One of the primary reasons for the ongoing employment crisis in India is that of unmarketable skills of the Indian youth. Having said that, students today are just running behind marks; but what companies need today is a set of skills that will lead to some value addition.
For this very reason, the Union Budget 2024-2025 proposes five ‘employment-linked incentive‘ schemes, with the goal of creating 4.1 crore jobs. However, there is a gap between the plan and its implementation.
Here is a detailed picture of the situation.
What Are The Government Schemes?
Students in India have abundant theoretical knowledge but do not know how to apply it in real-life scenarios. This is why even the students at the top-most position in class, sometimes fail to secure high-paying jobs.
The proportion of unemployed people has surpassed that of the ones employed for there are more applicants in proportion to available job vacancies. About one in two college graduates are not employable on an immediate basis.
To solve this very problem, the Union Budget of 2024-25 proposes five ’employment-linked incentive’ schemes to boost value addition and impart practical and usable skill sets to create enough jobs.
However, these may not be profitable for the private sector, including the manufacturing and services industries. For example, a scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years has been formulated, and discussions with 20 companies have already commenced.
The verbatim on the Budget speech is, “an internship allowance of Rs 5,000 per month along with a one-time assistance of Rs 6,000 will be provided. Companies will be expected to bear the training cost and 10 per cent of the internship cost from their CSR funds.”
This implies that we will get 1 crore people completely ready for jobs after half a decade. This is how the policy reads on paper. But is it really applicable?
Before diving into the practicality of this scheme, it is important to note that private companies will not need extra finances to hire 4,000 interns. All they need to do is reallocate their resources.
Under this scheme, companies need to cover only 10% of the stipend and training cost as part of their Corporate Social Responsibility (CSR) funds. And if the top 500 BSE companies, that are talked about here, they will be able to hire 2.1 crore interns annually.
Thus, it is not a matter of cash as the policy does not ask them to spend extra money on it; rather these private companies do not have any financial incentive to do so.
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What Are The Problems In The Implementation Of These Schemes?
In the financial year 2023, the top 500 BSE companies in India employed over 67.4 lakh people. Now, the Budget mandates these companies to hire 1 crore interns in about five years.
This means that each firm is supposed to hire 4,000 interns each year, implying that it will have approximately 13,480 original employees and 4,000 interns on average. Thus, a huge percentage of the company’s employees will be interns.
It turns out that the companies may not have such an effective absorption capacity, especially at a time when most are avoiding hiring interns for certain job roles. The reason being the lack of space to accommodate such a large crowd and the investment of additional hours and efforts by the existing staff to train the new interns.
According to a report by Deloitte, pre-placement offers dropped by 26% in 2024 while campus hiring budgets fell by 33% in 2023. This proves that the private sector is averse to hiring freshers and demands employees with a definite and applicable skill set.
Adding on, the seven largest employers in India, namely TCS, Infosys, Wipro, HCL Tech, Coal India, State Bank of India, and HDFC Bank indicated a very slow hiring process by collectively raising their workforce by 45,000 in 2024. This further proves that the chances of hiring interns or freshers at a time when experienced employees are getting laid off are very low.
Not only that, the economic survey reveals that India does not have enough non-agriculture or formal sector jobs to absorb the unemployed, let alone fresh interns.
Moreover, although the government has introduced several programs such as the industrial training institutes (ITIs) and loans to upskill thousands of youth over the next five years, the numbers are extraordinarily tiny juxtaposed to the massive number of interns the government wants the private sector to absorb.
In fact, although India has 15,000 public and private ITIs, they have been operated and financed, in the absence of engagement from real-world industries, by the government for the last 15 years.
However, a country that has brilliant outcomes under a similar scheme is Germany. After completing school, students can apply for internships of up to three years with private companies. While getting in-person training in the field they choose at vocational schools funded by the government.
At the end of the program, they get their completion certificate and all the industry-related skills. The best part about this policy is that it is well integrated into their education system.
Therefore, first, an ambience that encourages private sector investment needs to be developed to unlock the innumerable opportunities in the country; and more practical policies with proper management need to be undertaken to solve the ongoing job crisis.
Image Credits: Google Images
Feature image designed by Saudamini Seth
Sources: Deccan Herald, The Wire, The Economic Times
This post is tagged under: employees, employers, fresher, interns, internship, schemes, policies, government, hire, companies, firms, job, crisis, private sector, investment, finances, TCS, Infosys, Wipro, HCL Tech, Coal India, State Bank of India, HDFC Bank, paperwork, Deloitte, report, offers, roles, BSE, FY, 2024, 2023, economic, value addition, India, Union Budget
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