In his interview with this paper yesterday, Union Labour Minister Narendra Singh Tomar has made all the right noises - how there is a need to harmonise industry and labour interests and so on. While everyone agrees with the broad philosophy, the problem is that all his predecessors have roughly said the same things over and over again in the past, but with almost zero results. One hopes history doesn't repeat itself.
What's encouraging is that Tomar has termed the easier hire-and-fire policy initiated by the Vasundhara Raje-led Rajasthan government as a "good law" even though he has hastened to add that the Centre has to consider many other aspects before taking any action on labour law reforms. In that sense, the Rajasthan government needs to be complimented for going beyond mere empty words. After years of pussyfooting by the central governments, the state has actually set in motion the first major revamp of the forest of labour laws. After all, the archaic laws are the major reason why 84 per cent of manufacturing companies in India have chosen to remain small, by employing fewer than 50 workers.
Loosening strict hire-and-fire rules is a path-breaking initiative, but there is no doubt that the state has also tried its best to take care of labour interests in its own limited way. That explains why the state is amending the Apprentices Act, 1961, to address the skill gap in the labour market. Even if a company does not absorb all apprentices, it will at least produce job-ready individuals who can be absorbed by others, according to media reports quoting a Rajasthan government official. It's, of course, a different matter that in 2013-14, all-India data show only 211,000 apprentices were appointed in industry, which is a negligible number considering that the workforce is growing at 12 million a year.
So a lot more needs to be done - much of which is beyond a state government's ambit. There is no doubt that such significant labour law changes have to be linked with the skill deficit issue because expanding manufacturing employment is the key.
Let's look at some hard facts. China has 550,000 vocational institutions, training eight million people a year. India has about 6,000 such institutes, training about one million people per year. A country of more than a billion people can't find just 100,000 people per year for its retail, wholesale and logistics industry and the hospitality & travel industry can't find 50,000 people per year. The construction industry lacks sufficient plumbers and construction machine operators. According to a McKinsey study for the infrastructure industry, while 13 million workers enter the market every year, only three million receive any sort of training, as a result of which 70 to 80 per cent of the existing workforce is untrained, impacting the pace and quality of project implementation.
There are other problems, too, such as two-thirds of people pursuing vocational education are not employed in the trade they were trained for. Take Uttar Pradesh and Maharashtra, where the construction sector is expected to create over six times more jobs than the information technology (IT) and related services sectors by 2022, according to industry chamber Ficci. However, the growth plans of these two states show a lot of initiatives for the IT sector and none for construction. Skill-based studies have shown that carpentry, electrician, painter, welder, masonry, crane operations and plumbing alone will require 7.3 million vocationally-trained workers by 2022. But given the training capacity for key construction skills, India can train just about three million people by 2022.
The point is that the government does not need to look very far for a solution that targets the actual beneficiary. For example, the Gujarat government's skill voucher scheme aims to ensure that the funds allocated for training reach the actual beneficiary or the candidates and empower them by giving freedom to select the course and the institute they would opt to get trained in. The skill voucher is a prepaid voucher that can be purchased from the Gujarat Skill Development Mission (GSDM) after paying the value amount. This scheme effectively decreases the work of the entities involved in funding the training. These entities will have to just identify the beneficiary, get a skill voucher in his/her name and hand it over to the beneficiary. The system created by the mission is fairly simple, with an approach wherein anyone can fund through the skill voucher and anyone can utilise it to train the candidates.
The vouchers are serial numbered and issued directly in the name of the candidate/beneficiary. Once the candidate enrols in any of the eligible institutes for any specified course and submits the skill voucher to the institute, the training will be then imparted as in a normal case. If the candidate passes the assessment exams, then the institute gets paid by the GSDM in lieu of the skill voucher. In case the candidate fails to clear the exams, the money gets refunded to the funding entity. Though the skill voucher scheme is still in its infancy, these are the kind of efforts that will play a critical role to ensure that the latest round of labour reforms initiatives don't remain just on paper. Tomar obviously has his hands full.
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