India at 75: Skilling overdrive needed to cash in on demographic dividend

India has a skilling paradox, which has flummoxed employers for years. It has a burgeoning young population, yet companies struggle to find employable talent.

Since 2018, India’s working-age population (people between 15 and 64 years of age) has grown larger than the dependent population — children aged 14 or below as well as people above 65 years of age. This bulge in the working-age population is going to last till 2055, or 37 years from its beginning, according to a UNFPA (United Nations Population Fund) study.

However, the ‘age bulge’ does not essentially translate into a demographic dividend; India risks squandering this demographic advantage due to its ever-widening skills gap. Experts say skilling today is largely misaligned to the market due to the dynamic nature of skills. Pandemic-driven digitalisation has accelerated the pace of new skills emerging and some older skills becoming obsolete.

“The biggest demographic challenge is raising the productivity of our regions, sectors, firms and individuals. All four are connected,” says Manish Sabharwal, chairman, Teamlease Services.

A skilling environment that is flexible and agile and responsive to market requirements is critical.

The pandemic has exacerbated the skilling crisis further. According to the India Skills Report 2021, the youth employability stood at 45.9% consisting of highly employable resources, from pre-Covid 46.2%.

The pandemic has further slowed down the pace of skilling initiatives across the country, says Anjan Chakraborty, partner-advisory, PwC India.

To get the desired demographic dividend, what should be the top priorities of India's policymakers? According to Sabharwal, the most important supply-side intervention is bringing the glide path for NEP (National Education Policy) implementation from 15 years down to five years. “Twenty-five per cent of the world’s new workers in the next 10 years will be Indian, and we need to ensure their skills and productivity,” says Sabharwal. India Inc has a crucial role to play. “Industries, specifically during these times, have a larger role to play by way of paying wage premium, absorbing apprentices, widely participating in skilling amongst many other initiatives,” says Chakraborty. Among the biggest demographic challenges for India is the unemployment rate that has increased significantly.

Some like Sabharwal say the biggest challenge is wages, not jobs. “Our unemployment rates are a poor indicator of labour markets because they have roughly bounced between 4-9% since 1947 because of three shameful shock market absorbers; farm employment (42% of the labour force-generating 15% of GDP), self-employment (50% of the labour force that is largely self-exploiting) and labour force withdrawal (particularly women).”