In the early days after Independence, India’s massive population was seen as its biggest challenge. Today, we talk about a demographic dividend. By 2020, India will be the youngest country in the world. With a median age of 29 years, it will not just be the biggest labour force in the world, but also the largest consumer market. But for those celebrating this possibility, the World Economic Forum’s Global Human Capital Report 2017 released Wednesday is likely to be a wet blanket.
The report measures 130 countries against four key areas of human capital development: capacity (investment in formal education), deployment (continuous accumulation of work skills), development (skilling and reskilling of existing workers) and know-how (extent of specialised skills used at work)—across five distinct age groups.
Out of the 130 nations surveyed, India is ranked in the bottom quarter at 103. After noting that India’s educational attainment rate has improved markedly over past generations, the study says “its youth literacy rate is still only 89 per cent, well behind the rates of other leading emerging markets.” India also ranks poorly on labour force participation, due in part to one of the world’s largest employment gender gaps.
On the positive side, it fares well on education quality, staff training and economic complexity.
According to the report, many of today’s education systems are disconnected from the skills needed to function in today’s labour market, and rapid technological and economic change is further increasing the gap.
“The divide between formal education and the labour market needs to be overcome, as learning, R&D, knowledge-sharing, retraining and innovation take place simultaneously throughout the work life cycle, regardless of the job, level or industry.” Unless India implements ways to bridge this gap quickly and effectively, our demographic dividend may soon turn into a major liability.