Skills Demography in India

skills

India is not only expected to become the most populous nation by 2020, but also the youngest nation. The average age in India is expected to be 29 by the year 2025 whereas the average age in countries like USA and China is expected to be about 37 years. During the years 2011-2020, the working age population is supposed to increase by 108 million and this working age population would account for about 28% of world’s total workforce. The growth rate of the working population is bound to increase the growth rate of the overall population and according to the calculations, close 64% of the total population is expected to be in the age bracket of 15-59 years of age by 2026 with only 13% of the total above the age of 60. India is also expected to enjoy the advantages of the demographic bonus till the year 2040 and the situation is different from China on many grounds. With the opportunities that are available with this short of shift, India can grow at a tremendous rate provided all opportunities are grabbed and all resources are put to the best use. India may also expect itself to be amongst the fastest growing economies in the world in the next 10-15 years, if labour productivity, domestic production, skill development etc, there is focus on empowering all the sectors.

The government is working towards improvising & enhancing skills in individuals and has come up with various projects for the same. There is also a wide gap when it comes to the informal and formal sector and efforts need to be made in reducing this gap too. The government of India has set up a target of providing skill development to about 500 million people of the country by 2022. While the country has a total training capacity of just about 4.3 million, it is expected a number as large as 12 million is expected to join the workforce every year. If we compare these statistics to countries like China and USA where the net enrolment for vocational courses crosses 11.3 million and 90 million respectively each year, India is far behind in this respect. The net enrolment in vocational courses in India is about 5.5 million each year. Thus, it is very clear to note that the country faces severe challenges when it comes to imparting employable skills to the population and something needs to be in this regard, only then the demographic dividend would work in our favour.

Around 93% of the Indian population is employed in the informal or private sector where there is hardly any formal skill training. Even for highly qualified individuals in the society, the employment scenario is not very pleasing. For instance, out of 0.2 million engineers that graduate every year, only 20% of them are readily employable. A large proportion of our population lacks skills and as a result, there is shortage of skilled workers in the country. Out of all the individuals employed in the informal sector, about 83% do not receive any skill training at all, not even informal skill training. If the situation is compared to the leading economies of the world, the pictures becomes more clear. Countries like South Korea have skilled workforce close to 96% of their total population, countries like Japan and Germany also stand at 80% and 75%, respectively. Whereas in India, the skilled population accounts for only 2% of the total workforce. In the present scenario, it is very difficult to consider that the demographic dividend would bring benefits because having a young population alone is not enough to accelerate the economic growth if there is no skill development. The population would rather end up becoming a liability.

While countries around the world are expecting a shortage in their workforce, by about 56.5 million workers, India, on the other hand currently has the potential to have a surplus of about 40 million workers by the year 2025. With about 2 billion english speaking people, which is more than the population of many countries, India is expected to become the youngest nation by 2020. India not only has the potential to achieve a target for its own growth but also has the potential to become a worldwide hub for sourcing labor or workers. Countries around the globe are facing a shortage of workers in many fields like manufacturing, engineering and sciences, logistics, construction etc. Currently, India’s share in the global market for outsourcing is about 37%.

The poor skill development in India is attributed to a number of factors that the government and private institutions need to work towards, collectively. The high school dropout rates are very high in the country. There is lack of a formal educational vocational framework and there is high variation in the quality too. Even in the professional courses that individuals take up, there is lack of job ready skills. These skills are not imparted to the individuals who take up that course and they end up being unemployable. There is not enough capacity to impart formal skill training to all the individuals joining the workforce and there is also a negative perception towards skill training. There are also disparities between the urban and rural areas, while the people in urban areas have a higher chance, as high as 93% to receive formal training, people in rural areas are often devoid of these opportunities. Also, a person with a high school degree has a higher chance of getting trained than a person who is illiterate.

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