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India and China: Pre Occupations with Skills Development. Shanti Jagannathan, Senior Education Specialist, ADB

I recently attended two events related to skills development – the first one linked to the Asia Competitiveness Forum 2012 in New Delhi and the second, UNESCO World TVET Congress  in Shanghai.

India and the People’s Republic of China attract popular attention, and comparisons are common. As two giant economies with high rates of growth and potential for increasing influence in world markets, they offer much scope for discussions on policies and strategies.

The priorities for skills and training in the two countries have many similarities: both acknowledge that it is talent and high skill levels that will determine competitiveness in the times ahead, particularly talent for innovation. Both have an interest to move up the value chain to compete in higher value added manufacturing and services. Skills development is expected to be a key driver to facilitate their transformation from a low-end manufacturing to more sophisticated, service-oriented and innovative economies. Corporations in PRC aspire to move from ‘Made in China’ to ‘Created in China’. India announced 2010-2020 as the ‘decade of innovation’ that includes setting up innovation centres of excellence in different frontier areas.

Skills development is high on the agenda in national plan priorities for both countries – India has the target of creating a pool of 500 million skilled works by 2022. In PRC, the National Medium and Long Term Talent Development Plan for 2010-2020 puts emphasis on vocational training and employment promotion.  New and innovative public policy instruments are being directed towards TVET. In PRC, the development of vocational training parks such as the Tianjin Vocational Training Park is an example of a dedicated large scale facility to promote vocational training connected with the needs of enterprises. Allocating a third of the Shanghai urban tax to education, particularly TVET, helps to increase financing for the sector. The Government of India is setting up a credit guarantee fund to encourage students among weaker sections to go for higher technical and professional education. In 2011, 3.95 million TVET students received government aid in PRC. The World TVET Congress advocated a transformational role for TVET.

It was clear from the presentations that both India and PRC need TVET not only for higher order manufacturing and innovation (which is a high priority for avoiding the ‘middle income trap’), but also for social equity. The overwhelming share of informal labor markets in India poses a challenge to skills development. About 11 m small and medium enterprises (SMEs) in the country contribute to an estimated 7% of GDP, 40% of manufacturing output and 60% of exports. The Government of India is actively promoting the concept of clusters to support Micro, Small and Medium Enterprises (MSME). In PRC, skills development for accelerating development in rural and impoverished areas has been a key priority through programs such as the Sunshine Program for rural labor transfer training. Both countries are actively encouraging the contribution from industry and the private sector. In India, the unique private-public partnership model of the National Skills Development Corporation follows a results-oriented approach to skill development and has the target of skills development of 150 million people by 2022 and assuring employment for 70% of those. PRC’s policies to encourage industry-school partnerships with students spending about a third of their training period in enterprises strengthens much needed employability.  Inequality is a critical issue that both countries need to grapple with – the gini coefficient has worsened in both counties.

Thus the three dimensional lens (economic, equity and transformative) attributed to TVET by the forthcoming world TVET report seems quite appropriate.

RIGHTS TO SKILLS, Manish Sabharwal. Chairman, Teamlease Services

Rights are not reducing poverty. Time to place skills and employment at the heart of policy It’s been raining “Rights” in Indian policy for the last few years; education, work, food, service, healthcare, and much else. This “diet coke” approach to poverty reduction – the sweetness without the calories – was always dangerous because of unknown side effects. Commenting in 1790 on the consequences of the French revolution, Edmund Burke said “They have found their punishment in their success; laws overturned, tribunals subverted, industry without vigor, commerce expiring, the revenue unpaid, yet the people impoverished and a state not relieved”. Not very differently, early results of this “policy revolution by fatwa” – MNREGS, Right to Education, Right to Food, Right to Service, etc –suggests that it has led to 15 interest rate hikes in 12 months, is destroying government finances, fuelling inflation, and encouraging civil society to subvert democracy. It also reminds us that policy entrepreneurship, like all entrepreneurship, is not exempt from the rule that big ideas without execution and resources are ineffective. Outlays don’t lead to outcomes because poetry is useless without plumbing. But there is an alternative for reducing poverty to this impatient state driven idealism; Skills and Jobs. Poverty reduction comes from an individual’s ability to access opportunities. Unfortunately unemployability is a bigger problem than unemployment; 58% of India’s youth suffer from some skill deprivation. India’s skill crisis is a child of a fragmented regulatory regime (state vs. centre, 19 ministries vs. 2 human capital ministries), the dead-end view of vocational training (the lack of vertical mobility between certificates, diplomas and degrees), a broken apprenticeship regime (we only have 2.5 lac apprentices relative to 6 and 10 million in Germany and Japan), a weak job framework (the national occupation codes don’t create a shared thought world for employers and educators), no linking of financing to outcomes (we pay for training not jobs), no separation of financing from delivery (creating competition to government delivery by using government money for private delivery) and dysfunctional employment exchanges (1200 of them gave 3 lac jobs to the 4 crore people registered last year). The policy agenda around skills is not impossible or unknown. Employment Exchanges need to become public private partnership career centers that offer counseling, assessment, training, apprenticeships and job matching. The Apprenticeship Act of 1961 must be amended to view an apprenticeship as a classroom rather than a job and shift the regulatory thought world from push (employers under the threat of jail) to pull (make them volunteers). The National Vocational Educational Qualification Framework must be agreed by the states and the Ministries of Labour and HRD as the unifying open architecture tool for recognition of prior learning and vertical mobility between school leavers, certificates, diplomas and degrees. Delivery systems are in the hands of states and every state must create a skill mission or vocational training corporation tasked with building capacity and quality. States should also create asset banks to make existing government real estate available for skill delivery. All schools must teach English because English is like Windows; an operating system that creates geographic mobility and improves employment outcomes by 300%. Schools and Colleges must selectively embed vocational subjects – particularly soft skills – into their curriculum. The regulatory cholesterol around national distance education (mail order, e-learning and satellite) must be reviewed to offer flexible options for workers already in the workforce and the geographically disadvantaged. We must create a national network of community colleges offering two year associate degrees; these colleges, rooted in the local ecosystem, will serve the informal sector (92% of employment) This missing mezzanine layer – their two years programs are not normal degrees on a diet but vocational training on steroids – would bridge the gap between vocational education and training but make the system more inclusive. Finally, we must created skill vouchers that will allow financially disadvantaged students to get trained wherever they want at government expense. Such vouchers would shift the system to funding students rather institutions should be funded by money carved out of the MNREGS budget. Unlike the skill agenda, the job creation agenda is more complex and controversial. But few disagree about the shame in four employment statistics being exactly where they were in 1991; 92% informal employment, 12% manufacturing employment, 50% self-employment and 58% agricultural employment. Economists do not understand how job are created or why they cluster where they do. But the broad contours of fertile soil for job creation are obvious; a flexible labour market, skilled employees, robust infrastructure, and predictable legislation. A flexible labour market is important; most economists agree that our labour law regime is poisonous. India’s labour laws – our employment contracts are marriage without divorce – have created a labour aristocracy (only 8% of our labour force works in the organized sector) that perpetuates labour laws which cripple India’s ability to compete with China in organized manufacturing. The labour law issue is closely related to the skill issue because expanding formal employment is the key to third-party financing of skill development and expanding manufacturing employment is key to getting people off farms (58% of our people produce 18% of our GDP). It’s late but not too late to change the tragic reality that the two most important decisions a child in India makes is choosing their parents and pin code wisely. Mughal Emperor Jahangir told his gardener in Kashmir that if a tree takes 100 years to mature, that’s all the more reason to plant it as soon as possible. In other words, the best time to start changing our skill system and reforming labour laws was twenty years ago. The second best time is now. India’s new tryst with destiny – putting poverty in the museum it belongs – doesn’t need more “Rights” but more jobs and more skills. And creating jobs and skills doesn’t need new ideas but courage. Not more strategy but more execution. Any takers?