Now is the Time for Interns

The chief concern for India since 1947 has been employed poverty rather than unemployment (relatively low as 4-9%). There are three solutions to this problem: productive industries that provide fair employment, employers with the ability to pay high wages, and skilled employees for productive work.

The new budget has good initiatives for mass prosperity to ensure India’s place among the top 50 for per capita GDP, in addition to our current 3rd GDP rank for PPP. It also makes us good ancestors by bridging the gap between available jobs and required skills, making employment attainable and sustainable, especially for freshers.

The timeline of 72 years for 1.4 billion Indians to cross the GDP of 6.6 million British was not preordained. It was primarily the result of misplaced biases of romantics, elitists, welfarists, bureaucrats, macroeconomists, and trade unionists who prevented the growth of high-wage, non-farm employment.

Romantics have a biased vision of private employers believing they are similar to government entities with infinite resources. Elitists, on the other hand, believe that private employee salaries are paid by owners and not by the revenue generated by the customer. Welfarists trust the possibility of replacing private jobs with government debt financing. Bureaucrats assume that statutory employer benefits are separate from salaries in the private sector. Macroeconomists over-rely on monetary and fiscal policies. Trade unionists advocate preserving jobs at the expense of creating new opportunities. All six perspectives lack a specific focus on the practical challenges of employers, employees, and job seekers.

The impact of budget interventions on high-wage jobs is arguable, but there are four fundamentals for employment: macroeconomic stability, physical infra, rule of law, and basic human capital. The budget’s plan to reduce the fiscal deficit to 4.5% helps curtail inflation expectations and minimize the cost of capital. The capital expenditure on infrastructure has tripled in the last five years, which will enhance the productivity of firms, notably the small companies. Corruption will decline with JanVishwas 2.0, integrating DPI for compliance and creating a National Open Compliance Grid. The 50-year interest-free performance-based loans for states shall apply only if they roll out labour codes, digitize compliance, remove employer penalties from state laws (about 20000+ jail provisions), and enhance basic human capital (mainly primary education and healthcare).

Hiring and skilling freshers is a challenge that requires in-depth analysis and effort. Employers hold back from hiring freshers as their inadequate skills lead to high training costs. Also, their education doesn’t teach the practical skill set needed at the workplace.   

Employers are ready to pay high for skilled workers but are hesitant to invest in training freshers due to three financial constraints: training pay done and the candidate doesn’t qualify (learning risk), training pay done and the candidate qualifies but is unproductive (productivity risk)  training pay done and the candidate is qualified, productive but resigns (attrition risk).

The budget focuses on taking risks to tackle two challenges: hiring and skilling freshers. Fresher hiring is addressable by lowering the employer’s cost, and fake employees can be managed by making the subsidies, a reimbursement, linking it with PF accounts, and demanding a year of employment for the benefits. Skilling freshers is feasible through the internship program, eliminating the need for employer investment in skill development. We are aware of five design principles for effective, scalable, and sustainable skilling programs:

1. Learning while earning
2. Learning by doing (practical experience)
3. Learning with qualification modularity (flexibility in the education system)
4. Learning with flexible delivery (education mode)
5. Learning with signaling value (learning experience with a reputed organisation like HDFC)

India has understood the value of practical learning for a long time. The 20-point program introduced in 1975 had apprenticeships as a core initiative, but it wasn’t widely adopted by employers. Though implementing Internship program is voluntary, the official recognition, stipend subsidy, and freedom to use CSR funds may attract employers to integrate internships into their hiring and training processes.  Employers who hire interns will realise the benefits like fast hiring, low attrition, and improved productivity at work. The policy, with its features (funding and qualifications), attributes to encourage more participation.

Avoiding overreliance on fiscal deficits and monetary policies makes us good ancestors. This budget acknowledges that the continuous drive for mass prosperity is to hire and train our young generations.