The learning crisis underlying India’s unemployment

It may be difficult to imagine that the humble “anganwadi”, the grassroots institution at the base of the Integrated Child Development Services scheme (ICDS), could have any role in addressing India’s formidable challenge of unemployment. However, two recent studies, Employment In India (Oxford University Press, 2019) by Ajit Ghosh and the Annual Status Of Employment Report 2019 (ASER 2019) released earlier this week, together establish a clear causal link between early learning among children in India’s vast network of 1.2 million anganwadis and employment outcomes in the labour market over the long term.

Using data from the NSS Periodic Labour Force Survey (PLFS) report for 2017-18, Ghosh, a leading authority on India’s employment situation, estimates that there is a total backlog of some 79 million surplus plus openly unemployed workers. In addition, some 7-9 million new workers join the labour force each year. To employ all the new workers and absorb the backlog over, say, the next 15 years, productive employment would have to grow by about 13 million persons per year. Instead, employment has actually been declining by 0.5%, or about 2-3 million persons per year.

Ghosh further points out that such employment growth as exists, mainly in the formal sector of the economy, requires at least a modest level of skills. The opportunity for unskilled work in the informal sector has been shrinking.

However, most of those looking for work are mainly unskilled workers. India’s record in this regard is abysmal. Only 5% of the workforce has any skill training, and a mere 2% actually have a formally certified skill as compared to 70% in advanced European countries and 80% to 90% in east Asian countries like Japan and Korea. A report by the Confederation of Indian Industry indicated that only 40% of those looking for work were actually employable in skilled jobs.

Clearly, apart from macroeconomic policies to revive growth on the demand side, what the employment challenge requires is a massive and effective skilling programme on the supply side of the labour market. Indeed, the government has several skilling initiatives in place, especially the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) launched in 2015 to train some 400 million workers in the 15-45 age group over a seven-year period.