2/5/2009. Contents. Skill Development Initiatives the way ahead. Indian economy Then and Now. Transition in nature of employment

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1 Human Resource Requirements in arious states Skill Deelopment Initiaties the way ahead The way ahead ICRA Management Consulting Serices Limited Indian economy has witnessed steady growth in the last few years GDP in 000 Rs. Cr 3,000 2,500 2,000 1,500 1, ,580 2,368 2,204 1,842 1,952 2,028 India has witnessed steady growth in the last few years a growth rate of 7% on an annualised basis between 2001 and Seeral states such as Gujarat, Maharashtra, Andhra Pradesh, Punjab, Tamil Nadu and Karnataka hae been at the forefront of this growth story. Indian economy Then and Now THEN In % % 22% 24% 25% 29% 31% 25% 27% 28% 54% 52% 50% 48% 44% 43% 0% 40% 60% 80% 100% 54% NOW! In Source: Central Statistical Organization, IMaCS analysis. Source: Central Statistical Organization, IMaCS analysis. Transition in nature of employment Composition of GDP in Composition of GDP in % 31% Proportion of people employed in Agriculture ~ 67 % Agriculture continues to be the largest employer 54% Proportion of people employed in Agriculture ~ 58 % Manufacturing and Serice Sectors hae emerged as important employment proiders India s economic landscape will be shaped mainly by following high growth industries High Employment Potential Low Low Chemicals & Fertilizers Greater is the size of the bubble, bigger is the size of the industry Textiles Tourism Financial Serices Auto and Engg Competitie Positioning IT & ITES Healthcare Agro and Biotech Food Processing Paper Mines & Minerals Drugs and Pharma High 1

2 IMaCS has conducted skill mapping studies in arious states and identified human resource requirements Human Resource Requirements in arious states IMaCS has conducted skill mapping studies in association with Confederation of India Industry (CII) in seeral states The studies hae been conducted in a cross section of states: Tamil Nadu Andhra Pradesh Maharashtra Jammu and Kashmir Punjab These studies present the dimensions of the skill gap problem. Employment projections in major industries in select states - till to to to 0.5 A snapshot of how these human resource requirements span out in Tamil Nadu for high growth industries Textiles Employment (in 000s) Incremental 2015 (in 000s) % of incremental 2015 Curren t %-39% %-14% Leather %-8% Financial Serices % 6 to to 8 Auto ITES IT % 2% 3% 13 to 15 Light Total incremental employment (in ) Source: IMaCs analysis 0.1%-0.2% A snapshot of how these human resource requirements span out in Maharashtra for high growth industries Organised Retail IT and ITES Banking, Financial Serices, and Insurance Agro Processing Pharmaceuticals Chemicals and Petrochemicals Auto and Auto Components Key Industries 1,143 1,203 1,916 3,064 Total Demand all industries* - 6 to ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Incremental human resource Requirement till 2012 (in 000s) 4,402 Employment by ('000s) Current Employment ('000s) * - The secondary and tertiary sectors considered here exclude sectors such as Utility Serices, Public Administration and Defence, Transport, Storage and Communication, Unorganised Trade. 1,338 1, A snapshot of how these human resource requirements span out in Andhra Pradesh for high growth industries Textiles IT and ITES Healthcare Tourism Drugs and Pharma Banking and Insurance Mines and Minerals Agro and Food processing Chemicals and Fertilizers Biotech Paper Key Industries 1,366 1,826 2,200 Total Demand to 8 Incremental Human Resources Requirement till 2015 (in 000s) 4, ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Workforce in '000 s Employment by ('000) Current Employment (000) 2,010 1,

3 A snapshot of how these human resource requirements span out in Punjab for high growth industries Sector Employment ('000) Incremental (current ) Textiles Auto & auto components Food processing Light engineering i IT & ITES Real estate & construction Retail and location-based entertainment Total in high growth industries Other industries Total in economy Roughly 1.9 people needed in the high growth industries and 2.9 in oerall industry by 2015 The human resource requirements will be at arious leels as illustrated below Specialised Skills Skill Category Leel II SkillCategory Leel I Minimal Education (Skillable) Total Demand TN 3-4 % 21 27% 70 75% 13 to 15 Punjab J&K AP Maharashtra 1-3 % 22 28% 1% 24 29% 4-5% 10-12% 45-46% 6-7% 35-37% % 80 85% 38-40% 31-33% 1.8 to to to 8 6 to 6.5 The expected economic growth of oer 8% necessitates demand for skilled workforce. Howeer Human Resource Requirements in arious states - 44% of all workers illiterate % of workers only primary schooling - In the age group of years, only 5% of the workforce had ocational skills - While, Mexico had 28% - Only 10.1% of male workers and 6% of female workers had marketable skills - While, Korea had -96%; and other industrialised countries 60%-80%. Source: Planning Commission, Goernment of India only a small portion of human resources hae employable skills Key issues in the current education system Arts, Science, Commerce Vocational Education and Training Lack of focus on employability Lack of industry institute linkages Inadequate practical orientation ~ 7 lakh ~ 98 lakh ~ 11 lakh Only 30% - 40% of students are employable Infrastructure bottleneck Policy support Source: Selected Educational Statistics , Ministry of Human Resource Deelopment, Goernment of India, Enrolments in the year 2005, NTMIS 3

4 A sizeable portion of engineering graduates are unemployed A sizeable portion, about 18%, of the engineers who graduate are unemployed. About 12% of the engineers who graduate proceed for further studies in India or abroad. Only 30% to 40% of students find employment within one year of earning the degree While the aboe scenario is for Maharashtra, a similar situation has been obsered in other leading states such as Andhra Pradesh Studying abroad 1.5% Studying in India 10.2% Self employed Degree: Distribution of Engineers by Actiity Status* Unemployed 18.3% 2.6% Working abroad 2.8%.this indicates that a significant portion of the workforce is unemployable. Working in India 64.6% A sizeable portion of diploma graduates are unemployed and many of those who graduate proceed for further studies A sizeable portion, about 15% to of diploma graduates are unemployed* More than 35% proceed for further studies. While the aboe scenario is for Andhra Pradesh, a similar situation has been obsered in other leading states Distribution of Diploma Holders by Actiity 0.16% 6.56% 20. Unemployed 18% Studying in India Studying Abroad Self Employed 39% 1% 1%.this lays the seeds for a shortage in the workforce at the superisory leel. Source: Annual Technical Manpower Reiew, NTMIS, IMaCS analysis * - for the state of Maharashtra Source: Annual Technical Manpower Reiew, NTMIS, IMaCS analysis * - for the state of Andhra Pradesh Further, studies conducted by ILO reeal that there is significant scope for improement in the ITI/ITCs Indicator Orissa Andhra Pradesh Maharashtra Student retention rate 80.9% 68.3% 85.6% Student graduation 88.3% 62.9% 77.5% rate Utilisation of seating 102.1% 77.4% 92.2% capacity Oerall internal 73.8% 31.8% 62.6% efficiency*.this implies the need for increasing the oerall efficiency of ITI/ITCs. There are significant challenges in Higher and Technical Education* Industry perceies that only around 40-50% are employable. Substantial time, effort, and cost is expended on training. - Currency of curriculum - Infrastructure - Need for Autonomy - Need to increase the reach and coerage of Centre of Excellence (CoE) scheme in ITI - Awareness of career opportunities is low - Need to ease procedures for introduction of courses and release of funds - Need for practical ltraining i and insight i - The need for structured integration of English language skills into curriculum - Need to inculcate basic work skills in curriculum, especially in Tier 2 cities Curriculum is not geared to meet the needs of sunrise industries such as serice sectors, front-ending, retailing, sales and support Source: ILO study on ITI of India, the efficiency study report, sample across 3 states Orissa, Andhra Pradesh, and Maharashtra * - % of total number of sanctioned seats producing graduates Source: sureys, IMaCS analysis * - Comprising, Arts and Science, Diploma Polytechnics and ITI/ITCs This leads to a demand-supply gap in the skilled workforce Demand /s Supply gap for skilled Human Resource till 2015 Punjab Andhra Pradesh Human Resource Requirements in arious states Tamil Nadu J&K Supply Demand 4

5 Identified high growth sectors across states Underlines the need for sector leel iew of skill deelopment issues in addition to state leel iew Textiles, Auto/ Auto components, Light Engg., Food Processing, Real Estate and, Retail and Location based entertainment Handicrafts, Hospitality, Agro- processing,, ITES, Repair Sericing, Pharma, Textiles, Tourism, Cement, Power, Repair Sericing, Light Engg, ITES State leel studies Help identify unique requirements of each state Help identify key industries in each state Certain initiaties need to be addressed at the state leel. Banking, Financial Serices and Insurance,, IT and ITES, Auto and, Organised Retail, Pharmaceuticals, Chemicals and Petrochemicals, Textiles, Tourism, Healthcare,, IT/ITES, Pharma, Biotech, Paper, Minerals Textiles,, Auto / Auto components, Light, IT/ITES, Leather Common high growth sectors:, IT and ITES, Tourism and Hospitality, Auto and Auto components,, Agro Processing, Organised Retail, Handicrafts, Sericing, Textiles Sector leel studies Help identify unique requirements of each sector Help in proiding detailing for stakeholder interentions which are common across states and can be addressed at sector leel, such as Cluster leel initiaties Curriculum updation. Broad skill deelopment initiaties are required Employment Generation Initiaties Skill deelopment initiaties targeted at the specific skill leels of the workforce is key to addressing the skill gaps in the arious states and industries/sector. Specialised skills skills such as Research and Deelopment, Risk Management Skill Leel II skills such as software engineering, marketing, quality control Skill Leel I skills such as superisory, maintenance, and specialised operations Semi-skilled skills such as floor operations, basic equipment operations, handling repetitie machine tasks Minimally skilled - helping, cleaning, housekeeping Specialised skills required for creating R&D, design, testing, and deeloping Intellectual Property. Sector focussed, employable, skill deelopment initiaties Generic employment generation initiaties Employment Generation Initiaties i i focussing on: Farm to Work Programme School to Work Programme Certification of Experiential Learning A snapshot of generic employment generation initiaties Employment Generation Initiaties aims to focus on enabling employment generation especially in the backward regions targeted at those who are minimally educated. Farm to Work Programme Cultiators who are moing out of farming, marginal workers, agricultural labourers who are not occupied with farming during specific seasons. School to Work School leaers of working age, school educated youth who hae not found jobs, school leaers who hae not worked in the organised sector. Certification of Experiential Learning Those who are illiterate or minimally educated but hae significant on the job experience can aail of better employment opportunities if they can obtain independent certification of skills learnt. Employability focussed skill deelopment initiaties Employability Deelopment Initiaties focussing on: Deelopment of Modular Serices Training Centres (MSTCs) Basic and Adanced Job Oriented Semester Programme Skills Registry and Information Cell Industry Posting Programme Awareness building for Modular Focus to Vocational Training Demand-led Curriculum Enhancement Programme Performance Measurement and Outcome-led Funding 5

6 A snapshot of sector focussed, skill deelopment initiaties aimed at increasing employability Measure performance of institutes ITI, Performance ITCs and measurement and Polytechnics, link outcome-led funding funding to outcomes, and thereby to demand Fine-tune Demand-led curriculum to meet Curriculum industry Enhancement requirements Programme Modular Serices Training Centres Employability Leerage on Awareness building framework created by for Modular Focus to DGET to promote Vocational Training ocational skill building Tap growing demand in Serice Sector Job Oriented Semester Programme Increase industryreleant practical skills Skills Registry and Information Centre Create access to skilled human resource and market linkages Industry Postings Programme Teacher Training Programmes to update knowledge Specialised Skill Deelopment Initiaties Specialised Skill Deelopment Initiatie focussing on: Sustaining competitieness through deelopment of specialised skills A snapshot of Specialised Skill Deelopment Initiaties 1 A snapshot of Specialised Skill Deelopment Initiaties 2 Objectie Implementation Specialised skills, though employing a lesser proportion of human resource as compared to the other skill leels, is the drier of competitieness Deelopment of specialised skills is key to sustaining competitieness. We propose that this be an actie focus area of Goernment, Industry and Institutes of higher learning. The Goernment, Industry and Institutes of higher learning work together to identify areas where specialised skill sets are required A nodal agency comprising all three spearheads the process Select institutes are identified where specialised courses are taught These courses would be at managerial and research leels Institutes of higher learning, Industry and Goernment work together in deeloping such courses Courses deeloped would be in the form of modules which can be coered in short duration These courses can be a part of the college curriculum for the benefit of students, and also be offered to mid and senior leel working professionals who choose to upgrade their skills. Modular deliery of specialised courses The courses can be funded by the Goernment/charged to Industry. Content t Areas The following are some examples areas where specialised courses can be deeloped and offered: Auto and Design and high end testing Project Management and Human Resource Management Chemicals and Petrochemicals areas such as Petrochemical, Chemical manufacturing processes Pharmaceuticals R&D and deeloping IPR IT and ITES High-end computing, emerging technologies and architectures Agro Processing new processes, preseration and treatment. Organised Retail Supply Chain Management, Storage processes, Merchandising. Banking, Financial Serices, and Insurance Risk Management, Commodities, Banking operations, Microfinance. The skill deelopment initiaties require funding which can be raised through arious models Best suited for employability deelopment initiaties Partnership Model Thank you Disclaimer: ICRA Management Consulting Serices Limited (IMaCS) do not assume any liability, financial or otherwise, for any loss or injury that the user of this document may experience in any transaction. All information contained herein is obtained by IMaCS from Goernment Funded Model Funding Models Self Sustaining Model sources belieed by it to be accurate and reliable. Although reasonable care has been taken to ensure that any information herein is true, such information is proided as-is without Best suited for employment generation initiaties Priate Funded Model A mature state model when the initiaties become self sustaining any warranty of any kind and IMaCS, in particular, makes no representation or warranty, express or implied, to the accuracy, timeliness or completeness of any such information. The contents of this document may not be reproduced wholly or in part in any material form, Best suited for deeloping specialised skills including photocopying or storing it in any medium by electronic means, or communicated to any third party except with the written approal of IMaCS. 6