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Do skill building training programs improve labor market outcomes among rural youth in India? by Bhaskar Chakravorty

In India, 54% of the country’s population is below the age of 25 and faces a high rate of unemployment. The government of India is implementing job-linked skill building training programs to improve labour market outcomes among disadvantaged rural youths across India. The study[1] conducted in rural Bihar suggests the outcomes to be short-lived while caste discrimination and low paying job placements play a crucial role in negating the initial returns of the training.    

India is an example of a developing country facing a pressing need to devise strategies to provide regular employment to its youthful population. India is among the youngest nations in the world, and the expected ‘bulge’ in the 15–59 age group over the next decade offers an opportunity but also a challenge. The opportunity stems from the expected global shortage of 56 million young people (15–35 years), and India could potentially serve as a worldwide sourcing hub for skilled manpower (Ministry of Labour and Employment 2014). On the other hand, a failure to provide opportunities to the youth population as they enter the labour market may translate into a ‘demographic disaster’ rather than a dividend.

The twin challenge of creating jobs while at the same time bridging the skill gap is well recognized by the Indian government. Consistent with this policy priority, on September 25th, 2014, the government launched the ‘Deen Dayal Upadhyaya Grameen Kaushal Yojana’ (DDUGKY), a program for training, skill building and job placement intended for rural youth from poor families.

The scheme implements skill development through a public–private partnership mode, whereby registered private sector partners or project implementation agencies (PIA) plan and implement skills training and placement program for participants. The scheme is supposed to train rural youths of the age group 15–35. They are eligible as candidates if they belong to below poverty line (BPL) category or any member of the family is a member of a self-help group (SHG). Depending on the course, the training can be of three, six, nine or twelve months. Training courses offered by the PIA are approved by the National Council for Vocational Training (NCVT) or Sector Skill Councils (SSCs). Post-training, PIAs are required to place a minimum of 70% of trained individuals in jobs which offer regular monthly wages at or above a minimum monthly wage of Rs. 6000. Post-placement financial support of Rs.1000 is provided to the on-job candidates for a duration of two to six months.

The intention of the DDUGKY and other similar skills training programs is to attenuate unemployment and poverty, but this is possible only if social structures do not hinder voluntary participation in the program. If there are differences at the level of program accessibility based on caste, gender or other social markers, either in program participation or in job placement after training, then increasing government spending and augmenting the supply of trained individuals may achieve little towards the final goal of enhancing welfare and equity.

To understand whether skill building programs improve the labour market outcomes and social mobility among disadvantaged youth, the study was conducted with 263 DDUGKY participants of a three-months residential training program and 263 non-participants in mid 2016 in the Darbhanga district of Bihar, India.

The analysis of the findings is based on comparing individuals who had attended a training course sponsored by the scheme (termed “DDUGKY participants”) with individuals who had applied but did not eventually attend the training (termed “non-participants”). Analysis showed that the scheme is very well targeted, and more than 90% of those who attended the training and showed an interest in the scheme belonged to below-poverty-line families. While the NGO appeared to have well-qualified personnel, the bulk of the participants (64.6%) were not satisfied with the training they had received. With regard to employment effects, 42% of the graduates were placed immediately after the training, which translates into a 29% percentage point impact of training on employment.

However, these gains were short-lived and within two to six months after training, the impact of the scheme on employment was statistically not different from zero. About a third of the placed graduates left their jobs due to caste discrimination and a third exited as the salaries offered were too low to cover their expected living costs. While employment effects were zero, the training did help graduates move from agricultural to non-agricultural positions.

In conclusion, the analysis presented here focused on one training course in one district of rural Bihar. While this study does not paint a very optimistic picture of scheme-induced employment effects nor is it overtly negative about the scheme itself. Indeed, in the current case the positive effects of the scheme appear to have been partially undone by deep-rooted discrimination. It is entirely possible that other courses offered in other parts of the country are able to achieve higher placement rates and that trained graduates are not subject to post-placement discrimination.

Notwithstanding this possibility, what this study highlights is the urgent need for credible analysis of the slew of skills and job training programs that have recently been launched by the government. These should focus not only on initial job placement but also examine employment status after a time lag. Finally, while simply dictating job creation through such skills training courses and demanding 70% placement is unlikely to succeed, the analysis presented here shows that employment effects in the range of about 15% are likely to deliver a nonzero return.

[1] MA Dissertation (2015-16) at International Institute of Social Studies, Erasmus University Rotterdam, The Hague, The Netherlands

Image Credit: Atharva Tulsi on Unsplash

About the author:

BhaskarBhaskar Chakravorty is a development professional with more than 13 years of experience working on a range of development issues. At present, he is pursuing a PhD at Warwick Institute for Employment Research (IER) and is a Chancellor’s International Scholar (CIS) at the university. Previously, he completed a MA in Development Studies with specialization in Poverty Studies and Econometric Evaluation of Development Policies from the ISS. He was awarded the prestigious Joint Japan World Bank Graduate Scholarship (JJ/WBGSP) for undertaking the MA program.