Rotarians gain insight into the Indian labour market
Dr. Manish Sabharwal
Dr. Manish Sabharwal is currently the Chairman and co-founder of Teamlease Services, India’s largest staffing and human capital firm. Dr. Sabharwal received his MBA from the Wharton School in 1996 and is an alumnus of Shriram College, Delhi and Mayo College, Ajmer.
Dr. Sabharwal, having closely worked with the Indian labour market, shared his many observations and inferences. “I work for a people supply chain company and we are a product of low hiring standards. We have hired 1.6 million people in the last eight years and all of them are getting into the market only because corporate India has lowered its hiring standards. I know there’s a productivity impact which economists will worry about in the long run due to low hiring standards but from a public policy perspective, we are getting people jobs,” he said.
He noted how location and family background proves extremely important in getting a job today. “TeamLease held a job fair in Jaipur and 35,000 people showed up. I met 800 of them. I can guarantee that if they were born in Delhi or Bombay or Bangalore, they would have had a job. Unfortunately, they were born in rural and remote areas. So the two most important factors that determine your access to employment are your parents and your pin code.”
According to Dr. Sabharwal, poverty in India is closely linked to the infrastructure of opportunity available. Drawing on his experience as a student in America, he noted that America is a rich country because the system has capabilities that allow individuals to be more productive than they can be in a country like India.
“I believe that poverty is about productivity and productivity is about the three Es, i.e., Education, Employment and Employability. And these three E’s are much more closely connected than we had previously thought, not only personally but in the way we have organised our government because our governments are always organised vertically whereas the problem is horizontal,” he said.
He also identified divisions in the area. “The way I think about it, there are five geographies of work. There is a physical geography of work, there is a sectoral geography of work, there is an enterprise geography of work, there is an education geography of work and there’s a legislative geography of work. The physical geography of work revolves around one question. Do you take jobs to people or people to jobs? In political imagination, we are always taking jobs to people but that is not what most developed nations did.”
“The enterprise geography of work is not something most people think about. If you think of enterprises in India, there are 63 million, 12 million of them don not have an office or an address and work from home. There are only seven million GST or VST registered enterprises in India. There are only one million companies in India with ROC. 63 million enterprises translates only to approximately 14,500 companies with a paid capital of more than $1.8 million. So most of corporate India is informal and small and has a huge impact on productivity. The enterprise geography of work in India is that 63 million enterprises actually translates to a very small number of companies in reality.”
“Sectoral geography of work is about non-farm job creation and about increasing wage creation rather than self-employment.
“The education geography of work is more complex. 265 lakh kids take the class 10 exams every year in India and105 lakh fail. 160 lakh kids take the class 12 exams every year in India and 80 lakh fail. Out of the 80 lakh who pass the class 12 exam, 50 lakh go to college and 30 lakh sort of disappear. And there is no ramp for those students who fail class 10 and 12 to get into the college system.”
“India only has 3,00,000 apprentices because of an Apprenticeship Act written in 1961. Germany has 3 million, China has 20 million and Japan has 10 million apprentices. Learning by doing and earning are powerful ways of skill development. In education also, we have problems in the school system. We have a Right to Education Act and we have a skill system which is not connected with the actual world of work.”
The final geography of work, according to Dr. Sabharwal, i.e. the legislative geography of work, concerns labour laws. He also identified solutions to the problems related to the five geographies of work. “There is a matching problem which is about connecting demand to supply. There is also a mismatch problem which occurs while repairing supply for demand and there is a pipeline problem which is preparing supply for demand. So, we have to fix our employment exchanges. Currently, we are in the process of converting them into career centres that will offer assessment, counselling, training, apprenticeships and job matching. They will work as public-private partnerships,”
he said.
The pipeline problem, according to Dr. Sabharwal, is the most important one. “The solution to addressing the problem is to revolutionise the education sector. Skill development is not a substitute for fixing our schools. Today, we are at 110% school enrolment. This means our kids are in school but they are not learning anything.”
“India’s problem is not jobs, it is formal jobs. India’s unemployment rate is 4.5% officially. So, our problem is not a lack of jobs. Our problem is a lack of formal jobs, productive jobs. A job changes a life in a way that no subsidy ever can. If we can fix India’s people supply chain problem, our other issues like poverty will also take care of itself,” he concluded.