India’s skill shortage: A paradox that threatens growth

India presents a paradox of skill shortages despite a situation of labour surplus, which threatens the growth story. Leading infrastructure firms in the country like L&T are seriously concerned that they are not getting enough skilled labour for their operations despite a growing reserve army of educated unemployed youth, reflected in joblessness rates as high as 8.1%. The shortage is across business segments. According to SN Subrahmanyan, chairman and MD of L&T, “the lack of skilled hands continued even after the pandemic, the time when the labourers migrated back to their villages”. All of this is not good news for the NDA government’s objectives to become a $5 trillion economy through an infrastructure-led growth push that entails $300 billion of investments every year in roads, railway infrastructure, seaports, airports, transport, gas, and inland waterways. As the Union Budget doesn’t have the surpluses to provide massive fiscal support, private investors have to do the heavy lifting.

The country is currently experiencing an alarming shortage of 150 million skilled workers, up from 138 million three years ago, according to TeamLease Services, a leading human resources development consultancy firm. If we restrict the focus to infrastructure, there is a need for 33 million skilled workers in building and construction and 18 million in transportation and logistics. Skill shortages in construction are indeed a serious problem as it derails India’s rapid growth trajectory.

This industry is vital to building physical infrastructure as it accounts for more than half of the investment required for setting up facilities like ports, power projects, roads and bridges. Although the construction industry accounts for a substantial proportion of jobs generated in the country, more civil engineers, hi-tech welders, and bricklayers are needed. In transportation and logistics, trucks are idle because of the shortage of drivers. The steel industry needs more metallurgists. The upshot is that the requisite skills and training to the workforce in infrastructure must be imparted in a mission-mode.

The NDA regime’s response to address skill shortages is through three iterations of its flagship programme, Pradhan Mantri Kaushal Vikas Yojana. But the results have so far been underwhelming. Since 2015, the government has been able to enroll 14.3 million people, of which three-fourths have been certified and one-fifths have been placed. If we consider short-term training, out of the 5.6 million certified candidates, only 43% were placed, according to the PMKVY dashboard. This programme cannot really take off without the greater involvement of India Inc, which knows exactly the sort of skills required for its operations. The challenge is indeed daunting as the average Indian worker has less than 8 years of education, much less than the 14 years of a typical worker in China. Only 5% of India’s workforce has received formal skill training as against 80% and 96% in countries like Japan and South Korea.

While skill shortages must be tackled through India Inc-driven training programmes, there is also a need for change in mindsets, especially the aversion to blue collar work. Educated persons spend long periods in unemployment looking for suitable openings in government, often settling for lowly openings like peons despite their higher educational qualifications. This state of affairs will not improve so long as the ruling dispensation addresses the imperative of generating more jobs through quick-fixes like mandating the filling of a million jobs in government. Financial Express