Originally published in Firstpost here

Written by Sourajit Aiyer

The dynamics of commerce is shifting. In these changing times, it is only our skills that help keep us competitive. Skill-creation efforts have been made in many countries. Innovations have come up, one being ‘skill-vouchers’ in countries like Australia, Austria, Kenya, India, etc.

While its actual format might differ between countries, it is essentially a system of reimbursement that the government gives to institutes that provide the training, instead of actually running the institutes itself. It has shifted the government’s role from a training provider to a financier/facilitator.

There are some challenges: (a) of raising the training quality so that companies do not need to retrain, (b) not entirely succeeding in creating awareness of the skills available and enabling candidates to take the best decisions, (c) ensuring candidates enter the job market instead of squandering the subsidy, (d) ensuring the vouchers reach economically-backward households, (e) create incentives for the candidate, institute and company.

This situation suggests a redesign/restructuring of skill-vouchers, to minimize the probability of these shortcomings by focusing on who is ultimately impacted, giving precedence to merit, being responsible for the quality and the genuineness of participants.

Three skill shortages confront most nations – (a) Vocational/job-specific which includes production, self-employment and small-scale artisan roles, (b) Professional/educational training, (c) Non-cognitive, soft-skills category that can enable candidates to move up the professional ladder.

Professional-related/educational training includes computer, book-keeping and process skills. To sift the genuine candidates from the lot, the skill-voucher can be restructured as a subsidized loan. This means candidates can enroll only if they are serious. The voucher might pay off the loan in installments, to ensure the candidate sticks to the job. This helps reward merit. The candidate would be liable to repay even if he is unable to get a job. This is where the quality of the institutes is tested, since the inability of its candidates to get jobs despite merit would determine its future enrolments.

Aptitude tests might help the candidates identify relevant skills. Advising the candidates on skill choices might be outsourced to career agencies. They get paid a percentage of the voucher, part of which is paid when the candidates enroll and the remaining part when they enter the job, creating incentives to give relevant advice. The government’s role is to create awareness through SMS/email alerts, advertisement/pamphlets in local newspapers.

Non-cognitive/soft-skill category include analytical capabilities, inter-personal communication, psychological understanding, out-of-box thinking etc. These help build the effectiveness of leadership teams, which helps companies grow their scale of business across geographies.

The government can register those companies who are keen to participate along with a list of skills and quality levels. Institutes can be examined by those companies to arrive at a list of accredited institutes based on the training quality and infrastructure. This list must be periodically renewed, as it will create the incentive for institutes to maintain their quality and innovate.

While the companies can use employment-bonds to avoid attrition, it can also provide good working conditions and opportunities as an incentive so that candidates do not feel the need to move jobs. The companies may need to co-ordinate with the institutes to build practical test modules which create an incentive for the candidates to put efforts into learning, as their ability to scale up the ladder in the companies post-training would depend on their scores.

Vocational/job-specific category: Institutes, government and companies can draw a priority-list of skills as per the National Manufacturing Policy and give precedence to those with industrial production skills. Aptitude tests on motor-skills can be done by the industrial training institutes. Another priority would be skills that create self-employment jobs. An apprenticeship system post-training might be useful.

The government/institute’s role is to create awareness amongst youngsters of the better/relevant job opportunities they can get post-training.

Another challenge would be the network of institutes, as most candidates might not be able to bear travelling costs. This means prioritizing the network on economies of scale based on the available pool of candidates, or including travel expenses within the voucher. The quality of the institutes would be under the scanner,as the inability to make the candidates job-ready can create negative publicity through word-of-mouth in the area’s captive candidate pool.

To ensure delivery to economically-backward families, a solution might be to conduct physical checks on the homes of candidates to estimate the family’s economic position. The institutes/government can outsource this activity to microfinance field-officers covering that area for a commission.

These above suggestions focus on giving precedence to merit, and on creating responsibility for quality. In this process of weeding out non-serious players, there might be fewer institutes, agencies and candidates participating, but at least they comprise the genuine and quality lot.