India's vocational education and training challenge

German President Joachim Gauck, Infosys Chairman Narayana Murthy, and Vice-chair of the Bertelsmann Stiftung Liz Mohn are working together to tackle India's VET challenge.

In February this year, German President Joachim Gauck, Founder and Chairman of Infosys Narayana Murthy, and Vice-chair of the Bertelsmann Stiftung Liz Mohn assembled some 100 Indian and German business leaders, politicians and academic experts at the splendid Infosys Campus in Bangalore.

The agenda of this summit was to discuss and search for solutions to one of India’s most pressing challenges -- providing vocational education and training (VET) to its rapidly growing and youthful population.

The inspiration for the conference was delivered by President Gauck who argued that Germany's work-study VET system could prove effective in helping India master the enormous economic and demographic challenges it currently faces.

India's VET challenge

India's potential for rapid economic catchup is being held back by a large skills deficit. Its jobs market suffers from shortages of skilled labor, while unemployment and underemployment are also widespread. The problem is that barely 2 per cent of the Indian workforce has formally acquired skills and only another 2.4 per cent of workers have some technical education.

Over the next ten years half a billion young Indians will enter the labor force. At that time, one-quarter of the world's working-age population will live in India.

India has the potential to reap a large demographic dividend thanks to this large, youthful and energetic labor force. But without training, this could turn into a demographic time bomb. Social unrest in Arab countries and elsewhere shows the social and political risks of large populations of unemployed and frustrated youth.

The next Indian government must create an effective VET system. This will be the decisive factor determining whether the country experiences a demographic dividend or a demographic time bomb.

To what extent can the German "dual system" of VET be adapted for use in India?

Lessons from Germany's "dual system" of VET

A key ingredient in Germany's successful economic model has been its "dual system" of VET. VET is provided both in the company and in a vocational training institution. In the company, a corporate instructor teaches practical skills that apprentices need to be work-ready after their graduation. At the vocational training institution, apprentices learn theoretical skills that are relevant in the respective profession.

Some one-half of the German labor force receive VET qualifications, while one-quarter undertake university studies, and the remaining quarter is unqualified. Germany’s dual system seems quite successful. During the recent crisis period, European countries like Germany with VET systems have experienced much lower and more stable youth unemployment.

Despite the success of Germany’s dual system, it cannot provide a blueprint for other countries. Every economy has its history, traditions and culture. "Germany's system cannot be transferred one-to-one" said Liz Mohn.

But VET systems are being challenged to adapt, even in Germany, as rapid technological change and globalization are dramatically changing the world economy, according to Bertelsmann's Jorg Drager.

Looking ahead, VET faces five challenges as an employment-oriented education system of the future, according to Drager. These are the shortened half-life of know-how, the drift towards academization, the challenge of integration of the lowly skilled, the mobility of talent, and the competition for talent.

Dräger concluded that there is a future for VET, if it adapts to the following global trends: the need for "learning to learn", not only know-how; better integration with other parts of the education system; offering different levels (not just one level) of apprenticeships; developing international standards; and protecting company interests, especially against poaching of staff and intellectual property.

The fact that German companies doing business in India, including Bosch, BMW and Volkswagen, are very active training their workers, and are willing to do more, provides hope that the German approach can contribute to solving India's skills crisis.

Lessons from Infosys

Infosys is a leading Indian IT company which employs more than 158,000 people and is a pioneer in successful training and certification in the Indian service industry, as Narayana Murthy explained. In recent decades Infosys has trained more than 320,000 employees and established one of the most successful and innovative training models in the area of Software and Services. Its Global Education Center at its Mysore-based corporate university, the world’s largest corporate university, accommodates up to 13,500 new recruits.

Infosys is an exception in India, where many companies do not view training as an investment in the future. The key lesson from Infosys is its "enlightened self-interest" and long run perspective. In other words, it pays over the longer term to train your staff, even if you lose some. Indian companies should look very closely at Infosys as a model for VET.

As President Gauck argued, “For the system to function, companies must be willing to take responsibility even beyond of their own business operations".

Lessons from Google

As India works to design a more effective VET system, it should search the whole world for the best lessons of experience. And there is perhaps no better place to look than Google, which has been ranked the best company to work for, according to "the most extensive employee survey in corporate America" conducted by Fortune magazine. So what skills and qualities does it look for in its employees?

“There are five hiring attributes we have across the company,” explained Laszlo Bock, the senior vice president of people operations for Google.

For every job the No. 1 attribute is general cognitive ability, and it’s not I.Q. It’s learning ability. It’s the ability to pull together disparate bits of information.

The second is leadership. Not traditional leadership, like were you president of the chess club. But when faced with a problem and you’re a member of a team, do you, at the appropriate time, step in and lead.

Then there are ownership and humility. The sense of responsibility, the sense of ownership, to step in to try to solve any problem. And the humility to step back and embrace the better ideas of others. Without humility, you are unable to learn.

The least important attribute Google looks for is “expertise.”

New Times columnist Thomas Friedman, who “discovered” that “the world is flat” on a visit to the Infosys Bangalore Campus, sums up Bock’s approach to hiring as follows -- "Talent can come in so many different forms and be built in so many nontraditional ways today, hiring officers have to be alive to every one". "And in an age when innovation is increasingly a group endeavor, it also cares about a lot of soft skills — leadership, humility, collaboration, adaptability and loving to learn and re-learn".

"Many jobs at Google require math, computing and coding skills, so if your good grades truly reflect skills in those areas that you can apply, it would be an advantage. But Google has its eyes on much more." Bock also noted that the “proportion of people without any college education at Google has increased over time”.

Message for India’s new government

The lessons for new Indian government, which will soon take office, are clear. Both government and business need to work in partnership to design VET systems that enhance workers' skills and employability. The Indian government has much to do in a country where half the population is functionally illiterate, and where the VET system is way behind the curve in most ways. Indian companies need to employ enlightened self-interest in taking the training of their workers more seriously.

But VET systems cannot operate as in the past, where a tradesman learnt one skill for life. We live in a world of constant change, and "learning how to learn" is key. And a broad range of "employability" characteristics are perhaps now more important than narrow skills.

But addressing India's VET challenge also requires going beyond the VET silo.

Given the important role that multinational companies play in training their staff, it is important for India to improve its attractiveness to foreign investment. India currently has very restrictive policies to towards FDI, according to OECD analysis. And FDI inflows to India, at around $30 billion a year in recent years, are much less than for the other BRICs of Brazil, China and Russia -- and certainly much less than India's potential for absorbing FDI.

The Indian government also needs to make the country much more attractive to domestic investors -- especially in light of the current weakness in investment. A more attractive investment climate would provide companies with greater incentives to train their staff.

At the moment, India is one of the world's most difficult countries in which to do business -- especially with regards to enforcing contracts, construction permits, processes for starting a business, and paying taxes. The quality of much of its infrastructure is appalling. And corruption is rampant.

Migration is also relevant to VET, as many Indian students undertake VET studies in Australia and elsewhere (India accounts for the largest share of foreign VET enrollments in Australia). But all too often, they prefer to stay overseas, rather than return home. And India also has a great brain drain, including of VET graduates. The Indian government must do much more to make the country attractive to its own citizens.

We can only hope that the new Indian government -- whatever its stripes -- will listen to the very important lessons from this “skills summit” in Bangalore. India’s skills deficit is one of the very most important challenges facing the nation.