How CSR initiatives can drive scale and impact in skill development
India is graduating millions every year, but less than 3% of its workforce is equippedwith the skills to do a job. With over half of its
population being less than 25 years of age
, the young workforce presents a tremendous opportunity to harness the country’s demographic dividend for the sustainable growth and social progress of the nation.
Currently, the supply of skilled manpower in India is approximately 3.4 million. According to the International Labour Organization, there will be a demand for 500 million skilled workers in India by 2022. The huge deficit of 496.6 million skilled workers needs to be addressed in just eight years, making skill an urgent national priority.
With the industry being a primary demand creator and a key stakeholder in the skill ecosystem, the 2013 Companies Act mandate on Corporate Social Responsibility (CSR) provides a fresh impetus for corporates to innovate and invest in skill development.
Sattva in partnership with the Indian Institute of Corporate Affairs (IICA) has put together a strategy brief to inform CSR leaders looking to identify opportunities in skill development that can be addressed through CSR initiatives.
The brief arises from a CSR Roundtable that witnessed lively discussions with the participation of over a 100 corporates. It is enriched with perspectives of skill experts and practitioners from corporations, skill development organisations, the National Skill Development Corporation (NSDC), and institutions that are enabling jobs for the youth.
It also highlights areas in skilling that can create sustained long-term impact for the CSR investment and recommends various courses of action that can help build the CSR portfolios of corporates. The document is aligned to the National Policy of Skill Development and Entrepreneurship 2015 and emphasises interventions that align with the thrust areas of the policy.
India’s demographic dividend: An opportunity and a challenge
India is one of the youngest nations in the world today with more than 62% of its population in the working age group of 15 to 59 years and over 54% of its population below 25 years of age. This manpower underpins India’s growth story and economic advances since liberalisation and is especially significant in the face of a decline in labour workforce in the industrial world.
With the statistics pointing to the fact that India’s workforce will increase by 32% in the next 20 years, whereas the developed labour force will fall by 4%, India has the potential to provide skilled manpower to fill the expected shortfall across industries in the ageing world. While the surplus young workforce gives India a strategic advantage, the challenge the country faces is that a vast majority of the youth joining the workforce are unskilled and unemployable. The Economic Survey of 2014-151 brings to light this jarring concern: while India is adding about 12 million to the job market every year, only 3% of the workforce has undergone skill training of any form.
This gap underlines the pressing need for targeted skill training that can help ready the country’s workforce to enter into gainful livelihood and create a significant impact on the nation’s economic growth and social stability.
Corporates and Skill Development
In a landmark move, the 2013 Companies Act mandated all companies with a minimum net worth of INR 500 crores, a turnover of INR 1,000 crores, and a net profit of at least INR 5 crores, to spend at least 2% of their profits on CSR. This has shifted the conversation from philanthropy to a deeper and value-based engagement with society.
Progressive companies are looking for ways to leverage their core strengths, such as technical expertise, process rigour, and widespread presence across the country to create sustainable social impact.
There has hence been a strong interest in skill development since it offers companies a chance to create sustainable impact while leveraging their core technical expertise.
Investing in skill development to enable access to skilled resources to the industry also provides long-term business value to the corporations and the entire industry ecosystem. Companies are increasingly creating structured skill development initiatives in their specific sectors while leveraging the ecosystem support that is enabled by NSDC.
This report highlights key opportunities for CSR in skill development, each with recommendations for company action, the policy implication and short examples of corporate involvement in the particular area. While not an exhaustive list of areas within skill development or possible corporate models, this section provides a context on specific issues and ideas to enable innovative and strategic thinking to those charged with formulating CSR policies.