Employment and Skills: The Indian Case Devesh Kapur September 27, 2011

Anti Power Point Party

OVERVIEW Demographic Reality: 550 million under 25 Structure and Weaknesses of Indian Higher Education –College education (“white collar”) –Mid-level skill Training (“blue collar”) Current Reforms and the Road Ahead

India Age Demographics Source: US Census Bureau 509 million age group

India Age Demographics Source: US Census Bureau 888 million age group

Population Increases in Age Group million million

Public and Private Sector Formal Employment

Casualization of Labour Year Rural Male Rural Female Urban Male Urban Female Self-Employed Regular employees Casual labour Source: NSS Employment Surveys; Subhanil Chowdhury, “Employment in India…”, EPW, Aug. 6, 2011

Labour Force Participation (%) Principal Status NSS RoundDate Range Rural Male Rural Female Urban Male Urban Female 43 (July’87- June’88) (July’99- June’00) (July’09- June’10) Source: Himanshu, “Employment Trends in India,” EPW, Sep. 10, 2011

Source: Partha Mukhopadhyay Labour Force Participation

Employment by Occupation ( ) Source: NSS Employment Surveys; Subhanil Chowdhury, “Employment in India…”, EPW, Aug. 6, 2011

Devesh Kapur, CASI Rapid growth of student enrolment in India  INDIA  1950/51: 27 Universities, 578 Colleges  2009: 504 Universities, 25,951 Colleges, 14 million students enrolled

Weaknesses in Higher Education and Skills Development in India Systemic – Dualism reflecting hierarchical status-conscious society with no ladders for vertical mobility between high status college education and low status “vocational education” Regulation Internal Governance Faculty

MISMATCHES Demand-supply mismatch Credentials-Skills mismatch Aspirations-Occupations Mismatch

Indian Civil Services Exam Name of Examination No. of Posts No. of Applicants No. of Recommended Candidates Civil Services4573,45, Engineering Services26274, Medical Services62428, Central Police Forces25692, Indian Economic Service/ Indian Statistical Service 305,01723 Source: Union Public Service Commission

Political Economy of Higher Education Higher Education is an important arena of distributional conflicts Centralized regulation provides fertile ground for rent-seeking and patronage politics Supply of quality institutions is severely lagging demand -Poor quality leading to diminished signaling and degree inflation -The few institutions that signal quality enjoy enormous brand-rents Quality: high variance and low mean – Entrenched mediocrity in most faculty – Exceeding weak culture of research Access and Equity exacerbated by failures at primary and secondary level Devesh Kapur, CASI

Structure of Higher Education Regulation FUNCTIONINSTITUTION Universities University Grants Commission (UGC) All aspects of “Technical Education” including engineering/technology, and management All India Council for Technical Education (AICTE) Medical Education Medical Council of India (MCI), Pharmacy Council of India (PCI), Indian Nursing Council (INC), Dentist Council of India (DCI) Legal Education Bar Council of India (BCI) Teaching National Council for Teacher Education (NCTE) ArchitectureCouncil of Architecture

Structure of Higher Education Regulation FUNCTIONINSTITUTIONHeads Indicted in Last two years Universities University Grants Commission (UGC) Corruption Investigations All aspects of “Technical Education” including engineering/technology, and management All India Council for Technical Education (AICTE) INDICTED Medical Education Medical Council of India (MCI), Pharmacy Council of India (PCI), Indian Nursing Council (INC), Dentist Council of India (DCI) Heads of MCI, DCI INDICTED. Investigations in others Legal Education Bar Council of India (BCI) INDICTED Teaching National Council for Teacher Education (NCTE) INDICTED ArchitectureCouncil of ArchitectureINDICTED

Obstacles to reform  PATRONAGE IN PUBLIC INSTITUTIONS  INCUMBENT BENEFICIARIES  POLITICALLY CONNECTED HIGHER EDUCATION ENTREPRENEURS  ELITE FLIGHT TO OVERSEAS INSTITUTIONS  KEY ARENA FOR DISTRIBUTIONAL CONFLICTS

Formal Government Skill Development Programs InstituteTotal CapacityQuantityGoverning Ministry Schools (Mainstream education System) 1 million9,619 schoolsMHRD Polytechnics providing diplomas 0.4 million 1,659 AICTE approved institutions MHRD Training institutions ITIs (Private) & ITCs (Govt) 1.2 million2,012 ITIs and 6,788 ITCs Directorate General of Employment and Training (DGET), under MoL Source: Megha Aggarwal, “Skill Development in India,” 2011.

Limitations in India’s Skill Development Framework ConstraintImplications Fragmented Industrial Structure (Dominated by small firms) Reduces Incentives for in-house training Limited capacityLess productive national workforce Limited focus on informal economyMissing target audience Lack of clear framework defining qualityVET fails as signalling mechanism Lack of flexibility and mobility within VET space Perception Limited access Lack of industry involvement in VETUnresponsive and static system Fragmented regulatory landscapeImpedes coordinated approach Mismatch between courses offered and those required by industry Poor labour market outcomes Lack of quality trainersAffects quality of instruction

INITIATIVE Launched in 2010 as PPP to create 150MM skilled workers by 2022 Indian Industry: 51%; Government: 49% Primary mandate - incentivise private sector participation: Developing curriculum; Delivery of training; Quality assurance; Placement Other responsibilities – monitoring and evaluation, facilitate “train the trainer” institutes Current progress: 30 training projects approved to train 55MM people Mapping skill gaps for 20 high growth sectors and the unorganized sectors 28 autonomous sector specific councils (SSCs) National Skill Development Corporation Source: Megha Aggarwal, “Skill Development in India,” 2011

Corporate campuses and workforce training Private providers increasingly dominant Overseas higher education (elites) Non traditional higher education developments Devesh Kapur, CASI Future of Higher Education?

The Trilemma: Scale, Cost and Quality Scale: 12 th Plan targets a GER of 20% (from about 14% currently) ~ 2 million additional students. What will be the quality of this labor force? The global hunt for talent: Where are the faculty? Is Traditional University Education Oversold? – Skilling vs degrees Will there be innovation in Higher Education itself? Devesh Kapur, CASI

Gender Ratio (15-64 age group) YearGender Ratio (M/F) Source: US Census Bureau