Employment and Employability Issues, Challenges, Opportunities

and the Public Policy Context

NHRD Chennai ChapterSavera HotelSept 22, 2008

• India– GDP 1 trillion; Double in next ten years– Why doesn’t it feel right?

• Labour Market Crisis– Personal and Existential; people supply chain company– Failure in Three E’s; Education, Employability, Employment– Unique demand side; unemployability bigger problem than unemployment

• Five Labour Market Transitions– Farm to Non-Farm– Rural to Urban– Unorganized to Organized– Subsistence self-employment to Decent wage employment– School to Work

Background

• Learnings– Poverty reduction needs opportunities and human capabilities– Growth is a necessary but not sufficient condition for employment creation– Need institutions, processes and resources at three levels:

– Immediate Matching Connecting Supply to demand– Medium Term Mismatch Repairing Supply for demand– Long Term Pipeline Preparing Supply for demand

• Policy Agenda– It’s raining money but problem needs more; absorptive/ transmission– More cooks vs. new recipe– Money and Mandate

Background

What is the problem?

Poor HRD Regime

Low penetration of education

Low returns to education

Regulatory; Accreditation

heavy but outcome light

Not work ready;

unemployment highest among

educated

58% of youth suffer some

skill deprivation

Uneven returns to education

10+2+3;Exams, No

Multiple intelligences

What is the problem?

Poor Vocational Training Regime

No outcome linkage;

effective/ self-sustaining

Scalability; Baby vs. dwarf

Entry Gate/ Exit gate

Centre regulates but state delivers

Institutional governance

Not self-healing; NOC

code mismatch

Apprentices; learning by doing/ while

earning

What is the problem?

Poor Employment regime

Lopsided GDP

Missing Middle; hero/ zero?

Subsistence self-

employment

Exploitation; friendly fire

Minority rule

Unorganized Sector

Employment Elasticity; labor

saving bias

What is the urgency for reform?

India

Unviable Agriculture; Productivity

Demographics;1/4

Matching failure; People

to Jobs

Regulatory arbitrage e.g. CLRA

Inability to afford social

security

Labour market Diversity;

Outsider Access

Mismatch; trespassers

1. Immediate MATCHING Connecting Supply to demand

2. Medium Term MISMATCH Repairing Supply for demand

3. Long Term PIPELINE Preparing Supply for demand

The Agenda

The Agenda

Matching

Employment Intensity; labour

laws

Apprenticeships; Satyendra

Incentivizing Organized Sector

Employment Exchanges

Assessment; job, repair, certification

The Agenda

Mismatch

Separate Repair from Prepare;

3 kinds of unemployability

Measure and publicize

outcomes; Sunshine

Separate financing

from delivery

Livelihood agenda for EEs/ melas

Nudge last mile repair

privatization: Risk sharing

Link financing to outcomes;

pay for yield

PPP policy; Assets,

Placement

The Agenda

Pipeline

English;Windows, MigrationPolytechnics

Soft skills in college/ schools

Explode Capacity;SSA, Coverage of

12th class

Regulatory Revamp

Public Policy Campaign

• Our strategy– Research Based Advocacy; Reports– Press, Industry Associations, Conferences– Planning Commission– State Level Engagement

•Our message– Mutation; temping, labour, skills, equality of opportunity (3Es)– Moderation. Dosage makes the poison; Paracelsus– Move from concurrent list to state list

•Our plan– No beheading but death by a thousand cuts (e.g. exclusions)– Not time for big fight, but will happen– Outlast if not win right now

Reflections – Public Policy Campaign

• Job creation is a policy orphan– Too long for politicians of one-innings; beyond obvious time horizon– Too systemic/ cross functional for bureaucrats; too small/big

• Systemic Issues– Design Flaw; Asymetric payoffs for Ommission and Commission – Classic “distributional coalitions”; vocal minority hijacked agenda– Status quo bias; more cooks vs different recipe– Hardware vs Software– Concurrent list; policy orphan

•Learnings – Satyagraha argument works; million negotiations of democracy– Politicians equally frustrated with delivery systems e.g. NREGA– Hidden constituencies do not support publicly. Competitors?– Common Law country; court system works– Reform not good politics yet; but find hook; Job Melas, Apprenticeship Act

Challenges

Temping Companies

Regulatory Context

Gross Margins

Benefits Design/

Infrastructure

Skill Crisis

Scale Player; Spread and

Customization

Competitors; regulatory arbitrage

Banking Infrastructure;

KYC

Why has the Industry grown?

Temping Companies

India exploding

Test Drive

More competitive

markets

Ability to find people

Regulatory Arbitrage

Labour Laws/ Temp productivity

Fudge Headcount

Strategy

Temping Companies

Size

Public policy campaign

On demand temping

Massive IT investments

Stay Alive

Make exogenous variables

endogenous

Superior plumbing

Public Policy Case

Teamlease

Reduce Unorganized

Arbitrage

Apprenticeship Effect

Unemployment Reduction;

liquidity provider

Costs of Social Security/

Unemployment Insurance

Good is not enemy of

great; NREGA

Access for Labour Market

Outsiders

ImprovedCompetitivenes

s

Closing Thoughts

• India; WSJ in 1994– But largely fixed sins of commission not omission– Skill deficit is worse than infrastructure deficit; inequality

• Mismatch– Biggest problem and supply creates its own demand– Massive repair assessment– Re-architect Financing layer– Re-architect Training/ Repair layer– Credible Certification Layer

• Labour Law Issue– Corporate India not victim; Thorn– Transmission Losses; Breed Unorganized employment, capital substitution

Closing Thoughts

•Way forward– Solution not in Totalizing or Microfragmenting– Not only Projects but Policies; ICPs are weather of the moment– Not only Money but Mandate; Leaky pipes, Waste– Mission mode; three levels, three legs of ecosystem

•Tryst with Destiny– Missed appointment; 300 million– Unique time in India to create equality of opportunity– Difficult but not impossible. Daily spectacle of the hero/ zero tragedy– An unemployed or unemployable Indian is not a free Indian– Who? When?

Employment & Employability Issues, Challenges, Opportunities

and the Public Policy Context

NHRD Chennai ChapterSavera HotelSept 22, 2008