Luis Miranda connects dots. He started investing in India's infrastructure a long, long time ago. He started IDFC Private Equity and was earlier a part of the start-up team of HDFC Bank. Luis has invested in and has been on the boards of companies like GMR Infrastructure, L&T Infrastructure, Delhi International Airport, Gujarat Pipavav Port, Gujarat State Petronet, and Manipal Global Education. Luis today spends most of his time, together with his wife, on non-profits. He is Chairman of CORO and Centre for Civil Society and Managing Trustee for Nadathur Trust. Other organisations include 17000 Ft Foundation, SNEHA, Muktangan, Sunbird Trust and Samhita Social Ventures. Luis graduated with an MBA from Chicago Booth and is a Chartered Accountant.
When we talked to infrastructure developers 10 years back on what their biggest challenges were, it invariably included “getting people”. That was one of the drivers for setting up a skill training company within Manipal Global Education together with City & Guilds of the UK, the world’s leading skill certification organisation (full disclosure: I still remain associated with this company). The government also focussed a lot on skill training and set up NSDC, which in turn helped spawn a host of other skilling companies, and NSDA. But most of these companies haven’t grown the way they were expected to and the government must be way behind its skilling targets.
Various explanations have been given for this. In this blog I want to outline one reason – the fact that we are a welfare state has made kids less hungry to work hard for a job. Let me explain, before you start slamming me.
I am involved with India’s first dedicated student loan provider for vocational training courses, Springboard Finance, which is helping pilot a programme on student loans for vocational training. Mihir Sheth, the promoter, told me that some kids quit their jobs within a few weeks because of reasons like “my boss shouted at me”, “I had to be out in the sun too long”, “I wanted to be closer to home”, “ the food is not good”, “I don’t like the clothes they make me wear”, etc. And these young adults would prefer to be unemployed than to struggle at the job they have.
So on one side we have employers looking for employees and on the other hand we have youth who chose to be unemployed or underemployed. Why would these youth prefer to be unemployed and not take up whatever job they can get? Admittedly this is not the reaction of most students, but it is representative of a proportion that is still statistically significant.
I can think of two reasons for this – (1) these kids have the safety net of staying at home with their parents or relatives and so their basic needs are taken care of. In some parts of the world they are unlikely to have this privilege and would therefore take up whatever jobs they can get. (2) Because of this safety net, they are happy surviving on whatever little they get from their family or from schemes like NREGA’s Mahatma Gandhi National Rural Employment Scheme, a corruption-riddled employment scheme that the Congress hopes will help them win the next election. It is a well-intentioned programme where, like in all well-intentioned programmes, the challenges lie in its implementation. When I was in Manipur and Nagaland earlier this year the biggest employer seemed to be NREGA-created programmes. These schemes often dull the drive of the youth and also severely impact job migration (which has it positives and its negatives).
A friend of mine, Praveen Chakravarty, who has worked a lot on skilling issues, explained to me that these unemployment insurance schemes have also effectively raised the minimum wage level in the country, which is a positive step. But the higher compensation was meant to be balanced by higher accountability and performance levels. Unfortunately the latter part has been forgotten and as with most government programmes, outputs are ignored. This is why minimum wages have risen without any increase in performance level.
So unless we find ways of tweaking these safety nets we will continue to see a shortage of labour which will impact projects and businesses across the country.
An alternative to tweaking these safety nets is to make the youth understand the importance of hard work by changing their attitude. A few organisations look at this aspect when doing skill training. I was recently discussing this issue with Simon Winter and Punit Gupta of TechnoServe, an organisation I am involved with that empowers people in developing economies build businesses that break the cycle of poverty. They have a large programme with The MasterCard Foundation to train rural youth in East Africa to be entrepreneurs. A part of the STRYDE Program is mentorship and counselling to change behaviour patterns among the youth to work hard at a career. This has to become an essential part of skill training in India.