The case of apprentices: Why apprenticeship has not taken off in India

A recent report by the ILO on the employment situation in India says the country remains poised to reap its demographic dividend for at least another decade

It was a year ago that Sonu, 20, started working as a ‘helper’ in a metal forging unit in Mayapuri, a greasy industrial pocket in West Delhi. Housing hundreds of small and medium light-metal factories, scrap shops, and automobile service stations, Mayapuri helps sustain the livelihoods of half a million people, most of them migrants and low on skill.

This is Sonu’s first paid employment after he completed his schooling two years ago. It requires him to run machines that clean, harden, or anneal metals (annealing is a kind of heat treatment).
 

“I had no prior training and one of my uncles, who works as a blacksmith in a nearby unit, had to plead with the owner to take me in. Initially, I was afraid of the hot ingots, but now I can safely manage these machines,” says Sonu, with a touch of obvious pride.  
 

He is among millions who join the workforce in the country every year and have to find work in the vast informal sector without getting any skill training. Sonu would have been better off taking up an apprenticeship programme, where he could have had classroom learning followed by on-the-job training. That would have enhanced his skills and increased his attractiveness for employers.
 

A recent report by the International Labour Organisation (ILO) on the employment situation in India says the country remains poised to reap its demographic dividend for at least another decade, as the youth population will be 23 per cent of the population in 2036, down from the 27 per cent in 2021, but still on the higher side as compared to several other countries. This huge youth bulge translates into a mammoth employment demand.
 

However, youth employment (those between 15 and 29 years) has remained of poorer quality than employment for older people, with the unemployment rate among educated youth staying high.
 

The ILO report notes that policymakers need to take adequate and timely steps for ensuring rapid integration of the youth into the labour market through skill development measures such as apprenticeship, which will be helpful to ensure that the training programmes are responsive to the needs of the labour market.

 

Apprenticeship in India
 

Sonu’s case explains why ILO advocates apprenticeship. In his current job, Sonu gets about Rs 8,000 a month, which he can stretch to Rs 10,000 if he puts in enough overtime. Had he done an apprenticeship, he would make about Rs 12,000 a month.
 

But the real benefit to an apprenticeship is not in that difference of Rs 2,000 to Rs 4,000 a month; it would have come in the form of a skill certification. That would increase his employability and help him ride the salary ladder faster.
 

Sumit Kumar, chief strategy officer at Teamlease Apprenticeship, says apprenticeship is one of the most efficient ways of fulfilling the skilled human resource requirements of the industry by utilising the training facilities and without incurring extra expenditure on separate training infrastructure.
 

“Varying estimates show merely 1 per cent of people who enter the workforce annually are apprentices in India. In any modern economy, it is expected that apprentices comprise between 3 and 4 per cent of the total workforce, which would roughly translate into a total of around 20 million apprentices in India,” Kumar adds.
 

In Europe, the apprenticeship system has deep roots in the economy. In Germany , for instance, apprentices comprise 4 per cent of its workforce.
 

“Apprenticeship is intricately linked with the higher education curriculum in Europe and also linked with the small and medium enterprises, whereas in India the MSME sector is completely out of this whole apparatus,” says Kumar.
 

India, to promote the uptake of apprenticeship in the country, passed the Apprentices Act in 1961. The latest Apprentices Rules, formulated under the Act in 2019, says every establishment having 30 or more workers must engage apprentices in a band of 2.5-15 per cent of its total strength every financial year, including contractual staff. Of these, 5 per cent of the apprentices must be freshers and skill certificate holders.
 

Additionally, the Central government is implementing National Apprenticeship Promotion Scheme (NAPS) and National Apprenticeship Training Scheme (NATS). NATS is administered by the ministry of education to deliver apprenticeship programmes for fresh pass-outs of engineering and general stream graduates and diploma holders, as well as for those pursuing degree and diploma courses. NAPS is administered by the ministry of skilldevelopment and entrepreneurship (MSDE) for designated trade apprentices, freshers, and vocational apprentices.
 

Data from the apprenticeship portal shows 4 million apprentices trained under NAPS since the scheme was launched in August 2016.

 

The shortfall
 

As Business Standard reported last month, the MSDE has sent compliance notices to nearly 180,000 companies registered on the apprenticeship portal to fulfil their obligations under the Apprenticeship Act and take on more apprentices. Only 20,000 companies were found to be fully compliant with the provisions of the Act, and nearly 44,000 firms “somewhat” comply.
 

“Usually, paying a fine is easy for these establishments. Therefore, our effort is to make them fully comply and get the remaining establishments to hire apprentices. We are also working to bring more firms to register on the apprenticeship portal,” a person aware of the matter said.
 

Under Section 30 of the Apprenticeship Act, the shortfall in apprentices is punishable with a fine of Rs 500 per apprenticeship for the first three months and thereafter Rs 1,000 per month.
 

Surinder Bhagat, founder, Gigin, a recruitment portal, says apprenticeship in India has failed to take off due to a lack of awareness, especially in the services sector, where attrition is high and employers see little value in training someone instead of directly recruiting them.
 

Kumar of Teamlease says: “It is a misconception that apprenticeship is primarily for the manufacturing and production industries.
 

The other issue is non-integration of education and apprenticeship, which leads to a lack of an ‘aspiring’ value among students.”

The ILO report says the top sectors engaging apprentices are retail, automotive, electronics, information technology and IT-enabled services, and financial services including banking and insurance. The top five states engaging apprentices are Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Haryana.

 

Rights and responsibilities
 

The Apprenticeship Rules of 2019 were meant to promote the uptake of the apprenticeship. These included bringing additional establishments under the mandatory category, lowering the size limit of establishments from 40 employees to 30 employees, doubling of stipend to Rs 9000 for graduate apprentices or degree apprentices and Rs 5000 for school pass-outs, and introduction of general degree apprenticeship.  
 

The Congress Party, earlier this month, as part of its five “guarantees” for the upcoming Lok Sabha elections, announced the Right to Apprenticeship for every diploma holder or college graduate below the age of 25. Under this, the party “guarantees” a one-year apprenticeship as an assured first job with a private or a public sector company along with a stipend of Rs 1 lakh a year to every youth.
 

Praveen Chakravarty, chairperson of the All India Professionals’ Congress and a key member of the Congress’ manifesto drafting committee, told Business Standard in an earlier interview that the proposal involved replacing the current Act with one that will enable anyone below the age of 25 and armed a diploma or other similar qualification to demand an apprenticeship with a private or a public sector company or a government organisation.
 

“I have held extensive consultations with industry bodies and MSMEs have told me that they wanted to be part of it because it will lower the labour costs for them. Based on the latest GST data, it is expected that 1 million firms will participate in it and anywhere between 2 million and 4 million people are expected to demand it initially. The cost will be shared between the government and the employer concerned. So at 2 million people, this works out to be Rs 20,000 crore,” he added.
 

Santosh Mehrotra, a visiting professor at the University of Bath, says though apprenticeship is one way to bring down youth unemployment and create a skilled workforce, the need for government intervention exists at multiple levels.
 

“To start with, school education must include skilling and vocational education. Out-of-school children, too, need to be imparted training for employment. Industry must collaborate with educational institutions so that the training and content is matched to its needs to give employability a boost,” he adds.