The prime minister’s ambitious skills programmes are being viewed as complementary to the Make in India mission, the government’s push to boost manufacturing in the country. At present, manufacturing accounts for 11% of total employment, much lower than 30% in China.
There is little evidence, however, that industry in India views lack of skilled workforce as a major constraint – or that it is willing to pay a premium for skilled or certified workers. When it comes down to the shop floor, there are negligible differences in starting wages of workers based on their qualifications. Whether they have studied up to high school or are holding certificates from Industrial Training Institutes, workers get paid low wages.
On the shop floor: This pattern is on clear display just 30 kilometres from Delhi, in Haryana’s Manesar industrial model township which houses more than 1,000 industrial units of automobiles, electronics and consumer goods. Workers here say that only very large companies, such as Maruti Suzuki or Honda, pay higher wages to workers trained in ITIs than to high school graduates. But then, large factories such as Maruti or Honda, employing over 500 regular workers, make up just 2% of India’s factories, as per Labour Bureau data.
Santosh Negi, a slender 28-year-old woman, is one of the 1.5 lakh workers of Manesar’s industrial township. A political science graduate from MD University in Rohtak, she works at a factory that employs 400 workers and manufactures automobile wire harnesses and printed circuit boards for automobiles and appliances. When Negi joined the company as a contract worker in 2012, she earned Rs 5,600 per month. She now earns Rs 6,900.
Narendra Kumar, a 22-year old worker who trained at ITI Bhiwani, joined the company’s engineering department the same year as Negi at a wage of Rs 5,800. He now earns Rs 6,600, he says. “There is no value of education,” said Negi. "Students of class X, XII, or graduates – all get same wages here, everyone is a casual worker on a temporary contract." The company’s documents show workers receive wages in cash through labour contractors. On production sheets, officials ranked contract workers like Negi and Kumar on skill on a scale of 1 to 4.
Ram Nivas, a 26-year-old working in the same industrial area, has a contrasting career graph. He left his home in Rajasthan’s Churu after dropping out of class X, worked as a security guard for a few years before joining Nifco, a plastic injection-moulding workshop, as a casual worker. He is now in his third job at Hi-Lex, a firm manufacturing transmission cables, earning Rs 12,000, double of what Negi and Kumar make. “Our company has no preference for class X or XII or ITI,” said Nivas. “Even if they take someone from ITI, they tell them, we will pay the same as we pay others.”
Elsewhere, there’s starker gap to contend with. In Haryana, the industrial wage for workers has stagnated and is at present fixed at Rs 193 a day for unskilled workers and Rs 215 a day for skilled workers. But on many days, the daily wage workers who gather at Gurgaon’s Sector 5 chowk get paid much higher, Rs 300-350 for a day’s work as construction labourers and plumbers – although they have to face the uncertainty of searching for a job every day.
Low value for certification: Prerit Rana, CEO of Agrasar Foundation, which operates three vocational training centres and two bridge-schools for dropouts near Gurgaon, says his experience with placing candidates in jobs mirrors the workers’ experience. “Industry says that they will train the workers on the shop floor,” said Rana. “They are not willing to pay even Rs 500 a month more than the routine starting wage to a worker trained at an ITI, or even a worker with National Skill Development Corporation’s certification.” Agrasar Foundation has placed 2,000 trainees in jobs since 2011.
Modi’s skill cards may not be enough to goad industry into paying a wage commensurate with certification. In its earlier avatar under the Congress-led government, the National Skill Development Corporation had offered soft loans of over Rs 200 crore to 100 private firms to run vocational training centres. None of the firms that took loans have been able to break even because of employers’ reluctance to pay premium for getting formally certified workers, points out Rana.
Trainee workers: A few industries do provide workers in-service training. As per a World Bank report, “India’s Employment Challenge”, 17% of manufacturing establishments and 4% of small firms provided training in their plants in 2010. But this number was very low by international standards, lower even than Bangladesh’s 27% and Sri Lanka’s 38%.
Even today, most workers learn their trade on the job and through informal apprenticeships. To promote employment through on-the-job training, Modi had launched the Apprentice Protsahan Yojana last October. Under this, the government pledged to subsidise half the stipend paid to apprentices, or on-the-job trainees, during the first two years of training. Though there are 4.9 lakh seats in the programme, currently 2.82 lakh apprentices are undergoing training under it. The government aims to increase this figure to 24 lakh apprentices.
Ministry data shows that from the time of the scheme’s launch last year till February 2015, only 288 new apprentices were formally engaged in on-the-job training by 121 employers, which is too low to even meet the government’s first stage target to sponsor 1 lakh apprentices till March 2017.
Representatives of the Confederation of India Industry (CII) say they will partner with the government to conduct 40 workshops with employers around the country on the fine print of this scheme. Sougata Roy Choudhury, director (skills) at CII, said: “We have to demonstrate to industry that they will have to pay a premium for skills and for skill certified workers. But ultimately, not everyone will be able to get a job in the organised sector. The government’s renewed focus on skill may still help create talent for self-employment.”
In a recent paper of the International Labour Organization, economists CP Chandrasekhar and J Ghosh said that self-employment, most of it “highly fragile and vulnerable”, already accounts for over half of India’s workforce. Whether those trained under the Centre’s latest skills mission are able to make the jump from self-employment as daily wage workers to entrepreneurship will not only depend on skills but also other factors such as access to credit and marketing. The latest 2015 policy is silent on credit for skilled workers. It only states that the government will explore the possibility of setting up a National Fund for the Unorganised Sector.
Prerit Rana of Agrasar Foundation says that mere focus on skilling, without adequate attention to helping workers – many of whom are migrants – gain access to bank loans and marketing services will not markedly change their lives. “Ultimately, most of the workers making the shift from rural to urban India lack good public education, which is an investment in a person over 12 years,” he said. “Just by giving quick fixes of giving vocational training over 3-6 months will be acting like the doctors who offer a paracetamol for any ailment.”