Skill Impact Bond: Initiative skilled nearly 18,000 first-time job seekers

The initiative has skilled nearly 18,000 first-time job seekers, 72% of whom are women

Diksha (she identifies her first name) flashes a big grin as she recalls her days getting trained in communication skills, information technology (IT) and customer support — skills that would fetch the teenager a job.

The 18-year-old, now employed with Tech Mahindra in New Delhi, is part of a cohort that was trained by Magic Bus India Foundation, under the Skill Impact Bond.
 

“Through the (Skill) Impact Bond training course, I found new opportunities for employment, as I learnt IT skills and grew confident of my communication skills. These helped me land a job at Tech Mahindra’s customer support team and I can now save for my future studies,” she adds.

Impact bonds are innovative financing instruments that leverage private sector capital and expertise, with a focus on achieving results. It shifts the focus from inputs to performance and results. Rather than a government or a donor fina­ncing a project upfront, private investors (risk investors) initially finance the initiative and are repaid by “outcome funders” only if agreed-upon outcomes are achieved.

The Skill Impact Bond, pioneered by National Skill Development Corporation (NSDC) under the aegis of the Ministry of Skill Development and Entrepreneurship (MSDE) and a coalition of mission-aligned partners, is one such public-private partnership model in India in the skilling and employment sector.

It aims to transform the way skill training programmes are implemented in the country, with major emphasis on bridging the gap between skilling and employment, especially for women.

Abha Thorat-Shah, executive director for social finance, British Asian Trust, says that since its inception the Skill Impact Bond has been deeply committed to achieve impactful and meaningful employment outcomes, particularly for women. “The emphasis is on providing employment to trainees, rather than just a training certificate, as the current skilling initiatives only focus on providing training to candidates and oftentimes the trainees remain unemployed long after completing a course,” she adds.

Launched in Octo­ber 2021, the $14.4-million Skill Impact Bond aimed to skill and provide employment to 50,000 youths over four years. Sixty per cent of the youths will be women and girls. The trainees are being skilled and provided access to wage employment in sectors that are recovering from the Covid-19 economic shock, such as retail, apparel and logistics.

Earlier in January 2021, the Pimpri Chinchwad Municipal Corporation in Pune, Mahara­s­htra, had also signed a Memo­r­andum of Understanding with the United Nations Deve­lopment Programme India to co-create India’s first social impact bond to improve healthcare services, especially with respect to the pandemic.

Under the Skill Impact Bond, risk investors such as NSDC and the Michael & Susan Dell Foundation provided $4 million upfront working capital to the trainers to implement skill development programmes. On the other hand, outcome funders like the Children’s Investment Fund Foundation, JSW Foundation, HSBC India and Dubai Cares are repaying the risk investors based on whether predetermined outcomes are achieved, assessed by an independent third-party evaluator like Oxford Policy Management.

Until May, the Skill Impact Bond skilled close to 18,000 first-time job seekers from low-income families, of whom 72 per cent are women. The first cohort of the Skill Impact Bond also indicates a better retention rate in jobs, as one in two women who have enrolled in the training have continued to work in wage employment for three months.

“This is in stark contrast to other skilling initiatives, as the retention rate in employment hovers at as low as 10 per cent, once the training gets over. Post-placement tracking and guidance such as regular check-ins with candidates and migratory assistance are unique features under the impact bond that helps women adapt to new environments and challenges, thus reducing dropouts,” says Thorat-Shah.

Last year, the Parlia­men­tary Standing Committee on Labour, Textiles and Emp­loy­ment had raised serious conc­erns about the poor placement record of the gov­ern­ment’s flagship training scheme, Prad­han Mantri Kaushal Vikas Yoj­ana (in its third edition, till June 2022 merely 8 per cent of all certified candidates were re­portedly placed).