Technology has grown at an unprecedented rate over the last three decades—and the growth has been global. It has increased the pace of industrial development, enhanced the quality of goods and services, and facilitated critical social and economic developments. Developing countries such as India, Bangladesh, and China underwent an industrial revolution and emerged as global economic competitors, while already industrialized countries improved their productivity by developing automated technologies. However, while being a vital cog of global economic development, technology has also greatly reduced the demand for unskilled and low-skilled labor.
All of this has created a demand-supply gap that only seems to widen with time. According to McKinsey Global Institute’s (MGI) recent report:
- There are 40 million fewer workers with tertiary education and 45 million fewer workers with secondary education than their demand in developed economies.
- There are 95 million more low-skill workers (without college training in developed countries and without secondary education in developing countries) than their demand in both developed and developing economies.
- There are 360 million older people, including 38 million college-educated workers, who will no longer be a part of the labor force by 2030, creating further shortage of skilled labor.
The report also indicates that as the global labor force approaches 3.5 billion in 2030, inequalities will continue to grow as lower skill workers (including 75 million young people) face unemployment, underemployment, and stagnating wages. There is massive need for global efforts to ensure a steady influx of high-skilled labor to meet increasing industry demands and avoid a global unemployment crisis.
At the World Economic Forum at Davos in January 2013 David Arkless, president of human resource consulting firm Manpower Group, prophesied India’s strategic position as a future leader of the global labor force. India, once poised as the global outsourcing hub is now viewed as a prospective supplier of world-class labor. But achieving the latter is a mammoth task that will require infrastructure, capital, and changes to government policy. It is interesting to analyze this unique positioning and India’s ability to take on this role, as well the unique function that social entrepreneurs are playing in this process.
Per MGI, 600 million people will join the global workforce between 2010 and 2030, and 60 percent of these workers will be from China and India. This underlines the importance of China and India in providing the global labor market with skilled, employable workers—but is India a forerunner in this race?
India’s advantages include a large young population and English speaking skills. For the next 35 years, 75 percent of India’s population will be between the ages of 15-59, compared to 50 percent both in Europe and the United States. By 2050, India is projected to have 1 billion employable people versus 270 million in the United States and 450 million in Europe. And while English speaking skills are growing in China, the reach is limited—a deterrent for many international recruiters. Additionally, education is valued in Indian society, creating a drive among families to educate their children.
That said, India does need to catch up with other countries in a number of areas—most importantly on the mismatch between education and skills. Although Indian families tend to pay attention to educating their children, they prefer university education to vocational education. Studies show that the Indian industry considers three out of every four engineering graduates unemployable.
Further, the state of Indian vocational institutes is deplorable. For a population of 1 billion, India has a meager 10,000 vocational training institutes (ITIs)—and most work with outdated technology and pedagogy. So while the conventional education system does not help students develop employable skills, the lack of credibility and outdated nature of vocational and technical education make it an unpopular option among students. Additionally, the system’s lack of flexibility means it is difficult for candidates to smoothly transition from a university course to a vocational stream, and vice-versa.
Finally, there is also a social status attached to education. Vocational education is typically looked down as something only lower-class people pursue.
So what is the Indian government doing to solve these challenges, and how can social entrepreneurs help? Skill development has become a national agenda with the launch of the National Skill Development Corporation (NSDC), a public-private partnership that aims to create large, quality, for-profit vocational institutions. The initiative plans to “skill up” 500 million people by 2022. With incentives such as low-interest rates and a sizeable moratorium period, the NSDC allows social entrepreneurs to set up ventures and create social impact without facing huge financial burdens. In light of this government support, the vocational training market—valued at INR 90 billion (about $1.5 billion) in 2011—is slated to grow at a CAGR of 23 percent. Hence, there are both economic and social incentives for entering the skill development space in India.
Additionally, the worldwide phenomenon of Massive Open Online Courses (MOOC) has caught up in India, and many corporations are using this platform to train people and supply the industry with skilled labor. With top universities offering courses via MOOC’s and the recent prospect of setting up community colleges in India, the skill development sector brings promise to not only the Indian markets, but also the global community.