India’s unemployables

Today’s Financial Times has an excellent article on India’s poorly trained youth.

As economies worldwide – including fast-growing rival China – grapple with the cost of ageing populations, India, with 1.2bn people, growth of 8.5 per cent a year  and a pro-western business elite, is widely expected to be an engine of global growth, both as a market for multinationals and as part of the global supply chain. Its estimated 4m English-speaking software engineers and call-centre workers – as well as talented scientists and investment bankers – create the aura of an emerging knowledge superpower, brimming with untapped talent waiting to be absorbed.

In reality, however, about 50 per cent of the population still lives in rural areas and works in agriculture. Pressures on land are pushing many to seek other opportunities, potentially unlocking a huge manpower reservoir. Many question whether India, with its weak physical infrastructure, restrictive labour laws and stunted manufacturing sector, can create enough work to absorb them.

An even bigger worry is whether most young Indians have, or can be given, the skills required to fill those jobs already available or rapidly being created, both white and blue collar. ….

The crux of the labour problem – the poor employability of many young people – is reflected in the paradox of high unemployment coupled with labour shortages.

Despite the ostensibly favourable demographic trends, companies complain of difficulties recruiting and retaining qualified staff, whether civil engineers and software developers or bricklayers, waiters and shop assistants. ….

Close to one in three of those aged 15 to 35 is functionally illiterate, according to the National Sample Survey Organisation’s most recent data. States with the fastest-growing young populations tend to be the poorest, with the weakest schools and lowest literacy rates. Even rural youths who achieve basic literacy rarely have any vocational training.

While India boasts a few tiny bastions of world-class excellence in higher education, many of its other institutions churn out degree holders who are barely prepared for work. As a result companies must invest heavily in training, adding to their costs.

Amy Kazmin, “India: Labour to unlock”, Financial Times, 5 October 2010.

Ungated version here.

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