Employment and Employability Issues, Challenges, Opportunities and the Public Policy Context

1. Employment and EmployabilityIssues, Challenges, Opportunities and the Public Policy Context NHRD Chennai Chapter Savera Hotel Sept 22, 2008

2. Background • India • GDP 1 trillion; Double in next ten years • Why doesn’t it feel right? • Labour Market Crisis • Personal and Existential; people supply chain company • Failure in Three E’s; Education, Employability, Employment • Unique demand side; unemployability bigger problem than unemployment • Five Labour Market Transitions • Farm to Non-Farm • Rural to Urban • Unorganized to Organized • Subsistence self-employment to Decent wage employment • School to Work

3. Background • Learnings • Poverty reduction needs opportunities and human capabilities • Growth is a necessary but not sufficient condition for employment creation • Need institutions, processes and resources at three levels: • Immediate Matching Connecting Supply to demand • Medium Term Mismatch Repairing Supply for demand • Long Term Pipeline Preparing Supply for demand • Policy Agenda • It’s raining money but problem needs more; absorptive/ transmission • More cooks vs. new recipe • Money and Mandate

4. What is the problem? Poor HRD Regime 58% of youth suffer some skill deprivation Low penetration of education Not work ready; unemployment highest among educated Low returns to education 10+2+3; Exams, No Multiple intelligences Uneven returns to education Regulatory; Accreditation heavy but outcome light

5. What is the problem? Poor Vocational Training Regime Institutional governance No outcome linkage; effective/ self-sustaining Centre regulates but state delivers Scalability; Baby vs. dwarf Apprentices; learning by doing/ while earning Not self-healing; NOC code mismatch Entry Gate/ Exit gate

6. What is the problem? Poor Employment regime Lopsided GDP Minority rule Exploitation; friendly fire Missing Middle; hero/ zero? Employment Elasticity; labor saving bias Unorganized Sector Subsistence self-employment

7. What is the urgency for reform? India Inability to afford social security Unviable Agriculture; Productivity Regulatory arbitrage e.g. CLRA Demographics; 1/4 Mismatch; trespassers Labour market Diversity; Outsider Access Matching failure; People to Jobs

8. The Agenda • Immediate MATCHING Connecting Supply to demand • Medium Term MISMATCH Repairing Supply for demand • Long Term PIPELINE Preparing Supply for demand

9. The Agenda Matching Assessment; job, repair, certification Employment Exchanges Employment Intensity; labour laws Apprenticeships; Satyendra Incentivizing Organized Sector

10. The Agenda Mismatch Separate Repair from Prepare; 3 kinds of unemployability Nudge last mile repair privatization: Risk sharing Livelihood agenda for EEs/ melas Measure and publicize outcomes; Sunshine PPP policy; Assets, Placement Link financing to outcomes; pay for yield Separate financing from delivery

11. The Agenda Pipeline Regulatory Revamp Explode Capacity; SSA, Coverage of 12th class English; Windows, Migration Polytechnics Soft skills in college/ schools

12. Public Policy Campaign • Our strategy • Research Based Advocacy; Reports • Press, Industry Associations, Conferences • Planning Commission • State Level Engagement • Our message • Mutation; temping, labour, skills, equality of opportunity (3Es) • Moderation. Dosage makes the poison; Paracelsus • Move from concurrent list to state list • Our plan • No beheading but death by a thousand cuts (e.g. exclusions) • Not time for big fight, but will happen • Outlast if not win right now

13. Reflections – Public Policy Campaign • Job creation is a policy orphan • Too long for politicians of one-innings; beyond obvious time horizon • Too systemic/ cross functional for bureaucrats; too small/big • Systemic Issues • Design Flaw; Asymetric payoffs for Ommission and Commission • Classic “distributional coalitions”; vocal minority hijacked agenda • Status quo bias; more cooks vs different recipe • Hardware vs Software • Concurrent list; policy orphan • Learnings • Satyagraha argument works; million negotiations of democracy • Politicians equally frustrated with delivery systems e.g. NREGA • Hidden constituencies do not support publicly. Competitors? • Common Law country; court system works • Reform not good politics yet; but find hook; Job Melas, Apprenticeship Act

14. Challenges Temping Companies Scale Player; Spread and Customization Regulatory Context Skill Crisis Gross Margins Banking Infrastructure; KYC Competitors; regulatory arbitrage Benefits Design/ Infrastructure

15. Why has the Industry grown? Temping Companies Regulatory Arbitrage India exploding Ability to find people Test Drive Fudge Headcount Labour Laws/ Temp productivity More competitive markets

16. Strategy Temping Companies Stay Alive Size Massive IT investments Public policy campaign Superior plumbing Make exogenous variables endogenous On demand temping

17. Public Policy Case Teamlease Good is not enemy of great; NREGA Reduce Unorganized Arbitrage Costs of Social Security/ Unemployment Insurance Apprenticeship Effect Improved Competitiveness Access for Labour Market Outsiders Unemployment Reduction; liquidity provider

18. Closing Thoughts • India; WSJ in 1994 • But largely fixed sins of commission not omission • Skill deficit is worse than infrastructure deficit; inequality • Mismatch • Biggest problem and supply creates its own demand • Massive repair assessment • Re-architect Financing layer • Re-architect Training/ Repair layer • Credible Certification Layer • Labour Law Issue • Corporate India not victim; Thorn • Transmission Losses; Breed Unorganized employment, capital substitution

19. Closing Thoughts • Way forward • Solution not in Totalizing or Microfragmenting • Not only Projects but Policies; ICPs are weather of the moment • Not only Money but Mandate; Leaky pipes, Waste • Mission mode; three levels, three legs of ecosystem • Tryst with Destiny • Missed appointment; 300 million • Unique time in India to create equality of opportunity • Difficult but not impossible. Daily spectacle of the hero/ zero tragedy • An unemployed or unemployable Indian is not a free Indian • Who? When?

20. Employment & EmployabilityIssues, Challenges, Opportunities and the Public Policy Context NHRD Chennai Chapter Savera Hotel Sept 22, 2008