NN38, February 2007
Technical and Vocational Skills Development
VOCATIONAL TRAINING IN INDIA
By Amit Dar, World Bank, Washington
KeywordsVocational training, India
Summary
This article outlines vocational training in India that takes place in both the public sector and in the informal private sector. It outlines the options for the reform of both these training modalities.
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1. Largely because of the growth in factor productivity, India?s economy has grown rapidly over the past decade. Continuing to raise labour productivity while at the same time generating enough jobs for a growing labour force is proving a massive challenge. This issue has come into sharp focus over the previous decade when economic growth accelerated but employment growth fell to less than half that of the 1980s, raising fears that India is witnessing jobless growth.
2. Education and skill acquisition are important determinants of firm productivity. There is evidence of growing demand for workers with secondary education but the same cannot be said of workers with technical/vocational skills. Since the early 1980s, the relative wages of workers with secondary education have been growing even as these workers have become relatively more abundant. However, the relative supply of workers with technical/vocational skills has declined throughout this period while their relative wages have also come down since the early 1990s. This may be due more to the fact that workers with technical/vocational qualifications do not have skills that meet the labour market (often because of the poor quality of training provided) than that there is little demand for skilled workers.
3. Although productivity has been increasing and education levels rising, India still needs to improve education and training quality. While significant improvements will need to be made on quantitative indicators, little is known about qualitative indicators ? e.g. because India does not participate in standardized international examinations, there are no good comparative measures of quality. Providing more education and skills cannot, by itself, be enough ? quality and labour market relevance is crucial. The education and skills provided must be relevant to the labour market. Acquiring skills is essential, provided those skills are up-dated or meet industry requirements
Vocational Training in the Public Sector
4. Certificate level crafts training provide training to about 700,000 students. It is open to 5 million or so students a year who leave school after completing Grade 10. About 80 percent of the students take admission in engineering courses, and the remaining in the non-engineering trades. In addition, there are about 150,000 apprentices in various industries.
5. Labour market outcomes for graduates of the training system are fairly poor. Even three years after graduation, over 60 percent of all graduates remained unemployed. Although a significant proportion of apprentices find employment, close to two-thirds are not employed in the trade for which they were trained ? a third of these had been trained in obsolete trades. There appear to be three reasons for this: (a) limited growth and labour demand in the manufacturing sector, (b) mismatch between the skills attained and those actually in demand, and (c) mismatch between the skills taught and the graduates? own labour market objectives.
6. Employers still experienced problems finding employees with the right skills. In most cases, these shortages were in trades that were supplied by the Industrial Training Institutes (ITI) ? implying that their graduates did not suit employers? needs. Most employers felt that ITI graduates did not perform well enough in the use of computers, practical use of machines, communications and team work practices. Employers also felt that graduates lack practical knowledge and need significant on-the-job training to bring their skill levels to match the needs of the industry.
7. These poor outcomes arise owing to the public training system facing many constraints. These include the following:
* The management of the system is fragmented. Management of the system is shared between central and state authorities ? the National and State Authorities for Vocational Training (NCVT and SCVTs). While different authorities have clearly specified functions on paper, there is little coordination between them, leading to diverse accountability. There is often a duplication of effort with different agencies often performing the same functions. Furthermore, a preoccupation with providing and financing training has resulted in the government neglecting a key role ? providing information about the availability and effectiveness of training programs.
* Institutions do not have incentives to improve their performance. Institution managers have little freedom to fill places to capacity, replace training courses with new ones, and ensure that students receive quality training.
* Industry involvement in the vocational training system is nascent. Until recently there was limited participation of employers in defining training policies and developing courses. This is now changing, and industry associations and individual employers are showing considerable interest in involving themselves in developing and managing ITIs.
8. Options for reform at the policymaking and institutional levels include the following?
9. A key role NCVT and SCVT?s should play is in the provision of information and facilitating the evaluation of training provided in institutions. A key function for the NCVT and the SCVTs is to provide information on the nature and quality of training available, and facilitating regular and independent evaluations on the impacts of training programs ?expanding this role may be one of the most effective ways for governments to foster the development of a relevant and cost-effective VET system.
10. At the institutional level, involving the private sector in management is going to be critical if institutions are to be responsive to labour market needs. A very positive development is that Institutional Management Committees, chaired by the private sector and involving employers, are increasingly being formed. However, as yet these bodies only act with limited decision making powers and that, too, in respect of a few training programmes. Unless they are given greater control over decision making at the institution level, their efficacy will be limited.
11. Involving employers in management will only yield positive results if state governments are willing to provide institutions with greater autonomy and make them more accountable for performance. This means letting institutions administer themselves and keep the funds they raise through fees and production. Elements of autonomy that should be introduced include ? letting ITIs, in consultation with employers, decide on their own training programmes; giving institution managers the freedom to hire and fire teachers, including contract teachers and non-teaching staff; allowing ITIs to generate revenues by selling goods and services; and allowing ITIs to set more realistic fees (while the government will still bear a significant portion of the financing). However, autonomy is not a panacea. It needs to be accompanied by a new accountability framework for ITIs. Indicators of internal and external efficiency should be used to measure the performance of institutions and to match performance to financing.
Training for the Informal Sector
12. Over 90 percent of employment in India is in the ?informal? sector, with employees working in relatively low productivity jobs. Provision of appropriate skills may thus be an important intervention to increasing the productivity of this workforce. However, both demand as well as supply-side constraints have inhibited skills development. On the demand-side, few employees in the informal sector see the importance of skills training. Many identify lack of access to capital, cumbersome bureaucratic bottlenecks, and lack of access to quality equipment as their main challenges.
13. On the supply-side, there has been a variety of attempts to assist with training in the informal sector. The most important are probably Community Polytechnics (training about 450,000 people a year within communities), Jan Shikshan Sansthan (offering 255 types of vocational courses to almost 1.5 million people, mostly women) and the National Institute of Open Schooling (NIOS) (offering 85 courses through over 700 providers recognised by the NIOS). None of these programmes has been evaluated rigorously.
14. Public training institutions play a limited role in producing skills for the informal sector. While one of the mandates of ITIs is to train workers for the informal sector, evidence shows this is rarely the case. The share of ITI graduates who entered self-employment or became employers was not much greater than 10 per cent. The main reason is that running a small business requires much more than simply possessing a particular occupational skill. It requires the ability to run a small business, which requires a person to be multi-skilled. This sort of training is not imparted in the ITIs.
15. The diverse training needs of informal sector operators cannot be met by simply reorienting public training institutions. Public institutions would find it difficult to make the changes and serve both the formal and informal sectors with the same skill and experience. It would require a major investment to upgrade facilities and equipment, to attract, develop, and retain new staff, and to develop new curricula and materials to be able to provide the package of skills needed by the informal sector. Locally based non-government training providers ? often NGOs - may be more effective in providing services that meet the needs of the informal economy.
16. The governments can play a facilitating role in training for the informal sector. Instead of delivering training themselves, governments could focus on creating an environment to support non-public providers through: (i) establishing a policy framework (regulations and incentives); (ii) supporting curriculum development, training of trainers, and competency-based skills testing; (iii) stimulating investment through tax incentives or financial support so as to increase the capacity and the quality of training; and (iv) revising apprenticeship acts that are outdated and contain regulations that hamper enterprise-based training.
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