NN38, February 2007
Technical and Vocational Skills Development
SKILLS AS SECURITY IN THE INFORMAL SECTOR
By Jeemol Unni, National Commission for Enterprises in the Unorganised Sector, New Delhi
KeywordsSkills as Security, Informal Sector, India
Summary
Globalisation and trade liberalisation in India have led to a series of changes in the Indian labour market. Skills become a necessity and a form of security to improve the employability of the workers. This article examines ?skills as security? in the context of India?s informal sector.
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Skills as security: Globalisation and trade liberalisation in India have led to a series of changes in the Indian labour market. The direct consequences are the inflow of technology encouraged by the economic reforms and its impact on the growth of a skill based workforce. The technical change in industry is skill-biased and therefore leads to a wage premium for the skilled workers. The impact of skill-biased technological change can be seen in two ways. One view is that it has led to the exclusion of certain segments of the workforce such as women, unskilled workers, casual workers and rural workers. In all these cases it is mainly due to the lower levels of education and skill training among these segments of the workforce. The other view is that globalization and the opening up of the economy is a window of opportunity even for the small enterprises in the informal sector. We observed in a micro survey of the auto components sector that small enterprises are making every effort to take advantage of the opportunity they see in the expanding markets for motor vehicles (Unni and Rani, 2005).
In these two views lies the issue of security, both of informal workers and small enterprises. The emphasis on skills in the labour market has led to inequalities due to the wage premiums that the skilled workers attract. The process of informalisation also leads to job insecurity. For the small enterprises the issue of security is in the form of expanding, but fluctuating markets. While this is a window of opportunity and many entrepreneurs noted that they had to make the best of the markets when they were growing, they were also aware of the possibility of collapse. The spirit of the small enterprises was to seize the opportunity when the markets were growing overcoming all hurdles in their path.
Both these issues of security, job and markets, lead us to view ?skills as security? for workers in the informal sector. For the small entrepreneurs it is both ?skills and technology as security?. This emphasizes the need for a clear skill policy, and technology policy, for the workers and small enterprises. Skills become a necessity and a form of security to improve the employability of the workers. Skills are a method of improving human capital, which ensure income security to the workers, particularly for the poorly educated workers in developing countries as India.
Skill Training in ITI: In India, the government-run industrial training institute (ITI) has played a crucial role in providing skilled workers to the formal sector over the years. It was found that overall about 3-30 percent of the workers and 10-20 percent of the skilled workers training in the ITIs found work in the large enterprises in the formal sector (ILO, 2003). However, with economic reforms the public enterprises have either closed down or stopped recruiting and the private enterprises are using other methods such as the use of contract labour or out-sourcing to conduct their business. The employment of ITI graduates has therefore come down.
Traditional Apprenticeship Training: One of the main sources of skill training for the mass of the workforce in India is informal apprenticeship in informal enterprises. In many of the clusters of manufacturing industries, the method of recruiting workers is through engaging relatives and other known persons as a helper under a master or skilled worker. The ?trainee? at first only helps to fetch and carry for the master, then slowly begins to help the master in running the machine. In a study of automobile parts we found that the workers take two to ten years to become a semi-skilled and later a skilled worker in the enterprise.
There are various advantages of this informal training process. The advantages are that the training is flexible and involves the dynamic skills which are actually in demand. It is self-regulating and the costs are borne partly by the enterprise and mainly by the worker. There is no entry barrier of initial skill requirement or level of education as in the case of the public system. Only the willingness of the master, who is generally a relative, is required.
Obviously there are many disadvantages of such an informal system. The training is often based on traditional technology. The theoretical learning is weak and the training is limited to particular products or phases of production in the enterprise. Therefore, the trainees are unable to then apply their skill to other activities and it reduces their employability in any other industry or to operate any other type of machine.
Skill Training Models: Between these two very different forms of skill training, we suggest two models of training involving private-public partnership which would take care of the deficiencies in the supply-demand sides of the current models.
Model 1- Private-Public Partnership within an on-the-job model: As we saw in our micro-study, the major form of acquiring occupational skills in small businesses and informal enterprises is through the traditional apprenticeship model or ?ustad shagird? [learner-master] route. How best can the government and private sector co-operate to help upgrade the existing initiatives of this model? A system by which such a model can be partly formalized and the cost borne by the worker and the enterprise can be financed by an external agency perhaps in the form of a loan to be repaid later.
Model 2 - Private-Public Partnership within ?Skills Training Centres?: The service providers charged with the responsibility of training will design the curricula to suit the needs that have been established either through market scans and/or that can be justified based on the established skills gaps among the potential trainees. The objective of the curriculum should be to increase the employability of trainees in the local or regional context and/or raise the ability of the trainee to absorb higher levels of skills training available locally or at other locations. These will not be ?free? courses. A cost should be attached to each course based on overall expenditure (capital expenses amortized appropriately). Each trainee will be given a ?training loan? (without collateral) from a bank, which is to be repaid in small instalments after the trainee secures a job. The ?training loan? should include cost of the course plus the cost of commuting to the centre if the commute is long.
Two models of skill training are thus possible which take into account the skill training needs of the local economy and of the trainees. Such a training programme providing ?skills security? is more likely to create a faster rate of absorption of the trainees into the workforce and growth of employment in the local economy.
References:
ILO (2003) Industrial Training Institutes of India: the Efficiency Study Report, Subregional Office for South Asia, ILO, New Delhi, InFocus Programmes on Skills, Knowledge and Employability, ILO: Geneva.
Unni, Jeemol and Uma Rani (2005) Globalisation and Informalisation: Consequences for Skill Formation, Security and Gender, Project submitted to the Indo-Dutch Programme on Alternative Development and Indian Council of Social Science Research, New Delhi by Gujarat Institute of Development Research: Ahmedabad.
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