BENGALURU: Finance Minister Nirmala Sitharaman, in her recent General Budget speech, announced a slew of initiatives for the young population on skilling and internship opportunities in top companies so as to tackle unemployment challenges. The package on employment and skilling she promised to rollout is worth Rs 2 lakh crore. Of the five schemes related to jobs and skilling, three were Employment-Linked Incentives for the private sector. While Sitharaman gave a brief outline of the new schemes, their nuts and bolts would be announced later. The schemes are a recognition of the need to keep the youth invested in the country’s growth story.
Employment-Linked Incentive
Scheme A: This is for first-timers and is applicable to all those who enter the workforce newly with less than Rs 1 lakh salary per month. This scheme will be for two years (enrolment), and will cover about 1 crore people every year. With an outlay of Rs 23,000 crore over three years, this scheme is projected to benefit 210 lakh employees. The government will offer first timers a direct subsidy, which will be one month's wage with a cap of Rs 15,000. The subsidy will be paid in three instalments.
“First timers have a learning curve before they become fully productive; subsidy is to assist employees and employers in hiring of first timers," the finance minister said. All these schemes will be based on enrolment in the Employees' Provident Fund Organisation (EPFO). This subsidy is vital for both employees as well as employers as it supports their learning curve. The employee has to undergo compulsory online financial literacy course before claiming the second instalment. The subsidy would have to be refunded by the employer if the employment to the first timer ends within a year of recruitment.
Scheme B: This is for job creation in manufacturing to incentivise additional employment in the sector. It is expected to benefit 30 lakh youth entering employment, and their employers. Corporate and non-corporate entities with a three-year track record of EPFO contribution will be eligible for this scheme. With an outlay of Rs 52,000 crore over six years, an incentive will be provided under this scheme at a specified scale direct to the employee and the employer with respect to their EPFO contribution in the first four years of employment. If the employment ends within one year of recruitment, the employer would have to refund the subsidy.
Scheme C: The third scheme provides support to employers. It covers all additional employment within a salary of Rs 1 lakh per month across all sectors. New employees under this scheme need not be new entrants to EPFO. For two years, the government will reimburse EPFO employer contribution, which is up to Rs 3,000 per month to the employer for the additional employees hired in the previous year. With an outlay of Rs 32,000 crore, the scheme targets 50 lakh beneficiaries.
These schemes have been appreciated across sectors as there is strong emphasis on youth empowerment. "Over the next five years, the FM has devised a plan to provide employment possibilities for almost 4.1 crore youth. The allocation of Rs 1.48 lakh crore for employment and education to skill 20 lakh youth over five years is another noteworthy milestone. Jobs are the primary driver of economic growth, and putting new initiatives and allocations into practice would not only improve the employment situation but also have a significant impact on developing a trained labour force for all industries," said Anuraag Saxena, CEO, E-Gaming Federation.
Skilling programme
Apart from these, the Budget proposes Scheme 4, which is a skilling programme and upgradation of Industrial Training Institutes (ITIs) and Scheme 5, which provides internship opportunities for the youth in top companies.
The FM announced that 1,000 ITIs will be upgraded in hub and spoke arrangements in five years. With a total outlay of Rs 60,000 crore (Centre: Rs 30,000 crore, State governments: Rs 20,000 crore and industry: Rs 10,000 crore, including CSR funding) over five years, the course content will be aligned with the needs of the industry.
According to finance ministry sources, the hub and spoke scheme is inspired by a programme run by the Tatas in Karnataka.
“We have learned a little bit from the experience in Karnataka where the Tatas are trying something like this. Tatas have been involved with the government of Karnataka in ITI rejuvenation and we have borrowed some lessons from there,” says a top finance ministry bureaucrat.
The most ambitious of all the programmes announced for jobs and skilling is the internship programme – where the government is planning to rope in 500 top companies to help provide internship to one crore youth. Under this programme, the interns will be given a stipend of Rs 5,000 per month and a one-time assistance of Rs 6,000. The Central government will bear 90% cost of the monthly allowance and the Rs 6,000 one-time allowance, while the companies will bear the 10% cost of the monthly stipend.
There is some apprehension among corporates about pressure from the government to fulfil the target of providing internship to 4,000 aspirants every year for next five years. A government source told this newspaper that a ‘request’ will be sent from the government to the corporates to provide these internships. But he was quick to add: “You know what the request from the government means.”
Other initiatives
According to Sachin Alug, CEO, NLB Services, a talent solutions company, the budget’s support for over 4.4 crore MSMEs, coupled with a Rs 100 crore guarantee fund, is set to uplift this sector, which is currently reporting 19.09 crore jobs. The initiative will increase the number of jobs by 12-15% in the MSME sector.
Additionally, the focus on infrastructure development and improved connectivity is expected to elevate the country's status as a global tourism destination, generating further employment in both the tourism and infrastructure sectors. "This will further boost employment in the tourism sector by 15-20%, creating roles such as Tour Operator, Business Development, Travel Consultant, Hospitality Manager, Destination Marketing, and Tour Guide, and the 10-12% growth in the infrastructure sector with roles like Civil Engineer, Architect, Project Manager, and liaison officer, etc," Alug added.
A majority of employers across sectors opine that this internship scheme has been announced at a time when there is a shortage of talent in emerging technologies such as Artificial Intelligence, Machine Learning and Blockchain. These internship programmes will help employees gain exposure to real-life business environments.
"The new centrally sponsored scheme aimed at skilling 20 lakh youth over five years will significantly contribute to fostering a skilled workforce. This significant step is the need of the hour to bridge the gap between education and the skills essential to equip the youth to be industry-ready. These initiatives will help us maximise our education and skilling efforts, propelling the next phase of growth for the Indian economy," said Pankaj Jathar, Chief Executive Officer, NIIT Ltd, a skills & talent development corporation.
The Economic Survey 2023-24 also stated the need to bridge the education-employment gap. It said skill development is at the centre of changes happening in education and labour markets amid the global megatrends, such as automation, action against climate change, the digitalisation of products and services. With one of the youngest populations, the country can harness its demographic dividend by nurturing a workforce that is equipped with employable skills and prepared for the needs of the industry, it said.
It also said that new skilling initiatives and revamping the existing skilling initiatives should continue to be of high priority to the government. Indian IT companies have already joined hands with technology giants to train their employees. For instance, the country's largest IT services company, Tata Consultancy Services, has trained over 3,00,000 employees on the foundational skills of AI/ ML, including GenAI.
In its recent Talent Trends 2024 report, Michael Page, which provides recruitment services for professionals at middle management to leadership levels, points out that about 34% of organisations struggle to find the right talent, and almost one in three grapples with retaining existing employees. It added that the scarcity of required skills in the talent pool adds to the complexity.
Data from the Survey shows that the country has 26.52 crore students in school, 4.33 crore in higher education and more than 11 crore learners in skilling institutions. The country’s workforce is estimated to be about 56.5 crore in 2022-23. The need of the hour is to equip the workforce with employable skills. The Periodic Labour Force Survey (PLFS) report 2022-23, points out that 4.4% of the youth in the age cohort of 15-29 years have received formal vocational training, while another 16.6% received training through informal sources.
The survey also stresses that for large-scale skilling programmes, industry connection is crucial as it enables contemporary relevance and employability and ascertaining demand to absorb the newly skilled workforce.
Emerging job demands across sectors
Hiring platform, Indeed, in its latest analysis of job market trends identified the roles and sectors experiencing growth from January 2022 to June 2024. It highlights that the demand for AI/ML has surged by 433% in the last two years. AI/ML engineers represent highly specialised technical positions, while BPO executives are indicative of the robust demand for more generalised, customer-oriented roles, the report said.
The Economic Survey highlights the World Economic Forum's report that talks about an increasing focus on cognitive abilities, digital literacy, and proficiency in AI and big data. “This shift underscores the strategic imperative for businesses and the workforce to adapt to technological advancements and meet global market demands. Focus areas should include blockchain, AI, machine learning, Internet of Things, cybersecurity, cloud computing, big data analytics, augmented reality, virtual reality, 3D printing, and web and mobile development. Thus, the immediate task of the skilling programme in India is to plan and equip itself to meet these requirements adequately,” the Survey stated.
"With businesses showing a strong inclination to accelerate digital transformation powered by AI, the industry could see positive traction in H2 2024 and a significant acceleration in hiring from Q2 FY25, influenced by broader economic and industry-specific factors," Balaji Viswanathan, MD and CEO, Expleo Solutions Limited said.
Alug also pointed out that some of the most in-demand skills in the IT industry include expertise in cloud computing, and cyber security. Expertise in cybersecurity is critical due to increasing threats and regulatory requirements.