Private sector in vocational education.

AuthorSharma, Neeti
PositionBy Invitation


A million people will enter the labour force in India every month for the next 20 years. This could lead to a potential disaster unless we create a powerful infrastructure and provide easy access to education and skills opportunities. And access comes from the 3Es (Education, Employability and Employment). Our vocational skilling system needs to deliver quantity, quality and inclusiveness and develop a trinity of cost, quality and scale in the skilling system.

53% of the employed youth in India suffer some degree of skill deprivation while only 8% of the youth are unemployed. 57% of India's youth suffer some degree of un-employability. The 82.5 million unemployable youth fall into three skill repair buckets:

Last mile repair (

Interventional repair (0.5-1 year) 21.9 million

Structural repair (1-2 years) 55.4 million

Last mile repair above suggests, simple training in certain basic business etiquettes, communication skills, soft skills and certain generic skills which many of the educated people take for granted, be it even as simple as 'how to wear a tie'. This is exactly the kind of training which a candidate will get if he is given access to the workplace via apprenticeship programs. The source of the problems lies in the mismatch between demand and supply; 90% of the employment opportunities require vocational skills but 90% of our college/ school output has only bookish knowledge. High dropout rates (57% by Grade 8) are incentivized by the low returns of education; 75% of school finishers make less than Rs. 50,000 per year. The poor quality of skills/ education shows up in low incomes rather than unemployment; 45% of graduates make less than Rs 75,000 per year. The situation is becoming more urgent because agriculture is unviable; 96% of farm households have less than 2 hectares. 70% of our population and 56% of our workforce produce 18% of GDP. Demographics can be a dividend or a disaster because 300 million youth will enter the labor force by 2025. In fact 25% of the world's workers in the next four years will be Indian. We also believe that our 50% self-employment rate does not reflect entrepreneurship but our failure to create non-farm jobs and skills. The skill deficit hurts more than the infrastructure deficit because it sabotages equality of opportunity and amplifies inequality while poor infrastructure maintains inequality (it hits rich and poor equally)

The solutions will lie in fixing the challenges of "Matching demand with supply (Employment Reform)", 'Repairing supply for demand (Employability Reform)" and "Preparing supply for demand (Education Reform)".

There are various reforms that can completely overhaul not only India's human capital ecosystem but its whole economy at a cost far lower than what the current policies entail.

Three Buckets of Reform

Broadly put, there are three buckets of reform:

a. MATCHING (EMPLOYMENT REFORM): Better matching the available supply to the demand by removing the various market failures in India's employment/labor markets. This includes removing legislation that breeds unorganized employment, increasing the efficacy of within and across state infrastructure like employment exchanges to connect job seekers with employers, and much else. Most change in this bucket will be pivoted around a review of labor laws and labor infrastructure.

b. MISMATCH (EMPLOYABILITY REFORM): This World--repairing or fixing existing human capital for emerging requirements of a rapidly growing economy. This is particularly important for the people already in the labor force in low productivity jobs or students who have finished formal education that did not give them the skills to get or keep a job.

c. PIPELINE (EDUCATION REFORM): This is about re-orienting our education system to one that focuses on "learning for earning". The current education system has many issues around regulation, curriculum, teacher training, etc. that sabotage work ready output.

In India, both the government and private sector have realized the crucial role vocational education plays in developing skilled manpower which would in turn boost economic growth of the country. The focus of this paper is to identify effective ways and means of vocational skills development plans between the government and private sector.

Private Sector in Vocational Training

India has a significant demographic dividend due to its large and growing population in the age group of 15-59 years. The large working age population is estimated to be upwards of 600 million currently and can make a significant contribution to the country's growth if made productive.

The vocational training infrastructure in India consists mainly of government ITIs (Industrial Training Institutes) and ITCs (Industrial Training Centers), and is vastly inadequate to meet the varied skills required by the Industry. 90% of jobs today require skills where freshers out of schools / colleges possess 90% knowledge and 10% skills as almost all of them do not receive any kind of formal or informal vocational skills within our education system. This leaves a large gap to be filled and the private sector can play a key role in developing the vocational skills. However, the private sector players face many challenges in being able to develop a scalable model for vocational training. Private training providers are unable to setup adequate training facilities due to the lack of access to credit and financing of initial investments.

Another area of concern for private training providers is the level of government bureaucracy they have to face in order to register their training institution, accreditation and certification of courses thereby rendering many institutions unaccredited.

Other concerns faced by private training providers include that of finding skilled trainers, i.e., attracting job seekers into classrooms for training as there is very little prestige attached to vocational training. Another challenge faced by the private training providers relates to "who pays for the training"? High attrition makes employers unwilling to pay for training for candidates; they are willing to pay for trained candidates though. Candidates, on the other hand, are un willing...

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