Employability Issues and Impact SPEAKER: Venkat Matoory 1 Executive Director JA India http://india.ja.

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Talent shortage in India You probably know this already? 500,000 Suitable graduates needed by 2010 (IT-BPO sector) 1 Million Manpower required in Retail in 2008 Source: McKinsey report & Business Line 2

How many graduates does India generate p.a.? 1,000,000? Or even more! 3

Unemployment! A simmering problem Opportunity generation needs to be wider and deeper 16.00 16.00 14.00 14.00 1 # of heads (Mn) # of heads (Mn) 12.00 12.00 10.00 10.00 8.00 8.00 6.00 6.00 4.00 4.00 2.00 2.00 Crossing 16 yrs Crossing 16 yrs VII 1997 - 98 VII 1997 - 98 X 2000 - 01 X 2000 - 01 XII 2002 - 0 3 XII 2002 - 03 Graduates 2003 Graduates 2003 - 04 - 04 2 3 4 Organized Organized Employment Employment Source: Secondary research Estimated enrollments per year 10% growth perhaps enough but what about the growth model? Need more jobs but wh o will create them? 4

In a country of 1.1 billion people Talent shortage? 5

Should we be concerned? Does this impact our nation and its citizens? Relative per capita economic output (Vs India) % Country 1200% 875% 210% Population (Mn) 301 60 1,321 1,129 127 4.5 27 6 GDP ($ Bn) @ PPP for Non US Nations USA UK China India Japan Singapore Saudi Arabia Israel 13,130 (Base) 1,930 (2,346) 10,170 (2,518) 4,156 (804) 4,218 (4,883) 141(122) 14 1(122) 366 (270) 170 (140) 900% 850% 370% 800% India: A very talented workforce yet other nations workforce generating more! Indi a: A very talented workforce yet other nations workforce generating more! How do we get affected therefore? How do we get affected therefore? 6

UNEMPLOYABILITY and UNEMPLOYMENT Urgent crisis and current interventions are not delivering Unviable Agriculture; Unviable Agriculture; 96% of farm households have less than 22hectares. 96% of farm households have les s than hectares. 70% of our population and 56% of our workforce produce 18% of GD P 70% of our population and 56% of our workforce produce 18% of GDP Demographics; 300 million youth will enter the Labour force by 2025. Demographics ; 300 million youth will enter the Labour force by 2025. 25% of the world s workers in the next four years will be Indian 25% of the world s workers in the next four years will be Indian Our 50% self-employment does not reflect entrepreneurship but our failure to crea te Our 50% self-employment does not reflect entrepreneurship but our failure to create nonfarm jobs and skills nonfarm jobs and skills The skill deficit hurts mo re than infrastructure deficit: The skill deficit hurts more than infrastructure deficit: ItItsabotages equality of opportunity and amplifies inequality sabotages equality of opportunity and amplifies inequality While poor infrastructure maintains ineq uality (it hits rich and poor equally) While poor infrastructure maintains inequ ality (it hits rich and poor equally) The increasing returns to skills and skill deficit are reflected in the 10% incre ase in The increasing returns to skills and skill deficit are reflected in the 1 0% increase in inequality (Gini coefficient) since 1994 inequality (Gini coeffic ient) since 1994 7 Source: The India Labour Report 2007: The Youth Unemployability Crisis By TeamLe ase Services

UNEMPLOYABILITY: A bigger crisis than UNEMPLOYMENT 57% of India s youth suffer some degree of unemployability 57% of India s youth s uffer some degree of unemployability While only 8% of youth are unemployed While only 8% of youth are unemployed 53% of employed youth suffer some degree of skill deprivation 53% of employed yo uth suffer some degree of skill deprivation The 82.5 million unemployable youth fall in three skill repair buckets: The 82.5 million unemployable youth fall in three skill repair buckets: Last mile repair (< 0.5 yrs) Last mile repair (< 0.5 yrs) Interventional repair (0 .5-1 yr) Interventional repair (0.5-1 yr) Structural repair (1-2 yrs) Structural repair (1-2 yrs) : : 5.3 million 5.3 million :21.9 million :21.9 million :55.4 m illion :55.4 million 8 Source: The India Labour Report 2007: The Youth Unemployability Crisis By TeamLe ase Services

Is our human resource Constraining economic growth? 9

The Demand Supply mismatch 90% of employment opportunities require vocational skills 90% of employment oppor tunities require vocational skills But 90% of our college / /school output has bookish knowledge But 90% of our col lege school output has bookish knowledge High drop out rates (57% by Grade 8) are incentivized by the low High drop out ra tes (57% by Grade 8) are incentivized by the low returns of education; returns o f education; 75% of school finishers make less than Rs 50,000 per year 75% of school finisher s make less than Rs 50,000 per year Poor quality of skills //education show up in low incomes rather than Poor qualit y of skills education show up in low incomes rather than unemployment; unemploym ent; 58% of graduates makes less than Rs 75,000 per year 58% of graduates makes less than Rs 75,000 per year 10 Source: The India Labour Report 2007: The Youth Unemployability Crisis By TeamLe ase Services

Is there a need for us to relook at how we prepare our future work force? Do students understand the working world? And the ways to engage with the Do stu dents understand the working world? And the ways to engage with the working worl d? working world? Do they understand how economic, social and business environme nt are impacted Do they understand how economic, social and business environment are impacted by work? by work? Do they understand the role of the individual, t heir education and specific abilities for Do they understand the role of the ind ividual, their education and specific abilities for succeeding in the real world ? succeeding in the real world? Are they prepared for the real world? Are they prepared for the real world? 11

Thank You! JUNIOR ACHIEVEMENT INDIA SERVICES (A Company registered under Section 25(1)(a) of the Companies Act, 1956) http://india.ja.org 12