Some inputs for World Bank-World Development Report 2019

Let us look at workforce development in India as an example. The Government of India planned move to shift from a supply-driven to a demand-driven skills system from 2010 onwards led to the creation of an ecosystem with sector skill councils, private training providers, NSDC, etc. Broadly there are 5 pillars of skill education in India: a. Vocational Education in Schools and Higher education, b. Vocational Education by National Skill Development Corporation’s Private Vocational Training Partners (VTPs), c. Public and Private Industrial Training Institutes, d. In plant training by companies and e. the Skill Development schemes of the various 16 ministries of the Government of India.However, all these five pillars work in silo and leads to poor outcomes. What is required is to make one system; create one law and one national vocational education and training system. We need to create a unified national vocational system where the ITIs , NSDC private vocational trainers and vocational education in schools, and the otherCentral ministries conducting training, gel seamlessly and can learn from, and work with each other. A unified legal framework can facilitate such a unification. The absence of a law has only weakened regulation and monitoring and a National Vocational act that replaces all scattered regulations.

Additonally, skills are the software of business and the private sector is it’s hardware.The hardware is only as good asthe software it uses. The private sector understands thissoftware the best; it knows when to repair, how toupdate and what its future requirements will be. Hence, a more intensive and holistic role of the private sector is the only way to provide for on demand skills. However, this is a perennial challenge.Given the scale of the demographic challenge like the one in India, a belief that financing from corporate social responsibility, multilateral organisations and the government will meet the financial needs for skill development is wishful thinking. One key way to mobilise adequate resources for skills training, have equipment and tools that keep pace with changing needs and to ensure that employers have skin in the game is the Reimbursable Industry contribution (RIC) — a 1-2% payroll tax that will be reimbursed when employers train using public/private infrastructure and provide labour market data. RIC, which is in some forms implemented in 62 other countries is an idea whose time has come in developing countries. It can be a way to bring all employers onto acommon platform for skill financing by addressing the moral hazard problem(“One company will not skillits workers as others will poach them, and vice versa”). Such a ‘employer-skin-in-the-game’ mechanism means that industry makes a financial contribution, which goes into an training fund, over which private sector exercises control. RIC leads to better alignment with private sector skill needs and incentivizes industry which is reimbursed the costs for in-house or pre-employment training.

Mehrotra S., Singh A.P. (2018) TVET Financing and Employer’s Ownership in
Skills Training for an Emerging Workforce. In: McGrath S., Mulder M., Papier J.,Suart R. (eds) Handbook of Vocational Education and Training: Developments in
the Changing World of Work. Springer, Cham

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