India aims to Boost Apprenticeships and to Increase Apprenticeship Opportunities to 10 Lakhs by End of 2022 and 60 Lakhs by 2026:
By Atul Kumar Tiwari
Apprenticeship has long been recognized as an effective way to bridge the gap between education and employment, with Germany and other developed nations often held up as examples of how it can work. However, in India, apprenticeship has struggled to take hold, with just 0.1% of the workforce currently engaged in this kind of learning. Despite this, a recent study by Dalberg for DFID (now FCDO) found that the benefit-cost ratio for employers in various sectors was estimated to be 1.3 to 1.9 times. As a result, the Indian government is looking to increase the number of apprentices to 10 lakhs by the end of 2022 and 60 lakhs by 2026, but there are challenges to be overcome, including the structure of the economy, people’s perceptions of apprenticeship, and transaction costs. Challenges and Solutions
Apprenticeship is a formal agreement between an employer and apprentice, which includes stipulated payment of a stipend, structured training, and regular monitoring and assessment. The benefits of apprenticeship for employers include higher productivity, lower attrition rates, and reduced hiring costs. For apprentices, it offers work-based learning opportunities with reasonable stipends and a greater chance of securing employment. It is important that the growth of apprenticeships benefits all stakeholders – apprentices, establishments, and the overall economy – for sustainable, long-term growth.
Compared to Germany where 4% of the workforce and the UK where 1.7% of the workforce are engaged in apprenticeships, India has just 0.1% of its workforce in apprenticeships. This is largely due to the prevalence of the informal sector in India, where approximately 80.47% of the estimated 466 million workers (PLFS 2017-18) are employed. Furthermore, the crafts and skill trades economy is mostly unorganised.
Even among the 90 million formal workforces in India, less than 20 million are employed in enterprises with 30 or more employees. Companies with a larger workforce are more likely to offer apprenticeships and training positions. In Germany, for instance, 21.7% of the 2.1 million companies had at least 10 employees.
As per data, about 20.3% of companies in Germany provide trainee positions, with a higher percentage of 81.3% for companies having over 500 employees. However, in India, only 1.4% of establishments having more than 9 employees offer apprenticeships due to hindrances faced by micro-sized enterprises in making human capital investments, including apprenticeships. Additionally, apprenticeships are perceived differently across different countries, from being a crucial part of youth’s education in Germany to inexpensive labor in developing economies.
Interestingly, the stipend paid to apprentices in countries like Austria, Denmark, Germany, and Switzerland is between 20-50% of a skilled worker’s wages, providing significant economic benefits to the apprentices in the labor market. However, in India, the stipend paid to apprentices is only around 80% of the wages of semi-skilled labor, as per ILO estimates. This lack of financial incentives may not be attractive for MSMEs, which form a significant part of India’s economy.
Furthermore, managing apprentices in India involves higher transaction costs due to various processes like processing contracts, stipends, and monitoring, among others, which could deter enterprises from engaging apprentices.
As challenging as it may seem, India has managed to increase the number of apprentices from 0.9 lakh in 2014-15 to more than 5 lakhs in 2021-22. However, given the unique characteristics of the Indian economy, as previously mentioned, the goal is to raise the number of apprenticeships to 10 lakhs by the end of 2022 and 60 lakhs by 2026. To achieve this, it is essential to focus on improving the efficiency of establishments in managing apprenticeships. Under the National Apprenticeship Promotion Scheme (NAPS), the government shares the stipend cost with establishments up to 25% or Rs. 1,500 per apprentice. The Ministry of Skill Development and Entrepreneurship (MSDE) has eliminated physical claim submission, allowing online processing through the apprenticeship portal, to reduce procedural delays in stipend reimbursement to establishments. To plug leaks in the system, stipend support is proposed to be delivered directly to apprentices through the DBT mode. Furthermore, enterprises with pan-India operations will soon be able to engage with a single state-level apprenticeship/skill entity instead of multiple states, reducing transaction costs. Data sharing between apprenticeship schemes is expected to further streamline the registration process for enterprises. To make it easier for establishments to engage more apprentices, redundant courses have been removed, and the duration of apprenticeship training has been made more uniform. The standardization of curriculum and streamlining of the process between designated and optional trades, along with allowing establishments to customize their courses according to their needs, are other measures taken.
While the ease of doing business would certainly help, what remains an issue is how aspirational value of apprenticeship is raised in the country. For this to happen, it is necessary to embed apprenticeship in the educational ecosystem besides building credible pathways from apprenticeship to higher education so that apprenticeship receives the respect that it deserves for hands-on learning and improving the employability of our youth.
To actualize this intent, defined credits shall be assigned on completion of Apprenticeship and assessment as per the new National Credit Framework so that it becomes useful in pursuing further education. In addition, Apprenticeships and Internships are proposed to be embedded in the school curriculums at the post-secondary level. The higher education system is also gearing up to mainstream Apprenticeship embedded degree programs as per the guidelines of the UGC.
Finally, to make headway in any public policy, the stakeholders need to be energized. A massive awareness program across the country has been launched in the form of Apprenticeship promotion events across more than 250 districts as calendar events throughout the year. A centralized helpline is expected to address any queries from establishments or candidates.
While we work on all the above action points to make apprenticeship as a win-win situation for trainees and establishments so that it further grows deep roots in Indian economy, it is necessary that apprenticeship does not become an avenue for the supply of cheap labour. All forms of work exposure cannot be clubbed under Apprenticeship.