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Employability crisis takes its toll(Ecomonic Times, The (India) (KRT) Via Thomson Dialog NewsEdge) Nov. 5--NEW DELHI -- Some of the biggest economies worry about it. In July this year, the UK government ran full-page newspaper ads called 'Our Future. It's In Our Hands' talking about the 'burning issue of UK's skills deficit'. "Unless, the government and business sort out the skills and education systems, the UK will fall into a slow relative decline," a newspaper moaned. Across the Atlantic, in September, a presidential candidate in the US, the world's largest economy, was laying out proposals to overhaul education system amid reports on education crisis and rising skill gap. India, a relatively smaller economy with a far bigger workforce, faces a crisis perhaps far deeper than any other nation in the world today. Its demographic trends (300 million new workers by 2025), its archaic education system (barely 9-10 percent of graduates are employable) and economic structure (agriculture contributes 18 percent to the GDP and employs 56 percent) -- all of them have converged to make the crisis painful and difficult. "India is not a sequential economy with linear growth," says Shiv Visvanathan, a social scientist. Farm to non-farm, rural to urban, analog to digital, manual to tech-driven and domestic-focus to exports -- multiple transitions are happening simultaneously here. "We have a de-skilling economy without a re-skilling workforce," he says. Structurally, the education sector is in a crisis. Out of every 100 Indians, 70 completed primary school and only seven (between 15-60 years) completed graduation or beyond. Further, 90 percent of the jobs being created today require vocational skills, but 90 percent of India's colleges impart mostly bookish knowledge. According to the report, hardly 7 percent of India's youth (15-29 years) received any kind of vocational training -- and only 2 percent received it formally. "A degree-driven Indian society treats education as a proxy for skill levels creating strong supply-demand mismatch," says TeamLease Services chairman Manish Sabharwal. Poor quality of education compounds the problem. According to a 2006 report by PRATHAM, an NGO focused on education, only 16.5 percent of children (in class 1 to 8 th) have the ability to read a word and only 26 percent are able to recognise numbers. It only gets worse as one moves up. Barely 9-10 percent of India's graduates are found employable. Over 90 percent of India's 18,064 colleges and 68 percent of its 378 universities fall under poorer B and C grade. "This isn't about funds and resources," says CII HRD committee chairman B Santhanam. In 2005-06, the aggregate government spending on education stood at around Rs 1,20,346 crore. It is about how well the funds are being spent. "Government thinks primitively about two sectors so crucial for the country's growth -- education and agriculture," says Visvanathan. Not surprisingly, the two sectors that could have dramatically altered an average Indian's life remain under government's control even as virtually every sector of the economy is being opened up. This education crisis peaks with the demographic trends. In the next five years, one in every four new global workers will be Indian. Alongside, India's working age population (15-60 years) will swell in the next two decades -- in absolute terms by 300 million and in percentage terms from 58 percent in 2001 to 64 percent by 2025. "The time to act and address the issue is now," says Indicus Analytics head Laveesh Bhandari. This mess is hurting poor far more than the rich. At the top of the heap is the creamy layer that sends around 1.2 lakh young Indians to overseas colleges spending over Rs 50,000 crore every year, completely evading the mess in the higher education in India. Those who stay back, only relatively well off have the wherewithal to continue studying. UGC reports that only 53 percent of those who pass higher secondary go for further studies. The drop out rates surge as one goes down the income class. Poor do not have the staying power to continue pursuing a degree that is so divorced from immediate returns. There isn't much difference in the kind of jobs a 10 th or a 12th pass gets -- absence of vocational training in the regular curriculum hits the poor hard. In fact plenty of graduates and post-graduates too realise that their soft skills help them more than their grades to land a job. Due to sharp supply-demand mismatch at the top of the pyramid, the wage differential between primary and higher-level educated workers is rising rapidly. "Poor are stuck in low-skilled services with not much upward mobility," says Crisil India chief economist Subir Gokarn. But the tide may be turning. India may be at a tipping point. Here are five reasons why employability crisis hopefully may get better -- not worse -- from here: SO far they focused on restructuring themselves, technology, plant productivity, government policies and other external issues. Now, amid hyper growth, they have begun to worry about skilled talent. It began with the IT industry at the top end. Now virtually every sector -- including sectors like construction requiring thousands of masons -- are worrying about it. "We started it, but now even CII is focusing attention on educational reforms," says Nasscom president Kiran Karnik. India Inc's attention and lobbying will help enormously. Looking at the economy, the workforce pyramid is not sustainable. Manufacturing is growing but services will remain the mainstay of the economy. Agriculture, contributing 18 percent of the GDP and employing 56 percent of workforce, is in crisis and not sustainable. Pushed by poor farm incomes, lured by a talent-starved corporate sector and helped a little by the governments and NGOs, the change in the workforce pyramid has begun. "Our initiatives to train Andhra rural youths -- literate and semi-literate -- in vocational skills that industry needs has been very successful," says Meera Shenoy, executive director, employment generation & marketing mission, a PPP initiative. Last year they linked up 45,000 youths with industry jobs. Many more are mushrooming. Inequality is rising, especially in urban India. The social stress combined with surging aspirations in a sizzling economy is a potent combination. After the debacle of Incredible India campaign, issues around education, training, employment -- those that directly impact the lower strata of the society -- is far more sharply in focus. Geographical skew -- more new workers in BIMARU states whereas jobs being created elsewhere -- will worsen the stress. "Higher education is a sick child," HRD minister Arjun Singh recently admitted publicly. Hopefully, egged on by the industry, the government will find good reasons to fix the issue. Education-focused companies like Educomp and NIIT are rapidly scaling up and spreading into myriad areas like retailing, banking and finance to cater to the growing talent needs. Universities and premier colleges like Manipal University, IIMs, Symbiosis see good business and growth opportunities in tying up with companies like TeamLease, RPG, L&T, ICICI to offer customised training programs. Firms like Sterlite and SeaKing are exploring full-fledged universities. Amid all this, not-for-profit sector -- independent or run by corporates -- are rapidly evolving and scaling up to connect needs of companies, government and deprived sections. Expect some good to come out of all this. Job market at a cusp Lots of things are changing about the job market. Women, from all economic backgrounds, are entering the workforce in big numbers. Aspirations, irrespective of social background, are surging. Talent mobility is in. Lifetime employment is out. Attrition is high. Future certainty is low. Constant training, re-skilling to remain in demand is a reality hitting both corporates and job seekers. Pitching itself at the top end of the knowledge economy, with R&D, engineering services, IT and many other sectors, India will have to work hard to turn its demographic curse into dividend. As the world's youngest nation learns to live life in the tech-edged global world, the sheer momentum in the economy will bring forth many changes -- the industry as the cheerleader. To see more of The Economic Times, or to subscribe to the newspaper, go to http://economictimes.indiatimes.com Copyright (c) 2007, The Economic Times, India Distributed by McClatchy-Tribune Information Services. 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