By Sarah Syed
Every second article on employment statistics today mentions the two words – skill gap – the disparity between the skills required for a job and the actual skills that employees possess. The higher the skill gap, the greater the cause for concern, for both individuals and the economy. Industrial policy and government measures together, can perhaps begin to help solve it.
As of July 2024, the skills versus employment scenario in India highlights significant mismatches. The unemployment rate in India stands at 9.2%, with youth comprising a significant portion of the unemployed population, largely due to the skill mismatch between what colleges teach students and what the markets require of its employees. The India Skills Report 2024 underscores this skill gap, noting that only about 50% of graduates are considered employable by industry standards. Areas of fast and emerging technologies such as AI, machine learning, and data science face substantial skill shortages, with a gap of 60% to 73% between demand and supply.
Why does the skill gap exist?
There are multiple reasons that researchers and analysts have attributed to the widening of skill gap in the face of evolving technology, global competition, and more.
- The curriculum in educational institutions may not align with industry needs, producing graduates who lack relevant or practical skills. Educational systems or training programs often struggle to keep up, leading to workers lacking up-to-date skills.
- Certain regions may have less access to quality education and training facilities, leading to a localised skill gap.
- Lack of proper career guidance and awareness about in-demand skills can lead to individuals pursuing careers that are not aligned with market needs.
- Industries evolve and may require new skills due to changes in regulations, market demands or technological innovations.
- Companies may not invest enough in training and development programs to help employees upgrade their skills or learn new ones.
- Economic downturns can limit resources available for training and development, and layoffs can disrupt the skill development pipeline.
A great example of this could be that an engineering graduate who hasn’t been placed in a good company after graduation struggles to find employment even though job opportunities are increasing day by day. To add to this, the domination of technologies like AI, automation and robotics have become great disruptors of employment.
The Times of India says that the advent of Artificial Intelligence (AI) casts a “huge pall of uncertainty” when it comes to jobs, considering its impact on workers across all skill levels – low, semi and high, as per the economic survey. “The biggest disruption for the future of work is the accelerated growth in AI, which is poised to revolutionise the global economy. India would not remain immune to this transformation.” Automation and robotics on the other hand are transforming industries by taking over repetitive and manual tasks. This shift is particularly evident in manufacturing, logistics, and even services like customer support.While automation improves efficiency and reduces costs, it also leads to job displacement for roles that involve routine tasks.
The industrial effects of educational policy
Here is what the statistics say – an enormous skill gap exists in India; around 31% are illiterate, only 13% have primary education, and 6% are college graduates. Only about 2% of the workforce has formal vocational training, and 9% have non-formal, vocational training – a thing that India’s industrial policy must address.
Vocational training focuses on developing technical skills for a specific job or trade. It offers you practical knowledge in contrast to theoretical knowledge offered by the conventional formal education system.
According to the India Skills Report 2024, as of August 2023, there were 4.16 lakh AI professionals in India, and their demand is expected to reach 1 million by 2026.
Even though currently, India currently holds a prominent global position in AI skill penetration and talent concentration, it has a 60%-73% demand-supply gap in key roles such as ML engineer, data scientist, DevOps engineer, and data architect.
Here is some data to analyse the current status of employability-
| Criteria | Statewise distribution |
| Overall employability | 51.25% |
| Top State for Employability | Haryana (76.47%) |
| Top Age Group (22-25 years) | Uttar Pradesh (74.77%)
Maharashtra (71.97%) |
| Top Age Group (18-21 years) | Telangana (85.45%), Kerala (74.93%) |
| Top Age Group (26-29 years) | Gujarat (78.24%), Jharkhand (76.56%) |
| Top Cities (18-21 years) | Pune (80.82%), Bengaluru (72.18%) |
| Top Cities (22-25 years) | Lucknow (88.89%), Mumbai (82.45%) |
| Top Cities (26-29 years) | Pune (85.71%), Lucknow (75%) |
| Top Domains for Employability | MBA (71.16%), IT (68.44%), BE/BTech (64.67%) |
| Top States (MBA) | Maharashtra (73.15%), Madhya Pradesh (61.11%) |
| Top States (BE/B. Tech) | Maharashtra (80.56%), Andhra Pradesh (73.23%) |
| Top States (MSc) | Haryana (90.48%), Uttar Pradesh (80.00%) |
| Top States (Female Employability) | Haryana (49.58%), Andhra Pradesh (39.96%) |
| top Cities (Internship Seekers) | Andhra Pradesh (98.33%), Telangana (96.72%) |
| Top Cities (Male Talent) | Pune (75%) |
| Top Cities (Female Talent) | Bengaluru (44.01%) |
| Top States (Numerical Skills) | Telangana (78.68%), Andhra Pradesh (69.45%) |
| Top States (Critical Thinking) | Telangana (37.70%), Maharashtra (33.15%) |
| Preferred Work Locations | Kerala, Cochin (females), Bangalore (males) |
Source: The India Skills Report 2024
Even with such an employable workforce, the unemployment rate in India rose to 8.1 per cent in April 2024 from 7.4 per cent in March 2024.
According to CMIE’s Consumer Pyramids online survey, the rural unemployment rate climbed to 7.8 per cent in April from 7.1 per cent in March while the urban unemployment rate rose from 8.1 per cent to 8.7 per cent.
Skills in demand
According to Dan Brodnitz , Head of Global content LinkedIn Learning, the most in-demand skills of 2024 are
- Communication
- Customer service
- Leadership
- Project management
- Management
- Analytics
- Teamwork
- Sales
- Problem-solving
- Research
Top skill of the moment: Adaptability
The top skills that will be paying high in the future are-
- Data analysis and management
- Artificial intelligence and machine learning
- Cybersecurity
- Cloud computing
- Robotics and automation
- Digital marketing and social media management
- Project management
- User experience and user interface design
- Augmented and virtual reality development
- Software development
The socio-economic problems that follow the skill gap
The skill gap and the resultant unemployment are not just an economic crisis but a socio-cultural one, threatening micro and macro community peace. An industrial policy to curb the skill gap, then, is in the good of society.
Take for example the case of Gadchiroli, a region long affected by conflict. However, industrialisation efforts over the last three years (built on its mining potential) have helped the region gain stability and growth. The Maharashtra Chief Minister has stated that Gadchiroli has been seeing a reduction in Naxal activity because of a rise in employment.
Unemployment not only affects the individual but also the family and their social environment. Economic downturns and personal financial crises can also cause uncertainty and household stress, which may escalate cases of domestic violence.
Stress-based and socio-environmental theories of alcoholism coupled with empirical research on the health and social costs of unemployment have suggested that the unemployed may be “at risk” for abusing alcohol, which is both a public health and personal finance crisis. Specifícally, the unemployed are said to abuse alcohol as a means of coping with financial stress triggered by job loss. Some people may resort to illegal means to meet their basic needs or maintain their standard of living. (Source: PubMed)
Recent studies (published in Nature) have shown that situational factors leading to either unemployment or underemployment appear to be associated with the risk of common mental health consequences, such as depression, anxiety, and stress.
Underemployed or unemployed individuals often feel neglected and frustrated, which may lead to psychiatric suffering. In extreme cases, they can develop drug addictions and engage in criminal activities.
Bridging these gaps
In spite of automation technologies restructuring workforces, the manufacturing sector has the potential to accommodate seven to eight million youths entering the labour force annually, as per the ‘India Employment Report 2024’ released by the International Labour Organisation (ILO) and the Institute for Human Development (IHD). (Source: News18).
In order to bridge the gaps to make the most of these opportunities, it is necessary that the government, individuals as well as corporations make collective efforts.
A systematic approach that begins with mapping existing skill deficiencies through a thorough assessment that involves analysing job roles, current skill levels and industry demands and specific areas for improvement in each sector needs to be carried out. Based on this assessment, tailored training programs should be developed to efficiently address these gaps on a national level.
The approach of educational institutions must shift to skilled-based learning and practical knowledge should be payed attention to. More attention should also be given to teaching children the skills that are going to be the future, and providing them with the right training ground. For instance, using technological amenities can help students get accustomed to tech and innovation. Introducing programming early on can help them gain data analytics skills faster. Allowing mother language education can help them avoid rote learning new concepts. The list of changes is endless, and the National Education Policy tackles some of them. But execution remains a challenge.
Policy can only solve one half of the problem…
As mentioned earlier, structural problems like these require the collaborative solutions across governments, business organisations and industry, and individuals.
The following practices by organisations can make a huge difference in decreasing the current skill gap:
- Conduct regular reviews to identify skill gaps, provide constructive feedback and set development goals.
- Offer regular training sessions and workshops and encourage a culture of ongoing education and development. These can be conducted in collaboration with educational institutions.
- Establish mentorship programs to guide less experienced employees.
- Promote job rotations and cross-departmental projects for early career employees and encourage them to take on new roles and responsibilities.
- Invest in the latest learning technologies and tools and use AI and machine learning technologies to identify skill gaps and recommend training.
The economic growth of a nation highly depends on the skilled workforce. India’s GDP grew at 7.8 per cent annually in the last quarter (Q4) of FY24. The overall growth rate for FY24 is projected to be 8.2 per cent, as per the Ministry of Statistics and Programme Implementation (MOSPI).
Closing the skill gap will be priority to make this happen.
