Ten things we need to do to make our graduates job worthy

Currently India has 2 crore kids pursuing a degree in a physical classroom, 50 lac kids getting degrees via distance and online education, 40 lac kids pursuing vocational education and only 4 lac kids doing apprenticeships. Is this system architected to cater to the 10 lac kids who will join the labor force every month for the next 20 years? More importantly, what can we do to ensure that our education system delivers the employment outcomes that many of these graduates seek?
Before we dive into answering these questions, it’s important to remember that college isn’t what it used to be; 31% of retail sales clerks in the US now have a college degree (up from 1% in 1970). 60% of taxi drivers in Korea now have a college degree (up from 1% in 1990). And 15% of high end security guards in India now have a college degree (up from 1% in 2010). But it is also important to not be patronizing about the pursuit of degrees; vocational training is usually for other people’s children not our children and going to college seems to rationally matter beyond the traditional “shaadi” requirement of degrees; Michael Spence got his prize for work on value of the signaling value of higher education. In other words, being from IIT is more valuable than being at IIT. Indian higher education must make the leap that classical physics (discrete systems) made to quantum physics (everything is interconnected) by thinking harder about the deep connections between the 3Es of education, employment and employability. Our college system must recognize Peter Diamonds work on search costs in labour markets. A country like India where more than 50% of our labour force works in agriculture needs to think about the work of Arthur Lewis on the wage impact of the accelerating the farm to non-farm transition. The work of Gary Becker is important in thinking about financing skills and education; it is unrealistic to expect employers to manufacture their own employees. And higher education reforms must be inspired by the work of Robert Solow who found that increases in employment and capital stock only explained a tenth of long term economic growth with the rest being technological innovation.
History matters. College 1.0 for India was started by the British with the objective of producing an elite class to perpetuate their rule. College 2.0 began after independence; it led to the masterful creation of IIT’s and IIM’s but this excellence seems to have come at the expense of K-12 education. College 3.0 began in the 1980s where the decline of governance and lack of expansion of state capacity led to a private sector response. India now needs College 4.0; a radical reboot of our higher education that balances the difficult trinity of cost, quality and scale while delivering the employment outcomes which “India scale” needs. We must innovate because even democracies with small populations find it difficult to balance “being equal and excellent”. College 4.0 is about massifying higher education, encouraging biodiversity, and thinking about the ecosystem.
College 4.0 needs us to do 10 things
  • First, we must start with fixing schools because you can’t teach people in 3 years what they should have learnt in 12 years. The world of work has changed and reading, writing and arithmetic may be the most important vocational skills. There is a race between education and technology and education is losing; consequently Class 12 is the new Class 8 for lazy employee filtering. We may have been confusing the skill premium with a school premium but our toxic Right to Education Act confuses school buildings with building schools. We urgently need to amend this act to become the Right to Learning Act.
  • Second, we need to remove the dead end view of vocational educational by creating full modularity under which a 3 month certificate becomes an opening balance for a 1 year diploma, which moves to a 2 year associate degree, and a 3 year degree.
  • Third, we need to use recent amendments to the Apprentice Act to rapidly increase our apprentices (India only has 4 lac apprentices while Germany has 3 million and Japan 10 million). More importantly, we need to give academic credit for apprenticeship so that the learning-by-doing and learning-while-earning also enables lateral entry into the degree modularity ladder.
  • Fourth, we need to end the apartheid against distance and online learning; all universities must be allowed to freely sign up students nationally and UGC must end its dated war against off campus centers; we need all the capacity we can get. Of course technology has been a disappointment; we all know technology matters in education we just don’t know how. But as economic historian Carlota Perez suggests in her great book Technological revolutions and Financial Capital, technology innovations take much longer to become useful than we think but we are probably a few iterations away from something that works. More importantly it is unfair that global MOOC (Massive open online courses) like Coursera, Edx and Udacity can freely sign up students in India but Indian universities cannot operate outside their state.
  • Fifth, we need a massive deregulation of higher education by ending the current regulatory regime. We need to encourage more biodiversity in institutional forms and innovation in delivery; the current system leaves little space for either. Two different regulatory regimes have led to substantially different outcomes because we produce 15 lac engineers but only 35,000 doctors every year. Arguably anybody who wants to be an engineer can be an engineer and the glut is now leading to a improve or perish equation for engineering colleges. On the other hand India needs 1 lac doctors every year and the lack of competition keeps fees unreasonably high. Quantity is leading to Quality in engineering and we need to replicate this across many other areas. Currently our education regime is over-regulated but under supervised and we need to re-imagine – or radically neuter – the role of regulators like UGC and explore university partnerships in some areas with the new sector skill councils.
  • Sixth, we need to convert our employment exchanges to career centres that offer counseling, assessments, apprenticeships, training, and job matching because today our 1200 employment exchanges only offer 3 lac jobs every year to the 4 crore registered. Universities have traditionally not established strong connections with employers and career centers could become this vehicle.
  • Seventh, we need massive labor reform; an employment contract that is the equivalent of marriage without divorce means that 90% of our labour force works informally. It also means that our 63 million enterprises only translate to 14,500 companies with a paid up capital of more than ten crores. The lowest hanging fruit in labor reform is the economic insanity of a regressive benefits regime that mandates a 45% salary deduction for employees with the lowest wages; exactly the point of entry for 10 lac kids into the labor force every month. The budget announcement creating competition and choice in PF and ESI has so far been ignored by the Ministry of Labor but needs to be operationalized quickly. But we need a broader and radical overhaul of our labor laws that will reduce the costs of formality but raise the costs of informality; formal high productivity jobs at the exit gate of our higher education system are fast becoming the binding constraint for India’s productivity.
  • Eighth, we need a lot more decentralization to state governments. States like Rajasthan, Madhya Pradesh, and Maharashtra are making moves to make their states fertile habits for job creation and 29 CMs are more important for jobs than 1 PM. There is no such thing as India’s labor and education market and handing funds, functions and functionaries to state governments.
  • Ninth, we need to create an open but well supervised regime for foreign universities to operate and compete in India. Competition and Innovation will only thrive if the current status quo which encourages an adverse selection among education entrepreneurs – they are mostly politicians or landlords – is challenged.
  • Tenth, we need to synthesize all of these changes in more skill universities; vocational universities are different from normal universities in three ways; they pray to the one god of employers, only 5% of their kids are on campus with the balance in apprentices, online or on-the-job and only 5% of their kids are doing a degree but all of them have the ability to use their certificate or diploma to go all the way to a degree. Skill Universities represent a confluence of various stakeholder interests because they are 1/3rd employment exchanges, 1/3rd ITI’s and 1/3rd college.
India’s painful poverty is a child of our productivity deficit on our supply and demand side. Our journey is to higher productivity needs policy to accelerate five transitions; farm to non-farm, rural to urban, subsistence self-employment to decent wage employment, informal to formal and school to work. The school to work transition is complicated because of the size of our demographic dividend, being democracy that cannot implement Singapore’s norm of forcefully diverting 25% of school students to vocational training, and cultural norms that value degrees for non-employment reasons. But fixing our higher education system would go a long way in not only fixing our supply side productivity but laying the foundation for innovation. India has always been more economically complex than other emerging economies – we make everything and do everything even if we don’t always do it at scale or well – and we are a ten horse power engine operating at four horsepower. Our problem is not capacity but capacity utilization. Making our graduates employable is a great place to start.

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