Rebuilding the vocational sector - Skilling challenges and opportunities in the new normal

June 8, 2020 Mradul Sharma

While containing the pandemic remains the top priority for most part of the world, it is now clear that the stringent and prolonged measures required for it are having a colossally disruptive effect on both the demand and supply sides of the economy. This has not just severely affected the jobs and livelihood of people, but it is also likely going to cause major re-orientations of labour and industry in the post COVID world.


In this blog, we focus on the largely unorganised vocational sector of India where people depend on their physical skills and turning out in person to make a daily, weekly or monthly wage, both aspects of which have been affected significantly by the lockdown. In India, 93% of the total workforce is from the unorganised sector according to the Economic Survey released in 2019. 75% of those who lost their jobs due to the outbreak are small traders and wage-labourers. It is estimated that over 23 million or 2.3 crore workers have returned home or are on the way as more channels like train services open up. Such large-scale movement is almost impossible to reverse in the short term, especially as the state continues to deal with the pandemic and the future remains uncertain.

The informal sector includes domestic workers, agricultural labourers, artisans, construction workers, street vendors, small manufacturing and production, weavers, animal husbandry, hospitality staff, factory workers, transport and logistic workers, medical helpers, daily wage labourers, shop owners, workers in small and medium industries, and every other worker whose livelihood depends on the daily cash flow.

The sudden loss of income due to the lockdown leading to inability to pay for rent and basic necessities, fear of disease in large cities which have many hotspots, and uncertainty about the future has forced hundreds of thousands of workers to migrate back to their home states. Many of them have also confessed to media reporters that they will be unlikely to return with this experience behind them.

This large-scale reverse migration is quite likely to have its own disruptive effects as we plan to resume economic activity across most industries. If harnessed wisely, this gigantic shift in the skilled/semi-skilled workforce can also act as a fuel for local economies, as workers will scout for work in places near their homes.

Here we discuss the major challenges for the informal sector which come to light in the current situation, and mull a few high level up-skilling, re-skilling strategies to make the most of the disruption, which can lead to some long term positive effects for the skilling ecosystem and consequently the economy.

Challenges

  1. Shortage of skilled workforce at the industrial centres:
    The most urgent and immediate challenge is loss of a big part of active workforce due to reverse migration in industrial states and regions that drive output - Tamil Nadu, Uttarakhand, Karnataka, Chattisgarh, Maharashtra, and NCR are among the top industrial centres in India which have significance for Manufacturing, Power, Textiles, Consumer goods, Oil & Gas, and Chemical industries, among others.

    This means even when a particular industrial area is ready for opening up, there will not be many people to return to work unless there is significantly higher incentive than there was in the first place. There is therefore an urgent need for a plan to get the workforce in place. There will have to be multiple alternative strategies to get this done.
     
  2. Local economies to absorb the influx while sustaining livelihoods and industry:
    As the workforce has returned to the towns and villages it came from, rural and small-town economies now have a two-fold challenge in absorbing the influx productively while also dealing with the pandemic. For the time being, the workers will stay in disguised unemployment through supplemental very small-scale cultivation or other activities like non-agricultural casual labour.
    Therefore, the need of the hour from the local and regional decision makers will be to put cash in peoples’ hands while also creating better value generation to bring their economies back on track.

    These migrants also used to send money back home every month for medical care, rent, school fee, food etc. which amounted to billions of rupees of remittances that will now also be missed by the local economies as they play a vital role in poverty alleviation. For many families in rural areas, remittance is the only source of income.
     
  3. Shift in working models and industrial activities:
    There will also be a larger shift in many industries which employ a large number of informal workers, such as the restaurant industry, which will become low-touch and many business operations that employ manual labour may be forced to automate for the long term to deal with labour shortage in the short term. More digital jobs will be a definitive and likely positive element of this shift. These shifts will also mean that workforces will have to up-skill, shape up and prepare in advance.
     
  4. The standalone skilling engine and initiatives are at a standstill:
    Shutting down of national skill training institutes, industrial training institutes and other skill training centres in the wake of the COVID outbreak is impacting the skilling of millions. Needless to say, this state-powered ecosystem provides income, employment, applied learning, and above all the hope for a brighter future to millions of people while contributing to the economy. Continuity and evolution of this learning ecosystem will be critical to not have a ‘lost year’ which will mean a future shortage in supply of skilled workers and millions of people ineligible for productive work.

Opportunities

While the picture may seem grim at first, every crisis brings opportunities in its wake. If decision makers plan and invest wisely, there will be long term opportunities in the making.

  1. Incentivize and up-skill local talent to rejuvenate regional economies sustainably:
    Local labour is easier to employ, as there is no need for additional housing, and auxiliary support systems which makes them more financially viable; the money earned is also retained and spent locally. This can be positioned as an opportunity for locals who often complain about insufficient jobs for them in the local market. Given the current downturn, loss of income can also be used to jolt them into action. The local governments will have to aggressively invest in up-skilling which can lead to a long-term revival of locally sustainable economies if coupled with adequate industrial investment as well. The public sector could lead the way in resuming production with the help of local workers.
    E.g. The Uttar Pradesh state government is planning to do skill-mapping of over 2 million migrant workers in the quarantine centres, so that they can be provided employment once they complete the isolation period. This data collection can significantly reduce the time and effort required for upskilling and deploying the right people for upcoming jobs
  2. Re-skill for the new economy:
    While upskilling is a necessity, reskilling the already skilled resources should also be made a priority in sectors driving demand. Such jobs include caregivers, grocery store employees, logistics workers, e-commerce employees, support staff for Information & Communication technology, etc.

    The government has announced that it is looking to prepare a comprehensive re-skilling plan for the workers who have lost their jobs which is a step in the right direction. Shift in jobs and industries should be accounted for while planning new training interventions. The employer-led training will help the potential workers to connect with employers easily.
     
  3. Train for the digital shift:
    It is incontrovertible that there is a rise in demand for digital skills in the vocational sector; E.g. Teachers with digital skills are preferred over those without digital skills, as the education and training systems move rapidly to virtual platforms. Similarly, digitally enabled grocery sellers are taking business away from conventional ones. Many new age Indian startups have already proven that a digitally isolated rural population is a myth, with every nook and corner actively using services like Facebook and WhatsApp.

    Therefore, bringing everyone formally into the digital ecosystem by imparting necessary digital skills is a necessity to prepare for the new economy. A quick and robust learning model should be introduced for Digital Literacy along with an advanced training platform which focuses on scalability of the participants. Providing workers with the access to internet at nominal rates can be the other way to increase their engagement in the digital world.  
     
  4. Reimagine skill development for the new virtual age:
    As we look at structural changes in the entire economy, the skill development ecosystem needs to adapt to keep pace. Going virtual is an obvious part, but putting together many other moving parts like gathering data of work force movements, skilling processes, mapping skills to jobs and measuring their effectiveness for continuous learning, will all make for a more effectively positioned plan.

    There is no dearth of technologies and tools that can manage the entire value chain of talent with administrative transparency and smooth distribution of incentives. Assessments for one are coming of age with tools that can virtually evaluate candidates through techniques such as gamification and AI based scoring algorithms, thereby making the process faster, fairer, and more transparent.

Inarguably, re-skilling and up-skilling millions of workers across the country in a short duration is the biggest challenge for skill development sector of India. However, if planned smartly, this can give a new life to India’s vocational sector and help provide momentum to an economy of the future. If used well, this crisis can lead the way towards a much more efficient, and forward-looking skilling ecosystem.

Disclaimer: This document has been provided as an informational resource for Aon clients and business partners. It is intended to provide general guidance on potential exposures, and is not intended to provide medical advice or address medical concerns or specific risk circumstances. Due to the dynamic nature of infectious diseases, Aon cannot be held liable for the guidance provided. We strongly encourage visitors to seek additional safety, medical and epidemiological information from credible sources, such as the Centers for Disease Control and Prevention and the World Health Organization. As regards insurance coverage questions, whether coverage applies or a policy will respond to any risk or circumstance is subject to the specific terms and conditions of the insurance policies and contracts at issue and underwriter determinations.

 

About the Author

Mradul Sharma

Mradul leads Assessment Content, Design and Analytics team at Aon’s Assessments Solutions, in India. With 9+ years of professional experience, his focus areas include development of technical and abilities assessments for hiring and selection, and Talent Analytics to support organizational decisions.

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