Breakfast Meeting: Smart Business Infrastructure – ‘Education, Employment and Employability; India’s Challenges and Opportunities’

 

AMCHAM’s Tamil Nadu Chapter held a meeting on held on ‘Education, Employment and Employability; India’s Challenges and Opportunities’ on Thursday, July 20, 2017 at Hotel Westin Velachery in Chennai. Mr. R. Ramkumar, Chairman – Tamil Nadu Chapter, AMCHAM chaired the meeting and Mr. Manish Sabharwal, Chairman, TeamLease Services India Ltd., was the guest speaker.

 

Responding to the concerns of members with respect to human assets in the operations of their businesses, the Tamil Nadu Chapter Executive Committee decided to invite Mr. Manish Sabharwal the guest speaker for the July breakfast meeting to address members on a topic that is top priority for all industry leaders – education, employment and employability.

 

Mr. Sabharwal, Chairman of India’s largest private sector employer, hails from Kashmir. Born to parents, who were civil servants, his interest in public policy roots back to his childhood based on his understanding that it is not the economy but the society as an important element. His illustrious academic background at the Mayo College in Ajmer, and his higher education at the Sriram College, New Delhi, speaks of his grounding in the Indian employment issues. His management degree from Wharton has given him the basis for his entrepreneurial journey, where, he founded the View Group, and managed to get 2 billion USD funding for his new company in the USA. He returned to India thereafter and sees himself as a crusader for labour reforms in India. Since its inception in 2002, the HR consulting company he co-founded, TeamLease, has placed more than half a million people in jobs. The growth has not only been linear but also exponential in revenue and growth. The company has 2,500 crores today and might increase up to 10,000 crores within a few years, according to him, by understanding the public policy and providing good employment. But he felt bad that the Indian education system was messed up. People in the metro cities can speak ‘good English’ therefore, hired at a higher salary compared to the migrants from different states like UP and Bihar he said. These are the implications of policy decisions, which allowed English to be taught in one state, but not in another, he added.

 

Mr. Manish stated that poverty is the biggest problem in this country. The problem is not only with poverty but also with the people who have obscure vision about the issues surrounding it. He said that we can demolish the poverty with employment and it is imperative to understand public policy. He said 2 things are important – choosing the parents and the educational institution. Ultimately, the 3 E’s –education, employment, and employability stand at the heart of the education policy in India. His appointment as a member of the prestigious Central Advisory Board of Education, GoI, and the various committees of the state and central government, and the experience of implementing the first vocational university in Gujarat on the PPP model, gives him an opportunity to delve into the issue and offer his formula for a successful policy on education in India.

 

With the caveat that large countries will always be disadvantaged in all such rankings, it is clear that India has long had a big unfinished agenda around human capital. It is helpful to highlight that labour surplus and young countries like India have very different human capital issues than rich countries which are rapidly ageing (the sale of adult diapers recently crossed baby diapers in Japan). Poverty is about productivity and within a month of landing in the U.S. for his MBA, he was asking himself why Americans, who are not smarter than Indians, were richer? And productivity is about the 3E’s of education, employment and employability. The government is organized vertically but a government report reminds us that this problem is horizontal.

 

Mr. Manish Sabharwal said India doesn’t have an employment problem; we have wage problem. Our official unemployment rate of 4.2 per cent is not fudge and almost anybody who wants to find a job can find a job – just not at the wages they need or want. These are two different problems because the wage premium is a reflection of total factor productivity not just individual productivity and skills. He said, “We made a mistake in 1991 by not reforming factor markets like land and labour and consequently, we have too many enterprises that are not productive and therefore don’t pay the skill wage premium (if you rank manufacturing companies by size there is a 22-time differential in productivity between companies at the 90th and 10th percentile).” He added that, India has begun the journey of improving factor markets, transforming enterprises and decentralising power to states; most kids who have the right skills in the next decade will not have a problem in finding jobs.

 

The world of work has changed; employment has shifted from being a lifetime contract to a taxicab relationship and it is impossible to predict where jobs will be in the future (research suggests that 50% of the jobs created in the U.S. in every decade since the 1960s did not exist in the decade before). This has huge implications for education because a rapidly changing world means strong foundations may be more important than specific skills. We are already noticing that Class 10 has become the new Class 8; we think that soon Class 12 will be the new Class 10. In the new world of work the most important vocational skills are reading, writing, English and arithmetic; instead of vocationalizing schools we should fix them. The Right to Education Act needs to become the Right to Learning Act and we need to create flexibility in regulatory structures for modularization, apprenticeships, and multi-modal delivery to facilitate lifelong learning. WB Yeats applies even more in the modern economy; ‘education is not the filling of a bucket but the lighting of a fire.’

 

India’s women labour force at 23% is just above Saudi Arabia and down 40% in the last twenty years. Mr. Sabharwal surmises that it came down because many more of them are in education and many of them were tired of wage-exploitation in farm jobs. He added that the job opportunity rate has not gone up because of the lack of robust rural non-farm formal job creation. There is no difference between the reform agenda for a Ministry of Women’s Employment or a Ministry of Employment; urbanization (India has only have 50 cities with more than a million people vs China’s 385 cities), formalization (India’s 6.3 crore enterprises only translate to 17,500 companies with a paid up capital of Rs. 10 crore), industrialization (only 11% of India works in manufacturing and 50% works on farms). Improving this needs reducing regulatory cholesterol in compliance, tax system, labour laws, credit markets, and much more.

 

Making a comparison with the mega factories of Foxconn that employ in total about a million workers making iPhones in China, he observed that Indian labour laws and sclerotic regulations have made us “a bunch of corporate dwarfs with only 14,500 companies which have a paid up capital of Rs. 10 crore.” The biggest problem is that India’s unorganised sector creates most jobs and that the “productivity difference between large corporations and small firms is 22 times.” The problem in India, he said, is not unemployment because people need to work to feed themselves, but widespread under-employment.

 

The crux of Mr. Manish Sabharwal’s talk can be summarized here:

  • India needs a more robust people supply chain to keep the employment rate high
  • Get ‘jobs to the people’ rather than ‘people to jobs’ by creating jobs where the unemployed reside
  • Make in India for India, not with an export focus
  • Reform labour laws which are too complex at present
  • Reduce regulatory cholesterol
  • Move jobs from farm to non-farm
  • Jobs have to move from the informal sector to the formal sector
  • Enforce the apprenticeship program
  • Continue with policies aimed at creating a larger middle class rather than pursue policies aimed at eradicating poverty – a change of mind set required
  • Most of India’s problems are a ‘plumbing problem’ and easy to fix, unlike the climate change problem
  • Notion of education is changing, ‘filling a bucket’ vs ‘lighting a fire’
  • Where rubber meets the road is where policy happens
  • Formalization is important in every sphere of economic activity
  • India grows by night when the government sleeps
  • Urgent need to reform the civil services to be more in tune with today’s India
  • Most enterprises in India are dwarfs with stunted growth
  • The 4 geographies that are vital to India’s growth and in urgent need of reform are: sectoral geography; enterprise geography; education geography; legislative Geography

The event ended with an interactive session and networking continued over breakfast.