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Lack of Skills the Only Reason for Rising Unemployment?
Lack of Skills the Only Reason for Rising Unemployment?

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Recently, I had the opportunity to attend a closed-door discussion on the issue of rising unemployment in the country. As a analyst who has been tracking skilling and talent from the tech industry perspective over the last few years, I went into the discussion assuming that this would again be a discussion which will talk AI, how it impacts jobs, new technologies that are becoming of paramount importance for industries to succeed. But to my surprise, it only touched upon skilling, but discussed a lot more on issues and challenges that are impacting on the ground. I have summarized a few pointers below:

Lack of Reliable Data

In India the lack of reliable data on various economic parameters specially unemployment remains a key challenge. Thus, if we see the numbers that we have today, we cannot be sure if that is the actual unemployment scenario in the country. There are broadly two reasons for the same:

  1. Does this data account for contractual employment, daily wagers who are not employed by government programs, a large number of maids, drivers, gardeners and so many more people who are not registered anywhere.
  2. The huge amount of disguised employment that we can never account for in the country’s agriculture sector.
  3. Considering there is no formal way of collating data of laborers amidst an ever-increasing population, this would continue to remain a key challenge in the coming years

Rising Burden on MSMEs to support employment

Whatever, be the case if we have to go by the data we have, we can see a significant rise in unemployment over the last few years.

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One of the key initiative that has seen a lot of focus in terms of increasing employment is the push towards the MSME segment. And compared to global statistics this push is warranted for as according to McKinsey Global Institute report “The micro, small, and medium enterprises (MSMEs) in India contribute 62% to employment, as opposed to 77% in other emerging economies”. The report also highlights that MSMEs in India contribute 30% to the overall business value added, as opposed to 49% in other emerging economies.

Basis the latest data from Udyam:

There were 4.6 crore MSME in the country employing a total of over 20 core people, which means on average less than 5 people per company. This highlights scope for more employment across the sector.

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Source: Udyam

Now this brings us to the question what is the reason for this gap and how can we bridge that. Lets first look at the reasons for this gap:

Lack of Agility in Compliance

Now when we talk about employment, we also see the lack of women being employed in the sector. Now the reason though organizations don’t talk about that on record is the issue with various compliance that are mandatory when they employ women. For some smaller companies that could be difficult specially when they are setting up their business. Similarly there are more such compliances that make it difficult for them to follow. Also, for some regulatory issues across industries there are challenges that remain with respect to “doing business”. This leads to a separate discussion all together (May be another blog).

Dying culture and heritage

Another area which could become a huge success story for the country and is witnessing a huge neglect are the Artisans of the country, who are not seeing any future for themselves and thus are pushing there generations out of their ancestral art. I just want to highlight here the Frech Perfumes today is a billion-dollar industry but our own Kannauj is dying. This is one example we have so much more. Can MSMEs focus on these areas, also can we have incentives from the government for this – some food for thought.

The Lack of Willingness/ Set Notions

Enough issues on the demand side but what about the supply side – are the people willing to work? Unfortunately, the answer to this is “No”, as today’s generation is only willing to work in Ac offices despite the fact that there older generations have toiled in the heat. Just one example of a Tier 3 city job fair – 10,000 opening; 2000 offer letters and only 32 joinings????

Reason – the jobs don’t offer them a seat in an AC office.

Now lets talk skills we can not close without that -  With engineering colleges mushrooming across the country with the archaic syllabus they continue to teach, today most engineers are not fit for the jobs they aspire for. And if you ask them to train for a technician role,  they are not interested. The system is also to blame in India we do not have the dignity of labor. On the other hand a huge number of qualified employed engineers today lack the knowledge for new age employees. So definitely a need to upskill here.

What can we do to make things better?

Everything that has been discussed across various platforms, and remains relevant:

  • Labor card for the labourers who keep switching there every day jobs, at least we know how many such ppl are there in such roles and how many days they are able to find work for themselves
  • Stringent but agile policies and regulations start from the grass root levels and are the same across states and districts (Easing the expansion across the country)
  • Train more technicians who can be employed than archaic course-driven engineers, and revise the curriculum at all levels specifically at schools, Tier 2 and 3 colleges
  • It might sound rude but like doctors engineers also need to upskill not by choice but for their survival
  • Lastly, efforts must be made to support our culture and heritage by supporting our Artisans.

To conclude it is a collective responsibility of all stakeholders including the Society. Let's do our bit as well.


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Neha Jain
Senior Analyst

Neha Jain

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