Data on jobs: Be careful what you wish for
Some of us have long felt that India’s poverty industry and poor people lived on different planets. But the poverty industry’s reaction to new data from Employees’ Provident Fund Organisation (EPFO)/Employees’ State Insurance (ESI)/National Pension System (NPS) confirms they don’t live on different planets but a different gamma quadrant. Job seekers —mostly young and poor —know that a formal job is better than an informal job (higher wages) and an informal job is better than no job (wages higher than zero). Yet, the poverty industry’s predictable and patronizing reaction to the massive increase in formal jobs implies that a new formal job is not a job. I’d like to make the case that jobs are yesterday’s war; India’s tryst with destiny lies in formal jobs.
Voltaire said doctors prescribe medicines of which they know little, to cure diseases of which they know less, in human beings of whom they know nothing. Intellectual humility in diagnosis is key to be an effective writer of prescriptions. The current debate about jobs demonstrates that the poverty industry’s diagnosis for India is jobs, yet most of our youth know they can get “a” job but struggle to find a formal job that pays them the wages they need or want. India’s youth —there were 100 million new voters in the last election and there will be 100 million new ones in 2019 —has raised its aspiration from subsistence wages to living wages. And the way to meet these aspirations is not yesterday’s stale thinking (throw money from helicopters, mandate a three-day workweek, take away their shovels and give them spoons) but raising the productivity of our firms and workers. This needs formalization, financialization, urbanization, industrialization, and human capital.
American politician Daniel Moynihan said, “You can have your own opinions but not your own facts”. The notion that the new EPFO/ESI/NPS data is not true, important or positive is delusional. The data is truer than survey data; it represents actual cash being deposited into an individual account linked to Aadhaar. The data is important because it gives researchers, policy makers and employers new data across time, ages and regions. And the data is positive because any increase in formalization whatever the source (GST, demonetization, better enforcement, amnesty, rediscovered morality, etc.) improves the lot of Indian workers and puts our economy on a trajectory of higher productivity. India must have diverse opinions about manufacturing vs service jobs, impact of automation on employment elasticity of growth, the diminishing role of capital in job creation, whether the only way to help farmers is to have less of them, etc. But we must unpack opinion and fact. There are four sources of employment data: household surveys, enterprise surveys, administrative data, and data from government schemes. Both survey and administrative data are needed to keep each other honest but the notion that survey data is superior is unfair (29% of Indians in our household survey say they work for an enterprise with more than 9 employees but only 1.5% of enterprises say they have more than 9 employees in our enterprise survey).
The original sin in labour market data and strategy comes from the National Commission for Enterprises in the Unorganised Sector (Arjun Sengupta report) that not only created confusion between informal enterprises and informal employment data but also surrendered by treating informality as undefeatable. To reuse a wonderful metaphor of Avinash Dixit of Princeton, informality is not like cancer but obesity. We must not think of informality as cancer, insisting that every malignant cell must be removed or will not come back. Instead, informality should be compared to being overweight or obese. The fight against obesity is hard and slow; victories are partial, and sometimes you regress. But keeping up the fight by all methods and at all times can mitigate obesity. Eventually the diet and exercise will become a way of life, and a healthier body will yield tangible benefits.
Informal employment is the slavery of the 21st century and arises from our sense of humour about the rule of law. This sense of humour shows up in transmission losses between how labour laws are written, interpreted, practiced, and enforced. Why do only 1.2 million of our 63 million enterprises pay EPFO or ESI? But it is becoming tougher for enterprises to hide; the 50% increase in GST-registered enterprises to 11.5 million means that EPFO payers should be closer to that number than a tenth of it. By holding our bad employers accountable, we stop handicapping our good employers. The task of formalisation is far from over; we need to amend all labour laws to adopt the IndiaStack (paperless, presenceless, cashless), replace our 25+ numbers with a unique enterprise number, and move forward on a single labour code (instead of the proposed 3 or 5). Our current labour laws need overhauling because they choose the old over our young.
India’s poverty industry draws inspiration from Karl Marx but clearly doesn’t take his advice: “You can describe the world in thousands of ways. The point, however, is to change it.” India’s labour market has new data and many new formal jobs. Now, that is change we haven’t seen in a long time.
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Read MoreForget all doomsday forecasts, India’s IT employment will double in five years
Employers will be increasingly frugal with training budgets, but employees have options that include external certifications, MOOCs, building applications for fun alongside a community to practice, code challenges, and hackathons.
On July 6, 1900, Dadabhai Naoroji gave a speech in England raising his “drain theory” suggesting that the wealth transfer by the British was bleeding India with devastating consequences. US president Donald Trump, who thinks in Twitter, could not have read Dadabhai’s remarkable 1901 book, Poverty and un-British Rule in India, but his rhetoric against India’s IT industry seems borrowed. Trump is wrong—India’s IT industry is not exploiting or draining America but is actively contributing to its innovation ecosystem. And his actions—the latest threat is not renewing H1-B visas—will only amplify and accelerate the competitiveness of India’s IT industry. We make the case that India’s IT employment will rise from 40 lakh to 80 lakh in the next five years, but this will be accompanied by a substantial rejig of its people supply-chain.
The notion that India’s IT industry will employ less people in the future is shallow, ahistorical and impulsive. The relentless march of technology—automation, machine learning, big data, social, mobile phone penetration, cloud, etc—mean that every company is now a technology company. Companies are disproportionately investing in “change the business” over “run the business” and need to deploy code surrounding every person, place or thing. India only has $150 billion of the $1.4 trillion global industry even though over 75% of Fortune 500 companies source from India. India may be reaching the same network effects in IT that China has in manufacturing; we produce more engineers than China and the US combined, more people speak English in India than they do in the US, India has more than 500 captive global development centres, five of the top-10 IT service companies by market capitalisation are Indian, and 75% of employees in the top-10 IT service companies are Indian. But the world of technology is changing, and let’s look at the implications for employers, employees, and policy makers.
Indian IT companies have gracefully transitioned three S-curves—mainframe, client-server, and internet—but their ability to reinvent themselves over the next 10 years depends on a massive re-imagining of their people supply chain. Training will need to be shorter and more online. Organisational structures need to morph from cylinders to pyramids on their way to Eiffel Towers. This means sharper performance management that may include a replication of the Colonel Threshold of the Army (if you are not shortlisted for promotion at this stage, you retire early). Committing to campus hires a year ahead with no clarity in demand has led to postponed or unhonoured offers that are bad for brands; fresher hiring will need to move to an apprenticeship model that creates learning-by-doing and learning-while-earning but allows employers to take students for a test-drive. Employers will also need to explore, prepare, match, and deploy partnerships with universities for just-time supply. And employee costs needing to be more variable than fixed, which means that a larger proportion of the workforce will have to be on fixed-term contracts. Finally, delivery models where groups of people from various horizontals worked in an inefficient linear workflow need to be reconfigured into a collection of full-stack development with industry expertise.
With the employment in IT shifting from a lifetime contract to a taxicab relationship, employees will have to think about their personal brands, continuously upgrade technical skills, and nurture soft skills. Upskilling is key to the wage premium; a programmer with Java /C #/Python skills can become more relevant in three weeks along with database skills in Mysql/Oracle/MS-SQL. An 8-10% wage premium comes from three weeks of investment in HTML/JS /CSS. A 15% wage premium comes from a four-week investment in server-side programming skills like servlets/JSP/Struts/Spring/Hibernate with familiarity of frameworks such as EJB that starts the journey into becoming a full-stack developer. Another 20% wage premium comes from four months of intense learning of more server-side programming using the Groovy/Grails/Django framework and learning niche front-end development skills like Angular JS/React JS. At this point, the programmer should choose an industry vertical and spend another 2 months becoming MEAN by picking up skills like Mongo DB, Node.js, and Express.js. The rest of the year can be spent picking up Python, R, Hadoop, and AWS/Azure. Extending interactions with colleagues in Infra will help relate to server management and the impact of code on the performance of applications. The employee, at the end of three years, should hence aim at having a set of keys that opens any doors to the web at a premium she commands. Employers will be increasingly frugal with training budgets, but employees have options that include external certifications, MOOCs, building applications for fun alongside a community to practice, code challenges, and hackathons.
There are important upsides and downsides for education policy makers. The downside is that the huge wage premium in IT meant that annual engineering capacity expanded from 3 lakh to 15 lakh over the last 15 years, but the demand-side for 3 lakh freshers per year will not change soon. This means excess capacity will need to go off the market, or its hardware and software will have to be rejigged for other vocations. But the upside is that engineers will finally be available to other professions; this synchronises with the surge in India’s spending and hiring for domestic consumption and infrastructure. This shift—if supported by regulatory change—could greatly expand vocational universities, apprenticeships, and online learning. The notion that India’s IT employment will decline is delusional; the future is bright but is different from the past. But the future does lie in IT companies making their brittle people supply chains more flexible.
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Read MoreDisrupting Higher Education
The future of education and jobs is unknown. That doesn’t mean we can’t prepare for it
In 1934, Nalini Ranjan Sarkar – the forgotten genius who chaired a committee in 1946 that recommended setting up IIT’s – said “There is a great need not only for a policy of action to deal with a pressing situation, but also the provision of a new conception of social and economic organizations. Unless something is done quickly, there is a limit to the sufferings that will be borne by a traditionally patient people”. Mr. Sarkar’s words apply equally to higher education in 2017; India’s youth are tired of degrees that don’t lead to jobs and employers are tired of employees that don’t have skills. India’s higher education needs urgent deregulation to create the space for innovation by new organizations because the current system is weak at delivering low costs and employability.
The mental conception of a University for most rich people is Harvard or Oxford; a big campus with big people thinking big thoughts and big selection criteria that create big signaling value. But is this 500 year conception valid for the next 50 years? And is this conception shared by non-rich parents or children who did not choose their parents wisely? Most people see higher education as a ticket to a job but the return on investment – fees paid relative to salary at graduation – for non-top-tier universities all over the world is rapidly declining (it’s no coincidence that 30% of engineering seats are empty in a year that the top 20% of ITI graduates will get more salary than the bottom 20% of engineers). This low employability is further complicated by noise around the future of work; threats from manufacturing automation, machine learning, trade protectionism and lower immigration suggest that you can’t predict where jobs will be. What should policy makers do? We suggest three steps.
The first step is policy makers accepting that the future of jobs is unknowable. The 50+ reports by various countries predicting where jobs will be in the future have the efficacy of palm reading or astrology (more than 50% of the jobs created in the US in every decade since the 1960s did not exist in the decade before that). Universities traditionally delivered a wage premium because a) the Gross Enrollment ratio – the percentage of kids in college – was small and thus signalling value was high; most honest alumni will agree that IIT is a good place to be at but a better place to be from, and b) Economies and companies were more stable and predictable before the advent of globalisation, digitisation, and automation (the average life expectancy of a Fortune 500 company has come down from 65 years to 15 years in the last 68 years). Does the future lie in jobs that are blue-collar (machine-facing), pink-collar (computer-facing), or white-collar (people-facing)? Nobody knows, and as change to the world of work accelerates, the job of education policy makers is not to predict the future but to make the system self-healing.
The second step is policy makers accepting that the future of university education is unknowable. Is it Physical classrooms or Online classrooms? Text or Multimedia? Degrees or Apprenticeships? Study before working or continue education? Or creative combinations? We recognise that our vision of a future of university education – on-the-go, always-on, on-the-job, on-site, on-demand, crowd-sourced, and gamified – will probably horrify traditional university academics. But nobody knows who is right. Unfortunately, traditional academics have captured regulators with their definition of a university that confuses university buildings with building universities. India needs policy space for innovation—allowing a number of statistically independent and genetically diverse life forms in higher education – that is impossible with the current mindset of prohibited till permitted.
These two steps lead to the third: a bold policy agenda that destroys the regulatory cholesterol in the next budget. The legal context of universities must be revamped by separating the policymaker, regulator, and service provider. Policy must recognise that large universities that pray to the one god of employers can coexist with small universities that focus on research and knowledge. This means equivalence for learning delivered on-the-job, on-site, online, and on-campus. And it involves lifting the ban on online education for all Indian universities (state or central, private or public, young or old). The role of policy is not to set things on fire (decide what higher education looks like or pick winners and losers) but to create the conditions for spontaneous combustion. Our regulatory cholesterol has not only hindered innovation but also created an adverse selection in higher education in both the private and public sectors; the hugely prescriptive, subjective, and hardware-obsessed norms mean that most higher education entrepreneurs are either criminals, politicians, or land sharks. And the lack of autonomy for public institutions means that there is no fear of falling or hope or rising for teachers or leaders.
An MHRD report last week suggests huge progress in quantity; we have 35 million students in higher education in our 51,000 colleges and 864 universities. Our three-year goal should be 50 million students. But everybody must be employable and pay lower fees. This is impossible without online delivery and vocationalization.
Source: First Published in Business Standard, 19 January 2018
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Read MoreFake agents leave job seekers in port project all at sea
An article in Hindu Business Line talks about how fake recruitment agents are on the prowl in Kanyakumari district; along with inputs from Kunal Sen and Rituparna Chakraborty.
The international container transhipment port in Enayam is far from ready, but a fake job racket is already thriving. Enayam port officials caution against fraudsters cashing in on ‘PSU job’ mania
Fake recruitment agents are on the prowl in Kanyakumari district with fraudulent promises of jobs in the 27,570-crore Enayam port project, which is still on the drawing board.
Authorities at the VO Chidambaranar Port Trust in Tuticorin, the implementation agency, have cautioned people against falling victims to the racket, which has its roots in a stampeding towards ‘secure’ jobs in public sector units.
There have been similar reports, from Delhi and elsewhere, of fake recruiters luring prospective candidates with the promise of jobs in the private sector — and even in multinationals.
Public cautioned
“We came to know that some agents are collecting bio-data promising jobs in Enayam port,” said a port trust official.
Nor is this an isolated case: virtually everyday, companies and banks put out advertisments cautioning the public against such fraudulence.
All preliminary work related to the establishment of a major commercial port at Enayam is being dealt with by a cell formed with VOC Port Trust employees.
The recruitment of permanent employees will begin only after incorporating a company/Trust; all such recruitments will be made by the port authority based on government guidelines after duly advertising such positions, the official said.
Fake offers galore
Kunal Sen, senior vice-president of TeamLease Services, a recruitment agency, said fake job offers peak in June-August, when companies make campus offers.
Recently, the Delhi Police registered an FIR following a complaint by the Tata group. Police say there are over 50 fake call centres in Delhi-NCR duping job seekers by collecting money with promises of jobs in MNCs.
According to Rituparna Chakraborty, President, the Indian Staffing Federation, fraudsters hoodwink the youth through fake advertisements, emails, and SMSes. They demand upfront payment from candidates as a registration fee, which is a sure-shot indicator of fakery.
Youngsters from small towns fall victim and even give away personal details about themselves, which can be misused, she said.
This article was published in Hindu Business Line.
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Read MoreDismal jobs scene blights GDP growth
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Low private investments, rigid labour markets feed rising unemployment
The nationwide strike on Friday called by Central trade unions underscores the seething resentment among organised labour, which is accentuated by the poor rate of job creation despite headline GDP growth in excess of 7 per cent.
Economists and analysts acknowledge job generation is dismal, and blame it on weak recovery in private investments, uncertain external demand and inflexible labour laws. It’s not quite “jobless growth”, they claim, but more the inability to create employment for the 70 lakh new entrants to the workforce annually.
“It is wrong to call it jobless growth,” said Rituparna Chakraborty, Co-Founder and Senior Vice President, TeamLease Services.
“Jobs are being added, but not at the pace at which new entrants are joining the workforce,” she added.
“The government promised two crore new jobs per year. But unemployment is rising. Urban rate is 11.24 per cent,” tweeted CPI (M) leader Sitaram Yechury.
There are no official statistics to either validate or contest these numbers; the National Sample Survey Organisation (NSSO) collects data on employment every five years.
However, according to data on unemployment and consumer sentiments gathered by the BSE and CMIE, unemployment rate rose to 9.84 per cent in August 2016, against 8.65 per cent in July and 8.84 per cent in June.
The increase in unemployment in August was spread across urban and rural regions. Urban India continued to face higher unemployment rates compared to rural regions, perhaps owing to a slowdown in hiring in key sectors, including IT and e-commerce.
Dismal outlook on IT hiring
According to Nasscom, hiring by the IT industry in 2016-17 will be slightly lower than last year due to increased automation and pressure on margins. “Last year, the IT industry hired nearly two lakh employees. This year, we expect it to be lower,” said Nasscom President R Chandrashekhar.
Ashishkumar Chauhan, MD & CEO, BSE said, “The rise in unemployment in urban India poses a challenge. It is apparently an outcome of low capacity utilisation… and low investment activity.” The most recent GDP data reveals that gross fixed capital formation, which denotes investment, shrunk by 3.1 per cent in the first quarter of the fiscal.
Mahesh Vyas, MD & CEO, CMIE said the sharp rise in unemployment points to a possible slowdown in rural economic activity. Intense rains and flooding in parts of the country may have impacted agricultural labourers and non-agricultural rural daily wage-earners, he reckoned.
Worse than NSSO estimates
The BSE-CMIE data indicates that the employment situation “may be worse than what is depicted in the NSSO survey,” said Amitabh Kundu, Professor, Institute for Human Development. The most recent NSSO survey, in 2011-12, recorded that workforce grew to 47.41 crore persons from 46.55 crore persons in 2009-10.
The Labour Bureau’s most recent quarterly survey, conducted in September 2015, however, revealed that job creation in eight labour-intensive sectors had dipped to a six-year low: only 1.55 lakh new jobs were created in the first nine months of 2015, against 3.04 lakh jobs in the corresponding period in 2014.
According to Kundu, the data underline the government’s need to focus on campaigns such as Make in India and Skill India, and to address the low level of women’s participation in the workforce in rural areas. Rigid labour markets also don’t give employers much flexibility to hire, he noted.
A number of labour reforms proposed by the NDA government are stuck owing to opposition from the trade unions. Even the recent decision to hike minimum wages will add to the inflexibility in labour markets, experts say.
The International Labour Organisation has repeatedly voiced its concerns over the lack of adequate employment generation and the absence of quality jobs. “Most new jobs in the organised sector are informal,” it said in its Labour Market update for July 2016 for India.
High job growth possible
But it noted that the fundamentals to sustain high rates of growth in the longer term are in place in India, including favourable demographics, high savings and investment rates, and increased resources for infrastructure and skills development.
“The challenge is to ensure that these drivers of growth are associated with the creation of more decent jobs that are accessible to youth, women and social groups across the country, particularly in rural areas,” it said.
According to Santosh Mehrotra, Professor of Economics, JNU, there could be some recovery in employment generation in the next six months with the government’s focus on highway construction as well as its campaigns for Swachh Bharat, rural housing and roads.
This article was published in Hindu Business Line
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Read MoreSpurious MBA education – a useless, fancy, label
In background checks carried out during 2014 23% of all potential employees that were screened in India showed up a lie or a discrepancy, with more than half of this related to education. This statistic grows at 26% per annum and a lot of it originates in fake degrees and certifications obtained from dubious institutions. The MBA degree has seen a lot of clamouring by candidates in recent times. Between 2009-10 and 2013-14 the number of AICTE affiliated MBA institutes grew by 2% to 3,364 but the student intake increased by a whopping 15% to about 350,000.
The MBA supply side is comprised of an illustrious crown – about 20 top-tier institutions with sterling reputation and enormous industry clout, a set of about 50 – 75 institutes with modest credentials and equally modest output of graduates and placements, and a long tail of more than 3,000 institutes that have neither the academic competence nor the market credibility worth the lacs of rupees of fee they charge students for. A substantial tail-end, though, is a bunch of dubious institutes that do not even qualify to be places of learning, let alone business education, but masquerade their shiny facades and dole out spurious MBA degrees for as hefty a fee as the rest of the tail charges.
The aftermath? Hordes of mediocre – or less – MBA degree holding ‘graduates’ that infest the job market with fake degrees and, worse, near-zero employability. Still, poignantly, thousands of gullible young minds and their parents and / or caretaker-sponsors are duped to co-opt into the racket. One such unfortunate case rues, “It was all so rosy when they counselled me and hard sold the admission – fancy course names, who-is-who recruiters, the works – but all I am left holding now is this piece of paper not even worth the ink on it.” Similar stories abound the job market – conned candidates walking around with skin-deep management jargon, false labels, and poor communicating ability even.
What explains the gullibility is wide-spread false pride and societal pressure. Keeping up with pumped up aspirations, a generation of job seekers fall for an imagery filled with suits and ties, and visions of being catapulted into a board room to present pretty Powerpoint presentations. Parental expectations are driven by societal conditioning. The MBA is the new, shiny, qualification in town and we have to buy a ticket and board this gravy train.
So, it is not lack of awareness – on the contrary – but social anxiety overriding logic and reason. A parent of another fake-degree victim, has a hint of regret on his face when he says, “When the IIPM lid was blown it should have set alarm bells ringing in our heads. But, such is the influence of media and the facile impressions it makes on us, that the fleeting news of the exposure faded and the earlier, long running high-on-blitz and full page, advertising campaign and its trappings stayed on in our collective memories.” Short-lived factual memories and long-lasting aspirational illusions, may we say!?
Still, don’t parents and caretakers carry out even a semblance of due diligence before shelling out their hard-earned money on little-known institutes with high-decibel claims?
However, the lies must get called out some day – even if after a while – and further course of action could be initiated by the parents / caretakers? Apparently, they and their wards get fooled by not knowing what to expect from an MBA course and an excessive focus on latching on to the hopes of a degree. “An MBA course is popularly perceived to be more about broad-brush business awareness and personality development. And, even if these abilities have to be imparted, by parading a fluffy approach to doing so institutes get away with low-cost superficiality”, A professor at a mid-tier MBA institute says. He did a brief stint at a dubious institute before getting to know about its reality and quitting. “Some even project internships as an extremely crucial element of the course and try to put the responsibility of securing an internship on the students.” This way, the institute can cut back on facilities, overheads and faculty.
But is there a stage when the unmentionables hit the fan? At least with a few victims acting on late realization? The legal route is a long-winded option for already embattled parents who wish they could get back the fee amount at the very least. This, the institutes foresee and extract the maximum possible money right at the outset.
As the number of the unscrupulous dwindle, the ones remaining still manage to victimise the gullible. Separating fools and their monies is an art that does not require having an MBA, but selling one – a fake one.
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Read MoreReveal, recognise, resolve
Gap between global banks and Indian banks on bad loan recovery is set to narrow
There are five theories for why Indian banks recover so little of their bad loans. The first suggests something cultural about the repayment intentions of Indian borrowers. This is, at best, the soft bigotry of low expectations and, at worst, racism. The second theory suggests that many big bank loans are a child of political connections; this smells right.
The third theory suggests that many large Indian projects are gold-plated; indeed, many seem to have spent more money than needed. The fourth theory suggests that Indian banks have not really been making loans, but equity masquerading as debt. The fifth theory — probably the most important—suggests that the lack of a speedy and decisive bankruptcy process became an unfair advantage for large borrowers. Bad loan recovery will not improve immediately; some companies going bankrupt now first defaulted 15 years ago, so recoveries should be compared to zero. But the ongoing reboot of our bad loan handling regime—revealing, recognising and resolving — will enable higher future recovery rates, modify entrepreneurial behaviour, and lower future incidence of bad loans. Let’s look at the 3 R’s.
One, resolving. The Insolvency and Bankruptcy Code (IBC), a competent Insolvency and Bankruptcy Board (IBBI), and Bank IBC filings mean that Rs 3 lakh crore loans are under resolution. Some process tweaks are needed, but a new Insolvency Law Committee is detailing them. The recent decision on eligibility for bidders was important because of the practically non-existent track record of repeated in-situ restructurings. More importantly, we don’t live in an economy but a society; the sustainability of big changes depends on their fairness.
Two, recognising. India is one of the 160 countries to sign up IFRS 9, a new international accounting standard born of the policy feeling that banks recognised bad loans too little and too late in the global financial crisis. IFRS 9 has three stages. A small provision is made when a loan is made for expected losses over the next 12 months. But this provision can rise quickly to the expected lifetime loss of the loan in two phases with borrower credit risk changes. Previously, loans to risky borrowers with higher interest rates meant higher bank income but no provision if creditworthiness declined. This complex change will be phased over five years, but the RBI’s Asset Quality Review, without changing rules, has already required banks to provide Rs 4.54 lakh crore extra for bad loans.
Three, revealing. Banks, globally, improve recovery rates by “calling” loans (all future payments become due) immediately after the disclosure of payment misses or lower-case defaults (violations around information, ownership, liquidity, or operational covenants). Revealing defaults forces open lines of communication, enables good faith negotiation between borrowers and lenders, and shrinks the extended bankruptcy periods that destroy value. A good bankruptcy regime does not aim for liquidation but motivates a speedy renegotiation of financial viability if there is operational viability; this needs immediate, automatic, and universal disclosure.
Doctors know that emergency room medicine is triage followed by quick, invasive, and expensive procedures. But if the patient comes to the emergency room regularly, they need to lose weight and eat better. Current bankruptcy changes represent triage but are complemented with preventive measures from the RBI like capping exposures to companies and sectors, disclosing provisioning divergence, prompt correction action framework, a central repository of information on large credits (CRILIC), and a mandatory legal entity identifier in CRILIC for all borrowers of more than Rs 1,000 crore by March 2018 and more than Rs 50 crore by December 2019.
Two areas need more work: Governance at public-owned banks (Aristotle warned that when everybody owns everything, nobody takes care of anything) and revealing defaults (sunshine is the best disinfectant). A great new book Capitalism without Capital by Jonathan Haskel and Stian Westlake suggests the rise of intangible assets makes corporate banking riskier; the Rs 2.1 lakh crore nationalised bank recapitalisation must come with surgery to their business model (no big corporate lending), culture (capping growth rates), and accountability (governance). The second area of revealing defaulters needs reconciling conflicting legal, regulatory, liquidity, privacy, and fairness questions. But automatic, immediate, and universal disclosure should be a goal reached through interim filters for timing (a small lag) and materiality.
The wilful defaulter definition needs review; it’s a flawed application of the legal concept of mens rea (meaning intention or state-of-mind and implies differentiating between murder and death by car accident) because loan taking and giving is by definition risk taking with a range of outcomes including default, restructuring, and repayment. We need one definition of default, SEBI’s smart proposal for listed company defaults must be reinstated, and IBBI’s information utility activated. China’s solutions are unacceptable; being listed on the government website of defaulters last week means that Jia Yueting, the founder of $3 billion consumer electronics firm LeEco, can be restricted from using luxury hotels, private schools, golf courses, and airlines. But India’s status quo of even a loan classified as bad often not being known outside the bilateral relationship needs change.
India’s Rs 10 lakh crore bad loans are also a child of the breathless bank loan expansion from Rs 18 lakh crore to Rs 52 lakh crore in the six years before 2014. The decisive actions by the current RBI management team on bad loans break with its immediate institutional past by shifting from a personality cult to institutional solutions.
The over-intellectualisation and running academic commentary masked years of inaction on bad loans that deserve Poet Akbar Allahabadi’s quip: “Platoen ki awaaz bahut der se aa rahi he, lekin khaana nahin aa raha he (The sound of plates has been coming for a long time, but the food is not coming)”. A banking system that recovers its loans is an important part of India’s infrastructure of opportunity. The contours of this system are emerging.
Featured in Indian Express .
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“We don’t have a choice on whether we do social media, the question is how well we do it” according to Eric Qualman, best-selling author of Socialnomics and motivational speaker. This may be self-evident, but the way in which companies think about social media the risk vs the reward— employee engagement, impact on productivity, collaboration —is constantly evolving”.
According to a survey conducted by TeamLease, organizations that allow unrestricted usage of social media at their workplace risk losing 15% to as much as 45% of the total productivity owing to social media indulgence alone and around 32% of the total time spend on social media during working hours is used for personal work indicating a huge loss of official resources and productivity. This underpins the fact that even though employees may primarily access social networking sites for business-related activities, it does not necessarily signal business focus and can have a detrimental effect on productivity. Apart from the loss of productivity, survey respondents also described that the extensive usage of social media by employees has resulted in an increase in loss of confidential information, defamation, misinformation and employee solicitation.
Drunken driving however cannot be a case against cars. Social media is emerging as an important tool to help employees collaborate more easily and its valued by employees particularly when they operate out widely dispersed environments. For many others, like the millennials, social media has almost become a way of life and expression. Hence many organisations are adapting to this behaviour by channelsing important messaging, conversations and communications leveraging social media even if it is restricted within the enterprise. In an era where emails seem outdated to the new breed of employees at the work place social media has a potential to become the key messaging tool and at the core liberating for the new gen employees. With improved access to internet bandwith and speed in data transmission we are witnessing interesting innovations at workplace using social media. If organisations are able to connect employees with a strong sense of purpose the worries around misuse and loss of productivity can be minimised. As a matter of fact, motivated employees shall become trailblazers of channelising social media capabilities gainfully and intelligently to collaborate and innovate. One cannot wish away the important of social media at workplace today just like we cannot wish away the importance of Internet and there is no better testimony than social media gainst like Facebook and Whatsapp seriously considerly launching the enterprise versions of both these tools (already on BETA for same). The argument is really hinging on how much is too much. Anything unrestricted comes with its risk however a carefully designed social media policy can help employers optimise organisational needs with those of their employees. Some suggested measures would include :
Social Media Policy : Invite employees to cocreate a social media policy which meets the organisational goals yet doesn’t deny employees a platform of expression. Through extensive brainstorming and weighing all pros and cons a company wide policy of the do’s and don’t’s can be articulated. The same can be relooked at reasonable periodic intervals. Co-creation shall improve the chances of its acceptance and also make employees responsible for its usage.
Use Social Media for Internal & External Communications – If you cant stop them, its probably better to join them, where they are. Organisations around the world are struggling how to ensure that corporate vision and sense of purpose gets percolated down to every indvidual contributor within the company and in today’s time social media is probably the best platform to choose to achieve this objective. It is easy to relate to and use. It also helps them participate and share actively which enhances their sense of belonging and loyalty to the organisation.
Employees as brand ambassadors on social media – Empower employees to be social media ambassadors of the brand and one can without any doubt expect them to be responsible in its usage and the kind of communication that go out. Inspired by Enid Blyton’s popular “Naughtiest girl is a Monitor” wouldn’t be such a bad idea to make the most errant cases the ambassadors. It has its risks however the upside can be potentially mammoth.
If there is one thing to take away from this, it is the fact that social media is simply just a new medium for an old dialogue. There is no denying the fact that the biggest social media risk is actually in not involving your employees. Statistics reveal that socially engaged employees feel more optimistic about their association with the company and are overall viewed as the most credible voices on a company’s work culture and ethics, innovation and business practices. Employers should focus on fostering employee social conversations, cultivate employee advocacy within the organization and empower employees to shoulder the responsibility of being the voice of the organization. In Margaret Heffernan’s words for good ideas and true innovation, you need human interaction, conflict, argument, debate. Safe to say this is one debate which shall remain inconclusive.
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Read MoreMaking skills self-healing
One solution to India’s challenges of education, employment, employability lies in state govts adopting apprenticeships on a large scale
In 1935, a committee chaired by Tej Bahadur Sapru lamented about the problems of India’s educated unemployed. In 1948, India adopted an Industrial Policy Resolution that targeted manufacturing to employ the majority of our workforce. In 1975, Indira Gandhi made reform of India’s apprenticeship regime the 20th point in her 20-point programme. But in 2016, only 35 percent of our graduates are employable without repair, only 11 percent of our labour force works in manufacturing, and we have only 300,000 apprentices. We would like to make the case that an important solution to India’s challenges of education, employment, and employability lies in state governments adopting apprenticeships on a large scale.
The quest for predicting where jobs would be created in the long run is uni-versal—many countries and states have prepared reports like “Jobs in 2020” or “Employment in 2050,” but most have the efficacy of palm reading. Dynamic economies, by definition, continuously deviate from the status quo. Research suggests that 50 percent of the jobs created in the United States in every decade since the 1960s did not exist in the decade before that. Anecdotally, this number seems true for new recruits to the Indian labour force in the last 10 years (700,000 a month) and will be true for new recruits in the next 10 years (one million per month).
But if policymakers can’t model job creation, how do they decide what to train for? The inaccuracy of 10- to 20-year predictions hardly means that two-to three-year job visibility is hazy. More importantly, we must make our skill system self-healing, with three lessons from the last decade. First, we can’t teach people in a few months what they should have learned in 12 years, and the most important vocational skills are reading, writing, and arithmetic. So, fixing schools is an important skill agenda. Second, exploding the number of employers offering apprenticeships —today, India has only 25,000 versus more than 200,000 for Germany— will ensure skills keep up with work. Finally, 29 chief ministers matter more for job creation and skill development because there is no such thing as India’s labour market. Active state government apprenticeship programmes could take our numbers to the same proportion of the labour force as Germany’s (this would take India’s current 300,000 apprentices to 15 million).
Investment competition between states is increasing even as opportunities for offering investment tax incentives are diminishing. States are left with three levers for differentiation — ease of doing business, infrastructure and the skills of their labour force. Apprenticeships are a non-fiscal alternative to dead-end sub-sidy schemes such as the National Rural Employment Guarantee Scheme (NREGS) but don’t get the attention of state governments because of real and imagined reasons: central government in the driver’s seat, employer reluctance, student unwillingness, low social sig-nalling value, etc. But the natural learn-ing-by-doing and learning-while-earn-ing make apprenticeship more sustain-able, scalable and self-healing than other skill programmes.
We suggest that each state set up a State Apprenticeship Corporation (SAC) as a public-private partnership co-chaired by the chief secretary and the chairman of one of the state’s largest private employ-er. SACs will anchor programmes on state strengths such as tourism in Rajasthan, information technology in Karnataka and manufacturing in Tamil Nadu; target employers with different strategies for companies headquartered and those operating in the state; make employers volunteers by simplifying procedures and recognising perform-ance; create matching infrastructure, and enable higher education linkages.
SACs can work with the Board of Apprenticeship Training under the Ministry of Human Resource Development and the Regional Directorates of Apprenticeship Training of the Ministry of Skill Development and Entrepreneurship to open state offices. SACs could operate from an employment exchange in a state capital and slowly add apprenticeship offerings to employment exchanges across the state. SACs would create an interface suite (website, mobile app, and call centre in multiple languages) for employers, industrial training institutes, polytechnic colleges, private colleges, and students to match demand and supply. Most importantly, SACs would facilitate academic credit for apprentices by partnering with universities within and outside the state. India’s education system is imbalanced—we have 20 million people in physical college classrooms, three million in distance-learning classrooms, but only 300,000 in apprenticeship classrooms—even though we should be indifferent to the mode of delivery. Degrees and apprenticeships complement each other: one has social signalling value, the other employability signalling value, so states can inno-vate in their convergence. Over time, SACs could work with school dropouts by mobilising subsidy money (NREGS, etc) to subsidise apprenticeship stipends, but this should be done in phase two and only after putting in place appropriate processes and plumbing to avoid fraud.
Nobel Laureate Daniel Kahneman says, “Most successful pundits are selected for being opinionated because it’s interesting and the penalties for incorrect predictions are negligible. You can make any predictions you want, and later people won’t remember them.” Policymakers can try but will rarely predict where jobs are created. Apprentices can make the system self-healing — the global experience in this regard is positive. Germany has Europe’s lowest unemployment rate because of apprenticeships, and UK has found that employers gain 26 times their investments on apprenticeship stipends. Recent amendments to the Apprenticeship Act of 1961 create the space for innovation, scale, and higher education linkages for state governments. If they don’t take advantage, then who will? And if not now, then when?
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Read MoreCities: Our policy orphans
India’s farm to non-farm transition is being murdered by bad urbanization because cities have unelected or impotent leadership
The speed of an average taxi in Bangalore city is now 7 km/h; most people can walk that fast (so much for the productivity upside of the internal combustion engine). India could give every household half an acre and they would fit into Rajasthan and half of Maharashtra; if we had Singapore’s population density we could fit everybody into Kerala (so much for a land shortage explaining our massive overpricing of land). India’s real estate market has a dangerous 5% difference between rental yields and bank loan rates; in most countries these rates are equal (so much for the relentless pricing discipline of financial arbitrage). 25 crore Indians produce less food than 25 lac Americans (so much for the food security argument that wants to keep people on farms). All these points are connected via labour markets and we’d like to make the case that a) the only way to help farmers is to have less of them, b) our farm to non-transition is being murdered by bad urbanization, c) Bad urbanization is a child of city leadership that is either impotent or unelected. Let’s look at the each point in more detail.
India has too many farmers (250 million) and too many poor farmers (they are about 50% of the labour force but only produce 12% of GDP). The recent farm loans waivers represent what doctors call triage in the ICU; highly invasive treatment done under pressure with unknown but inevitable side effects. But India and Indian agriculture does not have a jobs problem but a wages problem and India’s wages will only sustainably rise when we cross the “Lewisian” turning point that is named after Jamaican economist Arthur Lewis’s hypothesis of critical mass in the farm to non-farm transition (China has crossed the Lewisian turning point with its famous 200 million Chinese new Year weekend migration coming down every year and Foxconn announcing that they will set up a factory 2000 km inland to pay the same wages as outside Hong Kong). The only sustainable way to help farmers is to have less of them by moving many of them into non-farm jobs.
Political imagination wants to take jobs to people but is hard to create jobs in our 6 lac villages; 2 lac of them have less than 200 people. So we have to take people to jobs. But does this mean shoving more people into Delhi, Mumbai or Bangalore or creating 200 new cities? We believe the inevitable migration of people into our 50 cities with more than a million people is being retarded by bad urbanization that has created a big divergence between real wages (what employees care about) and nominal wages (what employers care about). We have hired 16 lac people over the last 15 years largely by moving people from small cities to big ones but this is becoming difficult because we can’t get kids to move (a kid in Kanpur said moving to Mumbai was impossible at Rs 12,000 because khana, rehna aur office jaana nahin banta). Urbanization is unstoppable but the mispricing of land, lack of public transport, poor connectivity to suburbs, and corruption means that India is not realizing the true productivity upside of cities that would make them magnets for evacuating farmers.
Cities are complicated organizations all over the world but Indian cities suffer the friendly fire of being policy orphans for three reasons. Firstly, State Chief Ministers are unwilling to cut the tree they are sitting on (Bangalore maybe 60% of the GDP of Karnataka). Secondly, cities don’t have the plumbing or mandate to generate their own resources from property taxes. Finally, and probably most importantly, city leadership is either unelected (bureaucrats officers serving as development authority or municipality heads) or impotent (elected politicians city that win elections but don’t wield power). I understand the argument against bureaucrats protecting cities against venal politicians playing a one innings game but the only sustainable solution in a democracy is “real” Mayors. It has taken us 70 years to get power from Delhi to state governments – there has been a massive devolution of funds, functions and functionaries in the last three years – but hopefully the process of getting power from state governments to cities will be accelerated. This needs enlightened state government leadership to look beyond self-interest; this is a big ask from any human but particularly a big ask from ambitious politicians. Politicians at the state and centre face two big human capital decisions over the next decade; civil service reform and the creation of elected and empowered city leadership. Essentially they will give up power with all the costs that entails but they will receive the undying duas of our youth and farmers who can find productive jobs in urban areas.
India’s farm to non-farm and rural to urban transitions are not accelerating because of the bad urbanization that is largely a child of the Constituent assembly where 299 remarkable people between 1946 and 1949 who wrote our constitution missed city governance in their design. We are confident that if the constituent assembly could review their design with the hindsight that this miss is sabotaging their directive principles of education and employment, they would change the laws, structure and design that make cities policy orphans. Why don’t we?
(Manish Sabharwal and Ashok Reddy. The writers are co-founders of Teamlease Services)
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A radical reboot of India’s employment, education, and employability ecosystem is making good progress
Solving India’s problems of poverty are complicated by the 10 lac kids joining the labour force every month for the next 10 years – our demographic dividend. But the only sustainable solution to both is recognizing that jobs and skills change lives in ways that no subsidy ever can. I’d like to make the case that India is rising because we finally have a long-term policy vision that recognizes three things; a) India doesn’t have a jobs problem but a good jobs problems and higher wages don’t come from regulatory diktats but formalization, urbanization, industrialization and human capital, b) India needs to move from deals to rules because it is economically corrosive for an entrepreneur who follows a rule to feel she has missed a deal, and c) the government is organized vertically but jobs and skills are policy horizontals that require teamwork across ministries.
India’s unemployment rate – 4.9% – is not a fudge. Everybody who wants to a job has one but they don’t get the wages they need or want. Most jobs in India don’t pay enough to live and most self-employment is self-exploitation.
The project of empowering India’s youth and poor involves declaring war on informal jobs and enterprises while simultaneously creating a Cambrian explosion of formal jobs that pay higher wages.
This explosion needs enterprise formalization (our 60 informal enterprises don’t have the productivity to pay the wage premium), smart urbanization (we only have 50 cities with more than a million people relative to China’s 350 and most of ours have an average rush hour commute speed of 7 km/h), rapid industrialization (50% of our labour force works in agriculture but only generates 11% of GDP) and upgrading human capital (fixing schools, skills and higher education). All this needs replacing the lower ambition of Keynes quip “In the long run we are all dead” with the steady purposefulness of Sardar Patel’s quip that “the best time to plant a tree was 20 years ago but the second best time is now”. I’d like to make the case that rapid changes to our entrepreneurship and human capital regime are laying the foundations of a New India that is employed, educated, and empowered.
Is the role of the government setting things on fire (industrial policy and huge government spending) or creating the conditions for spontaneous combustion (efficient factor markets of land, labour, capital and low regulatory cholesterol)?
Having spent my early career in the license raj, I can attest that the first strategy fails to deliver massive formal job creation because regulatory cholesterol creates companies that don’t have clients but hostages. This is not an argument against the state – if the lack of a state led to job creation than SWAT valley in Pakistan and Waziristan in Afghanistan – would be hotbeds of entrepreneurial activity. An effective state does fewer things but does them better (primary education, public health, law and order, enforcing rules and competition, roads, etc.) while catalyzing entrepreneurship, investment and growth.
India is becoming a fertile habitat for job creation – the abolishment of FIPB, labour reforms, vibrant IPO markets, growing venture capital pool, fiscal discipline, lower inflation, rapid road construction, coming GST rollout, bankruptcy bill, lower corporate tax rates, consolidation of permissions, algorithms to guide inspector behavior, uninterrupted power supply, airport and port improvement, and massive road construction means that first generation entrepreneurs can credibly challenge incumbents because entrepreneurship is no longer about substituting, managing or interfacing with the state. The job is far from done and pending agenda includes a universal enterprise number (replacing the 25+ number issued to employers by various government departments), a PPC portal (moving to Paperless, Presenceless and Cashless compliance could save more than 2 lac trees and greatly reduce corruption), and lower mandatory payroll confiscation (formal employment is crippled by the 45% difference between haath waali and chitthi waali salary deducted for poor-value-for-money schemes). Competitive federalism is an important new lever for job creation; China’s job creation genius was decentralization. The accelerated devolution of funds, functions, and functionaries from Delhi to state capitals over the last few years robs Chief Ministers of their “Delhi” alibi because land and labour markets are local.
The challenge for India’s human capital has never been ideas but execution – you could change the date on the Kothari committee report of 1968 and do well in education reforms and Apprenticeship reforms were the 20th point in the 20 point program of 1975.
Shifting from poetry to prose in skill development is starting to pay-off; more has been done on skill development with the creation of New Ministry in the last few years than the many decades before that.
The Apprenticeship Act amendments mean that apprenticeship growth rates are more than 150% annually after decades of stagnation. Our target should be crossing Germany’s 2.7% of its labour force in apprenticeships that would raise our current 5 lac apprentices to 1.5 crore. Even though the Sector Skill Council performance is uneven, the high performing ones are creating a superb employer and demand driven skill ecosystem. The conversion of employment exchanges to career centers has begun but needs acceleration. Work has begun on linking skills to school and college; the Right to Education Act is morphing to the Right to Learning Act by shifting focus to learning outcomes and the ban on online higher education that sabotages marrying skills to degrees is being reviewed.
India is on the move because the government now recognizes that our problem is not a bad job vs. no job but a good job vs bad job.
The Apprenticeship Act amendments mean that apprenticeship growth rates are more than 150% annually after decades of stagnation. Our target should be crossing Germany’s 2.7% of its labour force in apprenticeships that would raise our current 5 lac apprentices to 1.5 crore. Even though the Sector Skill Council performance is uneven, the high performing ones are creating a superb employer and demand driven skill ecosystem. The conversion of employment exchanges to career centers has begun but needs acceleration. Work has begun on linking skills to school and college; the Right to Education Act is morphing to the Right to Learning Act by shifting focus to learning outcomes and the ban on online higher education that sabotages marrying skills to degrees is being reviewed.
India is on the move because the government now recognizes that our problem is not a bad job vs. no job but a good job vs bad job.
Policy making is making the leap that science made from classical physics (discrete systems) to quantum physics (everything is interrelated) with improved policy teamwork across Ministries in Delhi and between those Ministries and state capitals. Formal job creation has no silver bullets but Fiscal Discipline, Demonetization, GST, Uninterrupted power, Consolidation of 44 labour laws into 5 labour codes, Skill Development, and much else are a powerful brew. India missed her Tryst with Destiny – there are 300 million people today who will not read the newspaper they deliver, sit in the car they clean, or send their kids to the school they help build – but she has made a new appointment and this is one she will keep because policy has finally begun praying to the gods of skills and good job creation.
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Read MoreIs your boss a Queen Bee?
An article in DNA, talks about the queen bee syndrome – a phenomenon high-ranking women actively limit the advancement of their female subordinates; along with inputs from Kunal Sen.
HR experts say that female boss who won’t let those of her gender progress is a myth.
It is a widely believed notion that high-ranking women actively limit the advancement of their female subordinates, a phenomenon known as Queen Bee syndrome. But how much of it is true?
A new study by the Credit Suisse Research Institute suggests that there aren’t as many Queen Bees as conventional wisdom might suggest. Female executives are actually more likely to promote women who work under them than their male counterparts are, the study has found.
So how does it play out in the Indian context? Shradha Kapoor, managing director at Black Turtle, a talent management consultancy, says such thing doesn’t exist. “Not only have we recruited female employees for female leaders, I have myself recruited many female employees. There are renewed efforts to ensure that there are enough women in senior positions to bring in equality,” she says.
The Queen Bee theory gained currency after a study in Michigan in 1970 came-up with findings that women leaders refuse to hire women in managerial roles.
Devil wears Prada
Female bosses are accused of being extremely tough on their sub-ordinates. The theory says that women are not natural leaders, and fear their effectiveness. The others just abuse their supreme role as if it were a prize. A demonised female boss from the famous movie, ‘The Devil Wears Prada’, has done no good to this manner of thinking either.
Experts, however, say that the truth is far from the bandwagons. “I do not subscribe to the view. It is possible for both men and women to be effective leaders without being bossy or domineering. A lot of leaders of both genders are choosing a hands-on approach towards increasing productivity,” says Kunal Sen, senior vice-president and SBU head at TeamLease.
Queen Bee is just one, female leaders of this gender face a lot of stereotypes such as they are incapable of managing companies with a large male workforce, and put their family first. And career-obsessed women suffer from lack of balance that a family provides.
Women leaders are subjected to harsh judgements. “Women who rise to higher positions have to work for ten years without a break and only 14% can manage it. Those who make it are also under scrutiny,” Sen adds.
The Suits
Women leaders are advised to think like men and behave like them too, springing the age-old theory that men are built to be leaders. They are expected to mask their femininity with either a poor sartorial sense which does not attract attention, traditional wear which ‘softens’ their image to make them look maternal.
“After I became a deputy manager, my boss told me to dress like a man with pant suits et cetera. He said my team would be more receptive to a man. The next best thing to a man is a woman who dresses and acts like one,” recounts the senior VP, who chooses to remain anonymous. She also informs that she never heeded her boss’s advice and yet remained successful.
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