Mismatch of supply and demand in SKILLS

Missing 100 million youngsters outside India’s skill ecosystem arise from a market failure in financing.

There are three pressing problems in skills:

• Connecting matching supply to demand.
• Repair mismatch of supply for demand.
• Prepare pipeline of supply for demand.

Market failure in financing skills straddles all three problems.

Employers are not willing to pay for training or candidates, but are willing to pay a premium for trained candidates.

Candidates are not ready to pay for training but willing to pay for a job.

Financiers are unwilling to finance skill development unless a job is guaranteed.

Skill providers are unable to fill up their classrooms because youngsters can’t pay.

This situation demands immediate action. The unwillingness of employers to manufacture their employees – finance skilling from their revenues – arises from three holes in the bucket:

• They pay for training, and the candidate doesn’t get a job.
• They pay for training, and the candidate gets a job but is not productive.
• They pay for training, and the candidate gets a job and is productive, but leaves.

So, learning productivity and attrition risks have made employer financing unviable.

The skill ecosystem should be aligned with employer supply chains through three reforms to NEP- enable degree apprentices (DA). These reforms would not only create new financing for ‘repair and prepare’ of millions of youngsters but also create structural connectivity between education, employability and employment:

DA meet policy and employer priorities. From a policy perspective, they solve matching (employers take potential employers for a test drive), repair (students learn firm-specific skills) and prepare (students get a broader education). From an employers perspective, they crate scalability, reliability and generalisability.