In the next 10 years, India will account for more than half of the increase to Asia’s workforce. This demographic shift will present India’s greatest opportunity and its biggest challenge.
As shown in the figure below, the demographic dividend can add about 2 percentage points annually to per capita GDP in the next two decades as the workforce swells and savings and investment growth increase. At the same time, India’s influence can be expected to rise in the coming years as growth speeds up and pro-business policies by the government create labour demand.
But this window of opportunity needs to be harnessed, as the benefits arising from it will be determined by the availability of an educated and skilled labour force that is well equipped to work in a dynamic market environment.
In other words, India’s young people need to be equipped with the requisite education and skills for the workplace of the future. This is where the roles of both the government and corporates come into play.
The Indian government has already identified skill development as an important area of focus. In 2009, the government launched the National Policy on Skill Development and in 2015, “Skill India Initiative” - aimed at imparting skills and training to more than 400 million people by 2022 - was also launched. In the past three years of “Skill India Initiative”, the single ministry of MSDE alone has trained more than 11.7 million aspirants in various skills. This excludes the number contributed through other ministries’ schemes.
Even with all this progress, more needs to be done. India, Inc. is best positioned to outline the needs and define the benchmarks of the workplace of the future. Given the fast pace of change and disruptions in the global economy, corporates have the best understanding of what skills will be viable and other emerging requirements. It has become increasingly important for corporates, therefore, to create structures and policies that deliver applied skill training and relevant technical expertise. Corporates are incentivized to do this because of their own need to have a sustainable workforce for future growth.
The Corporate Social Responsibility (CSR) programme mandated by the government in India focuses on the role that corporates can play in contributing to the country’s social and economic development. This has provided the industry with a medium in which to engage in effective skill building activities that feed into overall human productive capacity building. Besides the direct benefits to the society and economy, the CSR programmes run by corporates also helps to promote awareness of their brands. According to the India CSR Outlook Report 2017, which analyses CSR spend by BSE 300 companies, one-third of the total CSR spent was reported in education projects. In terms of actual spend, it was reported that one-third of the companies spent more than the mandated CSR budget. Furthermore, actual CSR spend in FY16-17 increased by 8% from FY15-16 and by about 47% from the actual spend two years ago.
Some of the skill-building initiatives adopted by corporates include capacity building of Industrial Training Institutes (ITIs), on-the-job training, vocationalization of education, promoting entrepreneurship, upskilling the existing workforce, training and employment of people with disabilities, and combating the training and hiring gap.
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Indian multinationals are increasingly participating in such collaborations with government-run ITIs across the country, some of which are formed under the public-private partnership model. A direct involvement of industry experts in such programmes has helped build a better informed and more efficient labour force that has helped to scale projects and achieve effective outputs.
A good example here is India’s IT-BPM sector, an industry that has created about 6 million jobs in the past three years. In response to the disruptive emerging technologies, this industry provides language and computer literacy skills with programmes to upskill the workforce.
To give more examples, in manufacturing, a leading corporate has introduced programmes to support 76 low-cost, private and government schools in infrastructure development and capacity building. Besides supporting school infrastructure development, vocational training for entrepreneurship, teach-to-lead as well as scholarships for meritorious students, and their e-learning project have reached more than 1,550 schools.
All of the above demonstrate that corporates are aligning to the needs of “skilling India” and are making a conscious effort to shape their programmes to target both general as well as advanced skill development. These efforts can be seen as part of a growing trend whereby corporates will continue to integrate social and environmental policies within their business goals.