

61.% of CWEs are working in

occupations of their choice

05

10152025303540

Aspiration for Grade 4 Job with Regular Salary: Skilled vs. Unskilled (all-India), %

Regular salary - Grade 4 Unskilled Regular salary - Grade 4 Skilled

Source: NCAER-NSHIE 2010-11

JOB CREATION

Challenges

Decline in output elasticity of

employment

Source: Basu, D. and D. Das (2016). Employment Elasticity in India and the US, 1977-2011:

A Sectoral Decomposition Analysis. Economic and Political Weekly. Volume L1. No. 10. March 5.

But what about post 2011, a time

of business uncertainty

Source: NCAER BES Surveys

-2.0-1.00.01.02.03.04.05.06.07.08.0

0.020.040.060.080.0

100.0120.0140.0160.0

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2011-12 2012-13 2013-14 2014-15 2015-16

IIP

(%

yo

y)

BC

I

NCAER Business Confidence Index and IIP (%y-o-y), 2011-12 to t0 2015-16

BCI IIP Manufacturing Growth Rate

Labour Markets show few signs

of movement

0102030405060708090

Percentage of Respondents: Changes in Labour Employed over the Last Three Months, April 2007 to

April 2016

No change in skilled labour employed over the last three months

Increae in Skilled labour employed over the last three months

No change in unskilled labour employed over the last three months

Increase in unskilled labour employed over the last three months

Source: NCAER BES Surveys

And hiring has been weak

0

20

40

60

80

100

Percentage of Respondents: Expected Changes in Labour Employed over the Next Six Months, April

2007 to April 2016

No expected change in skilled labour employed over the next six months

Expected increase in skilled labour employed over the next six months

No expected change in unskilled labour employed over the next six months

Expected increase in unskilled labour employed over the next six months

Source: NCAER BES Surveys

The 3-E Challenge in India

Education

• Primary • Secondary • Higher Secondary • Tertiary

Employability

• Job-Relevant Skills • Technical Skills • Problem-Solving Skills • ICT Skills

• Inter-personal • Socio-emotional • Language and Communication Skills • Working in a multi-cultural and diverse environment

Employment

• Creation of Jobs • Incentivising People to take up Jobs • Informal Sector • Manufacturing vs. Services • Entrepreneurship

Thank You!