PEOPLE’S knowledge and skills play a role in the development of society. The importance of human capital as a source of economic growth is gaining in emphasis, especially with the shift from an agricultural-industrial economy to a knowledge based one. India though rich in human capital is poor in human development. The challenge is to reduce this gap and the responsibility lies with the three major stakeholders: government, the education system and the labour market.

The responsibility of government is to develop the country, that of education to develop human capacity and of the labour market to develop productivity. These three circles are interlocked and overlapping, with shared responsibility and benefits. But so far, the various stakeholders have demonstrated little intention to synergise their efforts.

The Report of the Working Group on Adolescents of the Planning Commission makes a poignant commentary on school education: ‘Despite some attempts to make the school curriculum joyful and child-centred, what is taught in school is still far from being relevant for the majority of our students. As a result of an irrelevant and poorly designed curriculum, a large proportion of children drop out before they complete elementary school. Most children who drop out are from disadvantaged families and failure in school draws them deeper into the "nexus of disadvantage". The last few decades have seen a rising tide of educational aspirations, especially from the poor and disadvantaged. However, their hopes of quality education are massively frustrated.’

This summing up of school education is telling and the situation in higher education is as dismal. The governance and administration of higher education in India is synonymous with state policy and diktats. The Ministry of Human Resource Development, the University Grants Commission and the statutory bodies for professional disciplines work as the collective control mechanism for higher education in our country. These organizations are the think-tanks, policy formulating bodies and the regulatory authorities all rolled into one. It is from this apparatus and through the government universities that higher education is delivered.

 

There is of course the private sector, consisting mostly of non-profit colleges, but they are affiliated to government universities and are thereby kept in rein. Many of these private colleges fall in the missionary category, such as Loyola and St. Xavier’s in various cities. They have been around from before independence, are of high quality and are trusted. In another category are the entrepreneurial institutions, sometimes referred to as capitation colleges. They have grown in number, especially in the realm of professional education, are often embroiled in controversy and are considered suspect. They resist state control and are often at loggerheads with government and have an uneasy relationship with the statutory councils. Overall, the private sector has little say in matters of higher education in the country.

The university system is antiquated, the curricula are behind-the-times and research inadequate and of poor quality. Small wonder then that only one Indian university figures in the top 500 in the world. Of course there are high quality state run institutions that cannot escape mention, such as the IITs (Indian Institute of Technology), IIMs (Indian Institute of Management) and AIIMS (All India Institute of Medical Sciences). The most noteworthy aspect of this group of institutions is that they are free from the statutory control of bodies like the AICTE (All India Council of Technical Education) and MCI (Medical Council of India). Hence there is a strong argument for loosening the stranglehold of these bodies on professional education. In a recent survey of higher education, the Economist observed that worldwide statutory controls were being relaxed in favour of institutional autonomy. The lone exception was India, where in fact, government control is tightening.

A major attempt by the government to increase employability and address the needs of the labour market is vocational education, emphasized in the National Policy on Education, adopted in 1986. By 1994, almost 0.91 million were enrolled in 16,450 vocational sections in 5,701 schools. However, the quality of the vocational courses is a cause for concern. According to a Planning Commission report, the progress was considered sluggish and the links with industry weak.

 

The experiment of setting up a ‘land army’ in Karnataka in the 1970s to raise the level of skills among the youth, has been inadequately studied and seems to merit careful re-examination. The Karnataka Land Army Corporation was originally established to provide employment to the rural unemployed by taking up labour oriented works in drought prone areas such as construction of minor irrigation tanks, percolation tanks, rural roads, low cost houses, school buildings, rural hospitals and hostels for the rural students. KLAC, however, has become increasingly controversial because of allegations of corruption and poor quality of work.

University education, except for a handful of noteworthy exceptions, has failed our students. The suitability of university graduates in low-wage countries was the subject of a McKinsey Global Institute study in 2004. Only 25% of Indian engineering, IT and management graduates were found suitable for employment. Among arts, science and commerce graduates the figure was a dismal 10%. The study described the reasons for the low quality of Indian graduates (see Table I).

 

The reform of higher education is one of the three ‘high priority areas’ listed by the All India Management Association in order for India to become an economic powerhouse. The report bemoans the fact that despite numerous committees and commissions, little has been done to align university education with national economic development.

Given this patchwork scenario in higher education, it is hardly surprising that there is a disconnect with the world of work, especially the labour markets. There is no focused effort to create courses that are consonant with India’s development needs, match course content with industry needs, or provide life or career skills to students. The higher education establishment has failed to reach out to industry, and is therefore pathetically out of touch with market realities. No one is steering the ship.

 

The labour force participation rate (LPFR) is a measure of the proportion of an economy’s working-age population that is economically active; it provides an indication of the relative size of the supply of labour available for the production of goods and services.

The labour force participation rate in India has remained between 42-43% for the last 30 years. The figure for rural India is around 45% and for urban India around 36%. For males it has remained around 55% and for females about 29%. However, with age-standardisation, a clear decline can be observed in the young population aged 10-24 years. The main contributory factor is increased enrolment in school and college. Another recent observation is the increase in LFPR for urban females, perhaps because of the rise in proportion of high school and college graduates in the subset. The current low figure for women may actually be higher, given the discrepancy between the census and the National Sample Survey figures, possibly due to response errors. Many women who perform multiple roles may consider household work more important than their paid job and respond accordingly.

 

The 1993-94 data shows a small decline of in the level of unemployment. According to an appraisal of the Planning Commission, unemployment rates for male and female in both rural and urban areas have declined from 1987-88 to 1993-94. However, thin sample surveys showed an increase in unemployment rates in 1994-95 and 1995-96, which declined in 1997.

The unorganised sector of employment is expanding because compared to a labour force growth at 1.5%, the organised sector employment is increasing at less than 1%, primarily due to a sharp reduction in the rate of growth of employment in the public sector. In the organised sector, growth of private sector jobs, however, has accelerated after 1994, and has been much higher than in the public sector in recent years.

Informal sector workers dominate the Indian labour market and represent some 90% of the total Indian workforce. India’s unorganized sector is one of the largest, if not the largest, in the postindustrial world. The organized sector in India, according to the National Accounts Statistics of India, is defined as employment in the public sector and recognized educational institutions, and employment in enterprises registered under the Indian Factories, Bidi and Cigar Workers, Co-operative Societies and Provident Fund Acts. For statistical purposes, the remainder of the workforce is classified as being in the unorganized sector (see Table II). In more generic terms, informal employment comprises both self-employment in informal enterprises (small or unregistered) – including employers, employees, own account operators, and unpaid family workers – and wage-based employment undertaken without a transparent employment contract in both informal and formal sector enterprises.

 

The root of the problem is ‘jobless growth’ in the Indian economy, that is, despite an acceleration in the growth rate in India, the pace of creation of work opportunities has not kept pace with the growing requirements. In the post-liberalisation period, unemployment rose from 6.0% in 1993-94 to 7.3% in 1999-2000 resulting in an additional 27 million job seekers. The most disturbing fact is that of these 74% are in the rural areas and 60% among them are educated. The estimated number of unemployed today is between 50 and 100 million.

Education by itself does not generate economic growth, but contributes to economic growth. Education is not the only factor contributing to the problems of the labour market but direct or indirect relationships need to be examined.

 

The lack of training for work poses less of a problem in rural than in urban areas, in part because new entrants do not encounter difficulties in beginning work on the family farm or in the family enterprise. The continuing dominance of the agriculture sector and of self-employment in the rural employment structure still permits many new entrants in the countryside to take up the family vocation without any formal training. However, the Indian rural situation is no longer static and educated rural youth have also begun to look for urban-type work opportunities, particularly those with a reasonable performance in the public examinations.

The nature of work opportunities sought by the youth has also been changing because of the considerable growth in the number of high school and college graduates. According to the census data relating to the educational qualifications of the youth during 1981-91, the number of high school graduates or matriculates (including those obtaining a technical or non-technical diploma not equal to a degree) increased by 75% from 17.76 to 31 million, and that of college graduates rose by 96% from 2.43 to 4.77 million. The underlying average annual rates of growth of 5.8 and 7% are much higher than the rate of growth of employment in the organised sector, in which the matriculates and college graduates seek to be absorbed.

The ‘educated’ or the high school and college graduates seek non-manual work opportunities, particularly in the non-agriculture sector. In recent years there have been reports from some parts of India, such as the Saurashtra region as well as the fertile and prosperous Kheda district in Gujarat state, about the scarcity of agricultural labour because of the preference of the young new entrants into the workforce for non-agricultural work, which does not involve soiling the hands. Also, the preference for organised sector employment seems a rational response to the differentials between regular employment on the one hand and the casual work and self-employment on the other with respect to the security of work and other benefits such as the indexing of salaries and various kinds of paid leave enjoyed by the privileged workers of the formal sector.

Nevertheless the vast majority of the labour force is in the unorganized sector. What are the educational needs for this segment of the labour force to increase their productivity? Literacy is basic, but more important than a formal education would be technical training in improved agricultural practices, small-scale industries and entrepreneurship.

 

The New Economy is defined by Wikipedia Encyclopedia as ‘The evolution from an industrial-manufacturing economy into a high technology-based economy, arising from new developments in the Internet, telecommunications and computer sectors.’

Though the New Economy addresses only a small segment of the labour market, it has grabbed much of the present-day media attention. Measures of human capital are now focused on scientific and technical manpower which form hardly one per cent of India’s total human capital. Even official government reports demonstrate this skewed approach.

Certain occupations are considered as characteristic of the New Economy. These sectors have grown substantially in India and projections for new jobs in 2005 are listed in Table III.

 

Little thought is given to careers or personal development. What passes off as career guidance is slanted towards commercial interests such as admission to private high-fee institutes and is provided by the institutes themselves or by self-styled counselling organizations which are often recruiting agencies for private colleges or industry. There are finishing schools which claim to enhance communication and presentation skills and groom students to perform well in job interviews.

Industry is not waiting for higher education to get its act together. Industry-oriented non-degree education is flourishing. There are innumerable computer institutes, some operating on a large and profitable scale like Aptech and NIIT, which also have centres in other countries. Many universities, public and private, offer distance education in New Economy disciplines through commercial franchises. Several MNCs like Microsoft, Intel and Cisco offer certification that enhances the resumes of job-seekers. Industry itself offers in-house training for new entrants. Some of these courses are six months long and offer cutting-edge hands-on skills. These courses are geared to industry needs and little thought is given to the all-round or long-term development of the individual.

To screen the huge numbers of applicants for new economy jobs, companies and recruitment agencies have resorted to personality, psychological and intelligence tests. These tests tend to be modelled on instruments used in the West. Even in those countries, the tests are often criticized for their lack of reliability and applicability across different cultures. Unfortunately, the tests have not been validated for Indian subjects. One ‘skills assessment company’ claims to have evaluated more than nine lakh candidates, including applicants for government jobs.

 

The government should focus strongly on literacy, primary and secondary education. In higher education, government institutions should support generic disciplines that are not market-oriented, extend support to institutions that offer access to disadvantaged students and provide guarantees for student loans. Private institutions should offer courses that cater to the market. The government should loosen the regulation of education, and permit institutions to innovate.

Industry and educationists should cooperate in developing curricula, in offering practical training and in conducting research in applied aspects, including testing for employability. The interface between education and the labour market (the school to work transition) could be smoothened by innovative programmes conducted by academia and industry. Career guidance, career management and lifelong learning should be another area of shared responsibility.

All stakeholders need to find ways to include the youth who are outside the school system.

 

References:

National Council of Applied Economic Research, New Delhi, 2005.

Work Orientation and Responses to Career Choices – Indian Regional Survey. The Promise Foundation, Bangalore, India, 2006.

Tan J.P. and A. Mingat, Education in Asia: A Comparative Study of Cost and Financing. The World Bank, 1992.

E. Balaji, ‘Mega Offering’, The Week, 3 April 2005, pp. 16-33.

M. Goyal, ‘Hot Jobs’, India Today, March 2005, pp. 32-44.

McKinsey Global Institute: McKinsey.com.

India’s New Opportunity 2020. All India Management Association, Confederation of Indian Industry and the Boston Consulting Group, 2003.

Quenching the Thirst: Meeting the Demand for Tertiary Education in Asia. Kai-ming Cheng. US/OECD Conference on Trade in Educational Services, 2002.

Newsweek, special edition, ‘The Knowledge Revolution’, December 2005, Education Section, pp. 86-95.

The Report of the Working Group on Adolescents for the Tenth Five Year Plan. Government of India, Planning Commission, 2001.

Prime Minister’s Council on Trade and Industry. A Policy Framework for Reforms in Education. Ambani-Birla Report, 2000.

International Labour Organization. Employment and Training Papers 36. Unemployment Among Youth in India: Level, Nature and Policy Implications. Action Programme on Youth Unemployment. Pravin Visaria, 1998.

International Labour Organization, Global Employment Trends 2005.

Asian Development Bank Report, November 2003.

Planning Commission Report, 1996.

Special Report: Higher Education. The Economist, 25 February 2005, pp. 63-65.

‘Test of Your Skills’, Outlook, 28 February 2006.