Stop Kissing All Those Frogs

China’s labour force is declining while India’s increases by 10 lakh workers every month. China’s farmto-non-farm transition happened to factories for exports. India’s fastest growing job roles are sales, customer service and logistics. Also, India doesn’t have the equivalent of a Chinese New Year weekend on Diwali, Eid or Christmas when 250 million people buy a train ticket to head home because we have not taken people to jobs on that scale.

In supply, the ‘degree premium’ in India is being replaced by the ‘skill premium’. This year, the bottom 20 per cent of engineers will get less salary than the top 20 per cent ITI graduates. Unemployable graduates is not a uniquely Indian problem. The world produced more graduates in the last 35 years than the 700 years before it. Consequently, 60 per cent of taxi drivers in South Korea, 30 per cent of retail sales clerks in the US and 15 per cent of high-end security guards in India have college degrees.

Just don’t let the princess turn into a frog

The case for employers engaging apprentices is strong: taking employees for a test drive, ensuring training is functional and firm-relevant, judging soft skills, lowering attrition, creating a pipeline for talent, lowering per-hire cost by lowering rejection rates, etc.

Soft skills are increasingly valuable, yet are hard to teach and are almost always learnt on the job. Apprenticeships offer a solution to the market failure in skill financing. Employers cannot pay for the manufacture of their own employees because of three holes in the bucket: (a) you pay for training but the employee does not get the job, (b) you pay for training and he gets a job but is not productive, and (c) you pay for training and he gets the job, is productive but leaves.

The three risks of hiring, productivity and attrition have created a financing failure in which employers are willing to pay a premium for trained candidates but not pay for training. Which means employers have not been able engage with the National Skill Development Mission with the numbers that policymakers expected.

This can change because apprenticeships offer a solution for the broken model for bottom-of-pyramid hiring. But this will only happen if skill development is seen by employers as core to their growth and productivity rather than CSR or philanthropy.

At a recent job fair where employers were only hiring experienced people, a frustrated fresher said, “You tell me that you will not give me a job without experience. How do I get experience without a job?” This chicken-and-egg problem plays itself out on a daily basis for lakhs. The only way out of this is to become ‘vegetarian’: do something completely different. One hopes that employers are paying attention. Because we know they are tired of kissing frogs to find their princess.

(Sharma is joint secretary, ministry of skill development, and Sabharwal is member, National Skill Development Mission)

This article was published in Economic Times