BUILDING A SKILLS DEVELOPMENT FRAMEWORK FOR

SUSTAINABLE HUMAN RESOURCE DEVELOPMENT IN INDIA: SOME

COMPARATIVE PERSPECTIVES

Debi S. Saini Ph.D

Professor & Chairperson––Human Resource Management Area,
Management Development Institute
Mehrauli Road, Sukhrali
Gurgaon, HARYANA-122001

Phone: +91-122-4013050 Ext. 305 FAX: ++91-124-2340173

E-mail: debisaini@mdi.ac.in

Paper presented at the Fifth International Congress of the Work & Labour
Network on “Labour, Globalization and The New Economy” organised by the
Volkshochschule Osnabrück, VAUST [Association Work, Environment, Society
& Technology] Osnabrück and Department of Social Sciences, the University of
Osnabrück, Germany at Osnabrück, between September 21-25, 2006.
 BUILDING A SKILLS DEVELOPMENT FRAMEWORK FOR
SUSTAINABLE HUMAN RESOURCE DEVELOPMENT IN INDIA: SOME
COMPARATIVE PERSPECTIVES
Debi S. Saini

After the initiation of the economic reforms world over, the developing world is largely
focusing on the export-promotion model of development and development of requisite
skills amongst workforce through vocational educational and training systems so as to
enhance their competitive strength in the new labour market conditions, and also to
work as poverty alleviation strategies in the new economy. A facilitative legal framework
is needed to ensure a professional management of macro-level skills development
strategies.

This paper mainly studies the structural framework of the Indian skill development
system and finds it highly deficient in content, coverage and approach to the issues. The
paper studies the working of the two skill-development schemes that are in presently in
vogue. It is found that these schemes are working much below their projected capacity;
and the concerned laws and policies are not properly designed and enforced. There is
almost no organized system of skill development for the informal sector. Till today India
has not set up any regulatory authority to set standards of competence to be achieved at
different levels of each trade in the informal sector. The system is managed by the
bureaucracy like any other government department. Neither the bureaucracy nor the
politicians have shown any concern for the real issues at stake for developing a
professional skill development system.

The paper studies the issue in a comparative framework through examination of the
structure and working of the VT laws and policies in two other developing countries
facing many similar problems in development of VT and poverty-alleviation. The
formulations made are rooted in the Government reports reflecting the working of the VT
system(s), four interviews of the concerned officials (two officials associated with the
Indian VT system, one with that of Malawi and the fourth with that of the Philippines), a
comparative study of the legal and policy documents of the three countries, and the
existing literature on the subject including the published and other researches. It makes a
case for developing a facilitative legal framework that supports creation of an
autonomous statutory authority for designing and administering the country’s VT
system. This law should be so designed that it leads to development of a professionally-
managed, goal-focused, needs-driven, competency-based, stake-holders-owned, and
democratic system of VT. Eventually, the paper projects how lessons in comparative law-
making can be learned by the developing world by drawing on the experiences of three
such countries i.e. Malawi, Philippines and India.

I. INTRODUCTION

In the era of globalization human resource development (HRD) has become an important buzz
word. Governments see this as an instrument of promoting productivity and excellence in their
attempts for export promotion. But the issue of inequality caused by the working of the
2
globalization model is also assuming great significance. Here again HRD can be of help in
enabling people to sell their skills at better price. Thus, while discussing the priorities of the
state, scholars draw its attention towards the problems of the poor and their vulnerabilities in the
existing socio-economic dispensation. And, state’s role in poverty alleviation often involves
distribution of benefits to the poor. It is well-known, however, that one of the more effective
measures on the part of the state in this regard is facilitating the provision of employment
opportunities to those who can work but are not able to do so because of its non-availability.
Accessibility to reasonably decent jobs enables people to raise their living standards by own
efforts, and without attracting any stigma of pauperism and social indignity. Therefore,
providing “a fishing rod rather than fish itself to the needy is known to be a more viable
measure” (Saini, 2003: 269).

In particular, unskilled people are in a more disadvantageous position in facing the market
rationalities in the era of globalization. For, profit motive guides one and all in the new economy;
and the state often pretends that it is involved in poverty alleviation. Poor are also prone to
working at starvation wages especially in labour-surplus developing countries. Most of these
countries suffer from problems of overpopulation, illiteracy, unemployment and under-
employment, which give rise to a marshy situation of acute poverty. The problems of lack of
the latest technology, corruption and non-accountability at the levels of bureaucracy and
politicians which proves to be detrimental to common people, latent networks between vested
interests to secure unfair advantages from the powerless including the poor, and low productivity
in general lead to a peculiar dynamics which tends to exacerbate and perpetuate labour poverty.
While these problems could partly be seen as features of various stages of under-development of
economies, societies and polities (including the legal systems), the poverty-alleviation discourse
must therefore begin first tackling those issues which are less affected by the above-mentioned
dynamics. This paper looks at one such issue of legal framework and poverty alleviation i.e. the
issue of skills development through vocational training (VT) in developing countries.

The paper first examines the importance of development of a skill development framework
development through VTin developing economies. It then maps in the Indian context the
country’s contemporary skills-base, workforce structure, employment scenario, and the issues in
poverty alleviation arising from the present VT-related policies of the Government. The paper
mainly focuses on examining the present legal and policy framework of skills-development in
India. But this is done in a comparative framework through examination of the structure and
working of the VT laws and policies in two other developing countries facing many similar
problems in poverty-alleviation in the new economy. The formulations made are rooted in the
Government reports reflecting the working of the VT system(s), four interviews of the concerned
officials (two officials associated with the Indian VT system, one with that of Malawi and the
fourth with that of the Philippines), a comparative study of the legal and policy documents of the
three countries, and the existing literature on the subject including the published and other
researches.

It makes a case for developing a facilitative legal framework that supports creation of an
autonomous statutory authority for designing and administering the country’s skill development
system. This law should be so designed that it leads to development of a professionally-managed,
goal-focused, needs-driven, competency-based, stake-holders-owned, and democratic system of
VT. Eventually, the paper projects how lessons in comparative law-making can be learned by the

3
developing world by drawing on the experiences of three such countries i.e. Malawi, Philippines
and India.

II. GLOBALIZATION AND CHANGING VT ISSUES IN DEVELOPING COUNTRIES

After the initiation of the economic reforms programmes at the global level, the world of work
has changed substantially. Massive expenditures are being made by developed as well as
developing countries in manpower training––more so in the formal sector––so as to respond to
the needs of the new economic order. In the post-industrial economy, work and workplace have
been considerably influenced by changes in technology, management innovations, and
competition in the global market; these influences have transformed the kind of knowledge,
skills and attitudes needed for successful employment and work performance (Stasz, 2001).
Skills development at the macro level is a major critical concern not just for governments but
international agencies too. It is argued that investment in education can play “an instrumental
personal role” by enabling a person to get better jobs and making use of economic opportunities
(Dreze and Sen, 1995); acquisition of skill proficiency along with education can take people out
of poverty ((Romer, 1986; Barro, 1991); and can even produce leading small entrepreneurs––
more so in the globalizing world. So as to respond to the needs of the changed times, the World
Bank has set the goal of securing the universalization of basic education by the year 2015; it has
also realized that a focus on life-long learning is a sine qua non for the knowledge economy.
UNESCO/ILO recommendations provide that “…education and training can also help
individuals to escape poverty…and training therefore is an investment in the future”
(UNESCO/ILO, 2002). We have the example of Southeast Asian countries to suggest how
widespread acquisition of human capital has helped raising productivity and earnings and
development of skill-centred industries (Stiglitz, 1996; World bank, 1995; Saha and Sarkar,
2002). Thus, in the new export-promotion model success requires the use of improved
technology and appropriately-trained world-class manpower; these are also viewed as a strategic
choice for poverty alleviation.

Table-1 shows that in case of countries such as Asian tigers like Hong Kong, Republic of
Korea, Singapore, Taiwan and China training imparted are demand led; but they are supply-led
in most other countries of Asia, which is also the case with most African countries (ILO, 1999).
Informal sector, which employs the bulk of poor, powerless and unskilled people needs VT the
most, and meeting their training needs are a very common important problem in Asian countries
like India and most African countries. This is symptomatic of Government’s indifference or
inability to focus on the real issues at stake. Figure-1 shows that unorganized including the
agriculture sector employs 93 per cent of India’s workforce. Any VT discourse that aims to
alleviate poverty, therefore, has to focus on their VT needs.

Many new issues in relation to skills development through VT in formal as well as informal
sectors have now emerged as important determinants of the kind of skills needed. These must
receive critical attention of Governments, framers of any VT law, and employers in the
developing world in the era of globalization. They can be understood as follows:

1. Skills development for export promotion: Most developing countries are now focusing
their economic policies on export promotion. Thus are in great demand the most modern
skills to boost exports. A whole lot of skills related with international business and export
4
 trade are becoming important. With the World Trade Organization (WTO) becoming
more important and over-arching, new industries are flourishing across the globe in
service as well as manufacturing sectors giving rise to the need for proficiency in new
sets of export-related areas and skills.

2. Social and economic demands-based skill formation programmes: As can be seen

from the case of newly industrialized countries (NICs) of Asia, any meaningful VT
programmes have to be built on the demand-led skill formation. But most Asian and
African countries are far from building their VT models on the basis of demand for skills
in different sectors. Various agencies involved in VT in India, for example, operate in
water-tight compartments and in a highly inflexible manner treating VT as if it is an end
in itself rather than as a means to sustained livelihood and employability. Employers are
looking at the availability of skills to promote their competitiveness, which the system is
not able to provide. The requisite framework of industry–institution linkage is not seen
emerging. The curriculum at various levels of learning in Government-run institutions in
India, for example, is often not quite relevant to the diverse needs of the economy
(Shaljan, 2002; Government of India, 2001).

3. Training programmes for the informal sector: To cope with the demands of the new
economy, the technology-rich world adopts the strategy of “high skills and high wage”
employment involving gold-collared workers, shifting the other industrial activities to the
developing world to reap benefits of low costs. In developing countries, gold-collared
work force is few and far between. Employment in the unorganized and the informal
sectors is increasing. The formal sector is becoming relatively stagnant leading to
shrinkage of wage employment and explosion of the self-employment sector. These
developments should lead to re-thinking the whole approach to skill development in these
countries. The real challenge before developing countries is to evolve appropriate
incentives that will motivate training institutions to respond to the needs of the small
entrepreneurs in the making. The government’s role should rather be facilitative in
promoting an appropriate environment and capacity building. Of course, this strategy can
work only if there is in vogue an effective system of market-needs assessment. The data
on training needs will help carving out appropriate training modules on the basis of the
gaps discovered (Mathur and Mamgain, 2002: 1041).

4. Criticality of labour market information system: The new realities have necessitated
that an independent professional agency takes up the work of the establishment and
management of an LMIS at the macro level so as to facilitate effective policy
formulation. Often a total mismatch of skills generated and skills in demand is noticed
especially in less developed systems. This creates serious hurdles in responding to the
needs of globalization leading to surpluses and scarcities, which also hinders
effectiveness of poverty-alleviation measures. A large number of studies report
inadequacies of the institutional frameworks of skill development in meeting the social
demands; for example, in the Indian context it is more so in relation to the informal sector
(Ghosh, 2002; Bashir, 2002; Agrawal and Naqvi, 2002; Sasikumar, 2002). LMIS will
help in knowing, among others, skill training linkages with the community; assessment of
demand and supply of skilled workers including qualitative dimensions of skills and
wage structure; and dropout rates of those admitted to formal and non-formal streams of
VT.
5
5. Training of trainers: Today’s world has made it necessary that workers are taught to
develop most modern skills. For this trainers have to be exposed to the state-of-the-art
methods of imparting knowledge and skills among workers to save themselves from the
problem of skill redundancy. There is a need to initiate preparation of human resource
maps with long-term perspective of skill requirements, say of 10 to 20 years ahead
(Ramachandran, 2002: 1013). Instructors in Government-run training institutes are often
found not interested in revising the curricula as that would involve the burden of
preparation for them (Shaljan, 2002: 4651). This requires systems of adequate sanctions
and motivation for them to undertake updation of methodologies and syllabi.

6. Exigencies of flexible manufacturing, flexible specialization and Toyotaism: So as to

cope with the decline in mass production, industry is switching over to a newer method of
work organization. Focus is thus shifting from Fordism (mass production) to “flexible
manufacturing” as approach to production; it is also known as “flexible specialization” or
“Toyotaism” (Venkata Ratnam, 2001: 80). It implies the employer resorting to the
adoption of such technologies that are relevant to a different line of production in the
event of change in product demand. This involves major changes in the areas of “skills,
work organization, functional integration, control,” among others (Mamkoottam, 2003).
The approach emphasizes multiple-skills that are necessary for adopting flexible
manufacturing. This has been made possible by computer-aided designs and computer-
aided machines, popularly known as CAD and CAM (Seth, 2000: 80; Saini, 2000). These
developments are worsening the employment prospects of the less skilled (ILO, 1998).
Thus employers need to impart skills of high order among the employees over and above
their core skills so as to facilitate labour flexibility.

7. Retraining of the retrenched workforce: Perhaps, one of the most difficult issues in the
structural adjustment programme before the developing world is that of training the
retrenched workforce (Lucas, 1994). In fact, what workers displaced by the SAP want the
most is relevant training so as to make themselves available in the labour market at
reasonably acceptable conditions. In the Indian case, while initiating the economic
reforms, the Government had set up a National Renewal Fund (NRF) to provide safety
nets for labour affected by the globalization policies. It was intended to fund, among
others, re-training of the workforce affected by downsizing. We need to develop a skill-
agenda at the macro level that involves professionally-organized programmes, duly
funded by suitable agencies, which will help minimizing the problems of the retrenched
workers. Also, in order to be meaningful, skill upgradation for the retrenched workers
should be started before and not after the retrenchment (Mathur and Mamgain, 2002:
1042).

8. From one-time skill acquisition to life-long learning: The practice of the state-of-the-
art skills at all levels is increasingly becoming necessary for businesses to survive in the
competitive environment. Life-long learning is replacing one-time skill acquisition.
Developing a learning organization is becoming the key to organizational survival and
growth. Corporate universities are being set up by leading global business organizations
to keep the skill levels of their workforce up to date. This requires development of a
sophisticated VT system by the state, the use of which could be a starting point for
adapting to a culture of life-long learning.
6
 9. VT as per collaborative partnership between public and private sector: It is
understandable that in the post-globalization world, Governments can not be expected to
provide and fund the entire range of training activities. Private sector participation has to
be built-in the system with a facilitative framework. The Indian case, for example, shows
that private sector industrial training institutes (ITIs) have performed far better than those
run by government (Adams and Krishnan, 2003). The experience of the developed world
is also on similar lines (Ramachandran, 2002: 1012). Therefore, in order to be workable,
the new models of VT in the Asian and African countries have to be informed by these
realities.

III. ECONOMY, WORKFORCE AND THE VT SCENARIO IN INDIA

The contemporary issues in skills development and vocational training (VT) in India should be
understood in the context of the general economic environment in the country as it has evolved
over the years so as to fully appreciate the dynamics of the problems. This section, therefore,
discusses some relevant features of the Indian economy, the structure of the workforce and the
employment scene, the framework of the skill-development policy pursued at the macro level,
key problems in the institutional framework of the VT system, and the causal roots of the failure
of this system in meeting the social and economic demands.

A. The Economy

India had been predominantly an agricultural economy till it became independent in 1947. Even
after independence, its first Five Year Plan (1951-56) focused on development of agriculture. In
the second Five Year Plan onwards a shift took place towards industrialization. The country has
the second highest population in the world, which as per the latest Census of 2001 stands at 1027
million. It is also the biggest democracy in the world having a Parliamentary form of government
with a large number of political parties in operation. This feature even though is a matter of
pride for Indians but, some people say, has been responsible for slow decision-making on
important matters of national import, leading to loss of many opportunities at crucial junctures of
economic history. Some of the relevant national data as on 1 March, 2001 can be noted as
follows: The literacy rate for the population belonging to the category of seven years and above
stands at 65.38 percent. The country’s 28 states and 7 union territories are divided into 600
districts, which are administrative units of its 5161 towns and 6.4 lakh villages.

Post-Independence India chose to pursue the policy of self-reliance in its economic

development. Consequently, it preferred an import-substitution rather than free-trade
developmental model for more than 40 years. The Planning Commission that has been
constituted by the Central Government is continuously involved in making plans and arranging
their reviews. Presently, the Tenth five-year plan is in operation (2002-07). The government
policies till lately have been focused on widening the employment in the organized sector.
However, this sector never represented more than 10 per cent of the workforce in the country. As
seen in Figure-1, today it is 7 percent.

7
 The mixed economy approach stressed on the need to nurture the public as well as the private
sectors as per priorities laid down in the Five-year plans. By 1990, the Central (Federal)
Government had invested around 1000 billion rupees in 244 central PSEs employing 2.3 million
people. The State Governments had also invested some 382 billion rupees in 875 enterprises
under their control (Ramaswamy, 2000: 45). Jobs in Government and public sector have always
been most-sought-after by one and all; the most attractive being the civil service whose power
has its genesis in the governance structure adopted by the colonial British empire. One of the key
reasons for the attraction for government jobs is the excessive job security it provides to the job
holders and lack of any real accountability for their role. It is well known that bureaucracy is
riddled with corruption, which has got exacerbated by its subtle collusion and networks with
politicians. The bureaucracy also keeps distance from common people and often from their real
problems. The whole protectionist economic framework in the country so far has revolved
around the PSEs and economic planning which followed a modernization programme of
industrialization on the western pattern, with projections of securing to the people jobs in the
formal sector. As seen in Table-1, even the VT system in the country has been guided by this
thinking; and bureaucratic indifference, that will be discussed in subsequent paras, has to do a
good deal with it.

The failure of the import-substitution model of development became too evident with the
beginning of the decade of the nineties when the country started the reforms process in July 1991
through the New Economic Policy (NEP). India’s NEP came late as compared to those of others.
Structural adjustment programme (SAP) formed the hallmark of the NEP, which aimed to make
the economy efficient and conducive to export promotion, efficiency, productivity and economic
growth. Despite the tall claims of the success of the globalization process India is comparatively
slow in implementing the reforms process, which has resulted in lower rankings1 by global
agencies in reforms implementation.

The question of skills development and VT in the country becomes especially important
when we notice the reasons due to which Indian business has remained much below world class.
The factors responsible for this include: lack of aspirations among people in general to be world
class, lack of vision, lack of professionalism, lack of process sensitivity, sense of collective
paralysis, lack of sensitivity to customer needs, and lack of a professional system of skill
development, among others (Prahlad, 1999; Rao, 1999; Saini, 2000). Most enlightened
employers were aware of these problems in Indian business scene. They also realized a greater
need to tackle the problem of outdated technology, excessive workforce, inadequacy of skills,
and lack of concern for marketability, and unsatisfactory levels of productivity. Thus they are
investing in capacity building in these areas at their own level. That of course is in the formal
sector.
The country has multiplied its foreign direct investment (FDI) several times since adopting
the New Economic Policy (NEP) in July 1991 but is still far behind its neighbour China and
countries in South-East Asia in this regard. This will necessitate appreciating, among others, the
factors influencing skills development policies and activities in the Indian context. These factors,
among others, include availability of requisite skills and competencies; required mindsets, values
and customs; facilitative legal framework and institutions; and conducive cultural environment.
These factors are product of a country’s socio-politico-economic realities. Supporters of
globalization argue that high growth rate will itself trickle down and will lead to eventual

8
removal of poverty. Despite impressive growth in past few years, the issue of employment and
poverty alleviation has not attained much success. Active state intervention for a meaningful
facilitation of skills development has no substitutes.

B. The Workforce and the Employment Scene

The total workforce in the country on January 1, 2000, as per the 56th Round of National Sample
Survey Organization (NSSO) of Employment and Unemployment conducted in 1999-2000, was
410 million, of which 401 million was employed. Out of the employed workforce more than 93
percent (373 million) are engaged in the activities of the unorganized sector (including the so-
called informal sector) while 7 per cent of the workforce (28 million) are employed in the
organized sector (all public sector establishments and all non-agricultural establishments in
private sector employing 10 or more workers). As per the 55th round of NSSO, of the total
employment, 60 percent of the workforce is engaged in agriculture and the remaining 40 per cent
in the non-agriculture sector. Of the non-agriculture sector employment, unorganized workforce
is 82 per cent and the remaining about 18 per cent belongs to the organized segment. Only about
12 to 15 per cent of the total workforce in the country is estimated to fall in the category of
wage/salary employment. Such employees constitute 6 per cent of the workforce in the rural
areas and about 40 per cent of the workforce in the urban. The globalization programme has led
to a rise in the proportion of the casual and ad hoc workers; and the number of those enjoying
some kind of permanence is shrinking.

It has been estimated by the second National Commission on Labour [NCL] (Government of
India, 2002a) barely 5 per cent of the workforce in the age group of 20-24 years has acquired
some kind of a formal VT, though some scholars view this as an under-estimation (Mathur,
2002). Of course, this is a far lower percentage than those of developed countries, which range
between 60 to 80 per cent. The comparative figure in case of some of the developing countries is
also higher; for example, it is 22 per cent in case of Botswana, 28 per cent in case of Mexico; 17
per cent in case of Peru; interestingly, this is as high as 96 per cent in the case of South Korea.

The employment scenario in India is quite dismal. As per the survey carried out by the
National Sample Survey Organisation (NSSO), out of about 410 million people in the labour
force that we noted above, around 401 million are working and the remaining 9 million are
openly (fully) unemployed. Considering the size of the population of the country, open
unemployment (which means those persons who did not do any work during the last 365 days)
does not appear to be quite significant. What is of concern is that a large number of workers
(around 125 million) are working poor; thus about 30 per cent labour force works on almost
starvation wages. This means that though they are working but do not have quality employment
so as to fetch sufficient income to bring their family above the poverty line, which (poverty line)
by Western standards itself is quite low. The proportion of people living on less than $1 a day in
India is about 25 per cent, which speaks of the magnitude of the problem.

With a huge informal sector, it is Utopian to think that organized industrial development
strategies alone will do miracles in solving India’s problem of poverty and raising the standard
of common people. Alternative policy frameworks have to be examined to raise the employment
level, so as to cater to the peculiar needs of the market as also of those working for these sectors

9
including the self-employed. One of the disturbing trends in this regard is the decline in the
growth rate in employment in the post-globalization era, which has resulted in a situation of
jobless growth.

C. Skills Development: Legal and Policy Framework

Vocational education and training in India are divided into two sub-systems. At the central
(federal) level, while the vocational education is under the control of Ministry of Human
Resource Development (HRD), VT is basically regulated by the Ministry of Labour. In most
countries, vocational education and training are generally under the same ministry. Partly the
HRD ministry also exercises some control even in matters of VT. Further, about 35 ministries2 of
the Central Government are involved in providing and supporting some kind of training in their
respective areas of operations. The scope of this paper is confined to VT and does not extend to
vocational education.

As per the scheme of division of legislative powers between the Centre and States VT falls in
the Concurrent List.3 Therefore, the Central as well as State legislatures share responsibility for
making laws related to VT. At the central government (federal) level, the Directorate General of
Employment and Training (DGE&T), Ministry of Labour, Government of India, is the nodal
department for formulating policies, laying down standards, trade testing, certification and
monitoring training programmes and matters connected in the field of VT. It also operates
certain VT-related institutions called the Industrial Training Institutes (ITIs). At the state level,
State Governments are responsible for administering the VT system; they also operate some
industrial training centres.

Presently, there are two main schemes of skill development: one is the Craftsmen Training
Scheme (CTS) which is not covered by any special law; the other is the Apprenticeship Training
Scheme framed (ATS) under the Apprentices Act 1961. Under CTS, training is provided to
youth within the age group of 14-25 years in different. trades in ITIs as per common syllabi with
the objective to prepare semi-skilled workers for the industry. Under the ATS, certain number of
trainees, who are called apprentices, are associated with various notified industries in a specified
ratio between the apprentices and the other workforce). Under this scheme, on-the-job training is
provided in industry under the Apprentices Act 1961 to school leavers and ITI pass-outs with the
objective of making available skilled workforce to industry. The employers are obliged to enroll
and train the apprentices that are allotted to them as per the Act.

The Apprentices Act 1961 envisages training for three types of apprentices i.e. “trade
apprentices”, “graduate engineer/diploma holder technician apprentices”, and “technician
(vocational) apprentices”. While the administration of trade apprenticeship scheme is the
responsibility of the office of the DGET in the Ministry of Labour; the latter two schemes are
administered by the Ministry of HRD.

In administering the apprenticeship scheme the office of the DGET is expected to perform
its role in consultation with the Central Apprenticeship Council (CAC) that is constituted under
the Apprentices Act 1961. After the completion of the apprenticeship period in case of trade
apprentices, tests are organized by the CAC and certificates of completion are given to those who
pass the tests. The employers concerned are obliged to pay to the apprentices pre-determined

10
rates of stipend without any contribution by the Government or any other agency. The Act
obliges the employers covered under the Act to engage apprentices in certain specified ratios.
This is so in case of specified trades (for trade apprentices) and other employments (for those
holding degrees and diplomas in case of the other two categories of apprentices). In all 254
groups of industries consisting of 17,800 establishments are covered under the Act providing
training to apprentices in 138 designated trades in 31 trade groups (Government of India, 2002).
Under the ATS, 2.30 lakh seats are located in different establishments. This scheme is, however,
working much below the projected capacity for lack of proper enforcement.

Under the CTS, which involves specialized VT-provider institutions, 4465 ITIs are being
run today; out of these 1733 are run in the Government sector and 2732 in the private sector.
Altogether, a network of State Government-run ITIs and privately-run Industrial Training
Centres (ITCs) has a total seating capacity of 6.51 lakh. Under this scheme training is imparted
in 43 engineering and 24 non-engineering trades (Government of India, 2002).

Under the present scheme of things, the development of the CTS at national level, evolution
of policy, laying down of training standards and procedures, conducting of trade tests,
certification, etc. are the responsibility of the Central Government. So far as the implementation
of these schemes is concerned it is largely vested in state governments. The Central Government
is advised by the National Council for Vocational Training (NCVT), which is a non-statutory
tripartite body. It gives advice on formulation of policies and procedures, prescribing standards
and norms in respect of the VT Schemes. Corresponding State Councils for Vocational Training
(SCVT) advise the State Governments in respect of VT at the state level.

So far as VT in the informal sector is concerned, it is almost completely neglected and has
been left on its own. However, in 1979 the Central Government launched a scheme called the
training of Rural Youth for Self Employment (TRYSEM), which was intended to develop basic
technical skills among the rural youth who belong to families that are below the poverty line. It
was provided that training under the scheme would be imparted through a network of recognized
training institutions and master craft persons. The guidelines specified that skilled artisans,
industrial and servicing units, commercial and business establishments and voluntary
organizations could provide the required training. This programme ceased to exist by itself since
April 1, 1999, and was merged with a new programme known as Swaranjayanti Swarozgar
Yojana (SGSY) (golden jubilee self-employment scheme). The Planning Commission carried out
a mid-term review of this programme and found that TRYSEM had a weak link with the overall
strategy of self-employment in rural areas and with industrial policy. The training imparted was
not found to be in consonance with the capacity or aptitude of the trainees nor to the demand for
the skill concerned. The appraisal also discovered cases of corruption on the part of
implementing agencies whereby the youths who were supposed to have been trained received
neither the money nor any stipend (Ghosh, 2002).

D. Problems in the Institutional Framework of the VT System

A perusal of the working of the two formal-sector VT schemes in the country i.e. CTS and the
ATS shows that they are running much below the expected level of effectiveness. The efficacy
of the ATS has been adversely affected by indifference in administration of the Act. Referring to

11
the malaise in the ATS, a senior official in the Ministry of Labour, Government of India, who is
involved in the administration of the Act, observed:

Compliance in case of ATS that is administered by the Ministry of Labour is about 70

per cent, and in case of the other two ATSs that the Ministry of HRD administers is about
40 per cent. Generally, we do not launch any prosecution proceedings against the
defaulting employers for violation of the Act. Perhaps the only sanction that binds the
employers to comply with the provisions of the Act is a kind of a moral pressure. The
DGET puts pressure on the State Apprenticeship Councils to ensure that the employers
abide by the law. But frankly, there is no general enthusiasm for these schemes. There is
a charge on the industry that it often uses the apprenticeship scheme as a source of
procuring cheap labour; that is true to quite an extent. That is why some industries want
more apprentices. Others, however, view the scheme as a nuisance and of no utility to
them; this is despite the fact that the stipend rates have been fixed at quite a low level.
Even the working of the CAC needs to be improved. It is supposed to meet at least once a
year. But in the last three years no meeting has been held. That could be an indicator of
the degree of seriousness on the part of the officials concerned in making the CAC
functional.

In the two categories of apprentices which come under the Ministry of HRD, there is no
prescribed course curriculum as such. The employer is supposed to decide the contents of the
programme in consultation with the Chief Apprenticeship Advisor. In actuality no such
consultation takes place. The stipend payable to apprentices in this category is shared equally
between the employer and the government. Some employers find this subsidization as an
attractive feature of this scheme. Despite that, overall, these two schemes of apprenticeship have
created very little enthusiasm amongst the apprentices. While speaking about the operational
efficacy of this scheme an official of the Ministry of HRD, who is concerned with the
administration of these two schemes, observed:

The problem related to the poor implementation of these two schemes has to do with the
general indifference of the government. The stipend rates are too low: they are Rs. 1970
per month, Rs. 1400 per month and Rs. 1990 per month respectively for Graduate,
Technician, and Technician (vocational) categories in the first years of their
apprenticeship, and somewhat higher in subsequent years. Our monitoring mechanism is
also not effective in its structure and functioning. It can be said to be only for the name
sake or merely symbolic in nature. Only about 40 to 50 per cent seats are filled because
the apprentices are not enthusiastic enough due to the poor value-addition in terms of
prospects for getting jobs.

The VT system is run by the bureaucracy like any other government department. Some of the
main limitations of the present system can be stated as follows:
a) There is no unified VT system that enjoys the requisite autonomy and can ensure even a
semblance of professionalism in its administration. The system is run by the Government
without any representation of the stakeholders in it. Nor does it ensure any accountability
of the officials who are supposed to run it.

b) Various ministries and departments in the Central and State Government and many
organizations outside Government are providing VT in the country. But there is no
12
 synergy between these training providers. While some system of accreditation exists for
organizations working within the DGE&T framework, there is none for those outside it.

c) The whole approach of the VT system is supply-led rather than demand-driven. There is
no organized system of labour market intelligence and research for assessing the training
needs in emerging areas that can form part of a LMIS.

d) There in no significant system of VT in the vast informal sector. Whatever little has been
done in relation to those below the poverty line through the TRYSEM/SGSY scheme has
not met with any meaningful success (Mathur and Mamgain, 2002: 1041). It also does
not symbolize any effective and significant integration of informally-acquired skills into
the national mainstream. There is no provision for certification of skills acquired
informally. Agrawal and Naqvi’s (2002: 114) research on patchwork industry in Rampur
District focusing on the informal sector reveals that there is “total absence of institutional
back up” and that “the artisan’s efforts to enter new markets are hampered by their
inability to supply the product of required quality in bulk because of lack of trained
artisans”, only 18 per cent of whom had received formal training. Consequently, they are
not able to bring out innovative designs despite demand for the products, which are not
available in the market at all. This is largely the reality in the almost the whole of the
informal sector in India.

e) The present National Council of Vocational Training (NCVT), which is a part of the
central Ministry of Labour, enjoys no autonomy so as to infuse the requisite sense of
professionalism in VT design, delivery and administration. Even otherwise, It is only a
recommendatory body and does not have statutory powers to enforce its
recommendations on both the Government and private Industrial Training Institutions. It
also has no authority for raising funds for financing VT programmes; the present
situation is one of complete dependence on Government funding.

f) There is no VT scheme to cater to the needs of the socially-excluded groups and women
workers.

g) There are no centres of excellence in skill development, nor is research in this area being
conducted so as to resort to newer methodologies in Indian conditions.

E. Working of the VT policy: A failed agenda and lost opportunity

India adopted the structural adjustment programme 12 years ago and has now been
involved in carrying out the second-generation reforms. It has not yet enacted any legislation that
creates a framework for promoting demand-driven skill development and accreditation of skill
providers. No regulatory authority has been established to set standards of competence to be
achieved at different levels of trades in informal sector, in which 93 percent of India’s workforce
is employed.

While Government’s concern for modernization and its focus on the formal sector is
understandable, but the hard reality is that out of about 12.3 million persons who are expected to
enter the labour force per year, 10.8 million will enter the informal sector without any formal
skills whatsoever where they will become “wage hunters and gatherers” (Mitra, 2002). Not all
13
these 10.8 million job aspirants can be absorbed in agriculture where the need for skills is not so
important. For survival they need basic skills and the state can not disown its responsibility in
facilitating that process. There is almost no organized system of skill development and
certification for the informal sector. Only around 1.5 million job aspirants are likely to have
some degree of formal training from the existing VT system––allowing the under-utilization of
seats in the training institutes (Ebeling, 2002).

The Indian VT policy’s focus on the formal sector is symptomatic of the economic and
social structuring whereby the neglect of the VT needs of the informal sector has become an
accepted practice. It can also be said to represent the covert networks in the Indian system
between the vested interest groups who are influential in policy-making. The hallmark of the
malaise in the VT system for this sector is the usual indifference and limitations of the
government machinery, which is perhaps the main hurdle in the professional development of VT
and its working as per the country’s social and economic demands. Bureaucracy is often known
to reflect the following in its working:
Over-devotion of officials to precedent, remoteness from the rest of the community,
inaccessibility, arrogance in dealing with the general public, ineffective organization, waste
of manpower, procrastination, an excessive sense of self-importance, indifference to the
feelings of inconvenience of citizens, an obsession with the binding authority of
departmental decision, inflexibility, abuse of power, and a reluctance to admit error
(Encyclopaedia Britannica 1987, 342).

India’s VT policy reflects deeply entrenched bureaucratic indifference to the real problems
at stake. Parekh (1995) rightly argues that Nehru, the first Prime Minister of India, was
responsible for strengthening the bureaucracy and not ensuring institutionalization of people’s
power in the governance structure. It is well known that bureaucracy in the country was a legacy
of the raj and was rigidly hierarchical treating people as passive objects which could be moulded
the way it thought proper. In fact, Parekh (1995: 40-41) quotes Nehru suggesting that he had
admitted shortly before his death that his greatest failure “consisted in not transforming the
administrative machinery…it is still a colonial administration …and…one of the main causes of
India’s inability so solve poverty.” The role of the bureaucracy in VT administration as well
reflects a sorry state of affairs. The alliance between the vested groups in Indian society,
exacerbated by the tacit consent or indifference of the administrative officials, so works that laws
and policies are often reduced to a status of more as symbols than delivering any substantive
justice.

Very rightly, therefore, the state that enacts laws for the poor is sometimes charged of
being a “saboteur” of these laws (Baxi, 1995). Apathy to the real problems has reduced the key
law on skill development i.e. the Apprentices Act 1961 to be one that is lackadaisically
administered. While dealing with the question of poverty alleviation, Kjonstad and Wilson
(1997) rightly argue that the crucial question is “who has power and in whose interests are the
laws operated”. Baxi (1988) seems to be supportive of this formulation when he argues that
people are not naturally poor but are made poor by the decisions of those who hold power; these
include “judges, bureaucrats, economists and others.” Using Nonet and Selznick’s (1978) three-
stage development of legal systems, it is certain that the Indian experience of skill development
law shows it to be neither in the third stage of acting as “instrument of social engineering” and

14
poverty alleviation nor a case of the second stage where the law is able to assert its “formal
rationality” and enforce the existing VT arrangements in a just manner.

So as to tackle its problems of attitudes India needs to promote “clarity of goals and quality
of new ideas and concepts” (Prahlad, 1998). But with its excessive influence of bureaucracy and
indifferent politicians both these seem to becoming non-existent dangerous species. One of the
clearly-stated primary slogans of the a recent medium-term plan (1993-98) in Philippines, for
example, was "the creation of a world-class labour force” (Abdelkarim, 1997); this must have
surely contributed in the ranking of Filipino workers as the best in Asia today. The present
Indian system gives no such signals of goal clarity; it neither caters to the needs of the industry
up to its (industry’s) satisfaction nor does it solve the problems of the poor in the informal sector.

The performance of the existing system of excessively state-regulated VT in the country is

far from satisfactory (Adam and Krishnan, 2003). India has lost a valuable opportunity of
devising an occupation-based knowledge and skills imparting system in a more systematic
manner at a very crucial stage of its economic development; interestingly, the Asian tiger
countries (the NICs) in South-East Asia have far exceeded in developing competitive
performance through, among others, enforcing comprehensive needs-driven schemes of skill
development.

It should be understood that for a country of India’s size and economic profile it is Utopian
to expect miracles from exclusive focus on organized industrial development. Rather a more
meaningful VT system is needed to respond to the vast unorganized (including the informal and
subsistence) sector.

It is noticeable that private training-provider institutions have been able to demonstrate a

good degree of effectiveness and have some remarkable stories of success to tell (Adam and
Krishnan, 2003). The Government ITIs, on the other hand, are functioning under several
constraints and this fact should be kept in view while planning for effective training strategies.
They have not faired well due to a number of reasons. However, there is evidence that NGOs
have been able to play a more effective role (Mamgain and Avasthi, 2001). The skill
development discourse, therefore, has to move away from Government-focus to collaboration
between public and private sector. This can not be done without the support of an imaginatively-
designed legal and policy framework as can be seen from the case of Taiwan and Philippines.4 It
is a real challenge before the Indian Government to facilitate VT in view of the requirements of
the collaborating partners concerned.5

Even after more than a decade of globalization policies a “skill development fund” has not
been set up to facilitate a professionally-managed macro-programme of workforce development.
Ironically, the National Renewal Fund (NRF) that was set up at the adoption of the new
economic policy so worked that almost no effective programme of skill upgradation got started;
almost all spending for the NRF was confined to financing the voluntary retirement scheme
(VRS) of the PSEs (Mishra, 2001; Chandra, 1999).

The second National Commission on Labour (Government of India, 2002a) has

recommended that an independent regulatory authority be constituted by the Government with
powers for formulation of policies, action plans and programmes for providing a continuing
coordinated and fully integrated skill-development programme, and accreditation of training
15
institutions. It emphasized the need for multi-skilling through modular-approach VT so that the
individual aspirants receive inter-related skills to eventually contribute to enterprise flexibility.
The Commission advocated for associating NGOs, Workers Education Boards, and adult literacy
institutions in the design and implementation of training modules. It recommended Needs
Assessment Boards (NABs) for laying down competencies. Similarly, economic planners6 have
been emphasizing the need to develop relevant demand-driven skills as part of skill development
programme with the help of an appropriate statutory backing (Government of India, 2002b and
2001).

Interestingly, as is discussed in subsequent sections, even some of the small African

countries like Malawi have enacted most modern legal and policy framework in skill
development early enough (1997 and 1999); Philippines and South Africa enacted laws to this
effect in 1994. These instances can offer important lessons in comparative law-making in the
sphere of VT as per needs of the new economy. The next section discusses the salient features of
the VT laws and policies in these countries.

IV. A COMPARATIVE PERSPECTIVE OF VT POLICY FRAMEWORKS

In the era of globalization, comparative studies have become more important than ever before in
various spheres of knowledge and experience-sharing at micro as well as macro levels. Often,
countries may be having similar problems emanating in similar contextual settings; therefore,
there is good possibility of learning some lessons from each other through development of
comparative perspectives. For example, most countries in South Asia and Sub-Saharan Africa
have some common problems. These include: majority of their population deriving their earnings
from agriculture, high rates of illiteracy and lower levels of education, lower levels of income,
smaller formal sectors of employment, and high degree of bureaucratic and political indifference
and corruption in governance. They are “home to the largest number of hungry people…[and
also]…women produce much of the food in Sub-Saharan Africa and South Asia yet do not have
secure access to land” (UNDP, 2003: 6).

Further, their attempts to become world class and meet survival-needs have compelled them
to follow export-promotion model of development. Pressures of global competition have led
them towards searching the best possible alternatives. Therefore, comparative study in general
has been becoming an important approach to scholarship and problem-solving. Benchmarking is
increasingly becoming a flourishing industry in various spheres of corporate and business
management, which involves searching and adopting best possible practices followed by one’s
competitors. By the same logic can be benchmarked the legal models from other countries. There
are some solutions which can be expected to work in any locale while others are informed more
by the cultural contexts. This section looks at the distinctive features of the VT policy
frameworks of Malawi and Philippines so as to know the extent to which they help VT design
and delivery across nations in the contemporary dynamics of the new economy.

A. VT law in Malawi

Malawi recently experienced an important shift in political, economic and social paradigms;
among others, it moved from a one-party to a multi-party political system. The country realized
16
the strategic importance of having a policy on Technical, Entrepreneurial, Vocational Education
and Training (TEVET) as fundamental to economic and social development. In the economic
sense TEVET was aimed to provide skilled workforce to industry and thus work towards poverty
alleviation. It was also seen as a system to contribute towards democratisation by empowering
people to participate in the political decision-making process.

In July 1997, the Ministry of Labour and Vocational Training commissioned a task force
comprising of all stakeholders to formulate a TEVET policy and prepare a strategic paper in this
regard, eventually aimed to make changes in the legal framework of skill development. The
mission statement of TEVET aimed to establish an “integrated, demand driven, sustainable,
independent and autonomous TEVET system” that had the potential to respond to personal
development, labour market demand, and improved access, quality and equity to people
(Government of Malawi, 1997). It was also expected to be gender sensitive and catering to the
needs of the marginalised groups.

Later on, the TEVET policy was couched in a proper piece of law in the year in 1999 by an
Act of Parliament, which established a Technical, Entrepreneurial, Vocational Education and
Training Authority (TEVETA) to implement the new concept of technical education and training
in the country. Unlike the situation that prevails in most other Sub-Saharan African countries, the
TEVETA law emphasizes a demand-driven, competency-based modular vocational education
and training system. In this model is envisaged a shared responsibility of private and public
sector, accessibility and flexibility of the vocational education and training system, among
others. This law emphasizes the recognition of the value of indigenous knowledge and
community-based traditional skills. A Directorate of Technical Education and Vocational
Training (DTVT) within the Ministry of Labour and Vocational Training oversees the
implementation and delivery of TEVET.

The governance structure of TEVETA provides for an autonomous, lean, efficient,

responsible and flexible management system that is intended to promote professionalism in its
working. The TEVETA is governed by a Board of Directors representing stake-holders from the
private and public sector, civil society and NGOs. It provides for the appointment of its
Executive Director along with various technical committees who have been charged with an
efficacious implementation of the TEVETA law. This piece of legislation is intended to be run
by highly motivated professionals and support staff to be appointed by the TEVETA. It also
provides that TEVETA would identify the trainers on the basis of their capabilities to face
future challenges of a demand-driven competency-based, modular system. The law puts on
employers a levy of 2 % of the payroll annually apart from other sources of funding.

One of the most important features of this VT law is the setting up of multifunctional,
adequately staffed, TEVET Resource Centres for providing specialised services within there
catchment areas. This is likely to be a very important device especially for identifying the needs
and problems of people in the informal sector, though it serves the formal sector as well. The
TEVETA is obliged to initiate labour market surveys and monitoring systems. The information
gathered by the resource centres is to be made accessible in order to facilitate planning and
reviewing of the programs.

The interesting aspect about the working of TEVETA is that it has moved quickly to
establish its operational structures and to consolidate its programme of action to service urban
17
and rural populations. Interestingly, the National Democratic Alliance (NDA) Government of
Malawi has shown very keen interest in the working of TEVETA. It has promised to facilitate a
national labour market information system to ensure that relevant, up-to-date labour market
information is available that provides information to government, National Employment
Councils (NECs), schools, etc. for taking appropriate action. The government has promised to
introduce measures that strengthen the accountability, efficiency, integrity and transparency of
the administrative mechanism. The working of the TEVETA should be looked as part of a
promise by the Government of general reforms in governance, including making the government
accountable. The NDA Government through its manifesto of 2002 has promised to restructure
and empower NECs to implement training, retaining and redeployment programmes for those
retrenched and to provide employment (NDA Malawi, 2002).

Looking at the way developments have taken place on vocational education and training front
in Malawi, what lessons does one learn. Mere projections, promises and policy statements may
not be viewed as reality. But the important thing is whether the governance structure is oriented
to the cause of the needs of the economy and the poor. Discussing this issue, a consultant to the
GTZ (an agency of the German Government) who did the feasibility study for creating the
TEVETA framework, and also has been observing its working since 1999, commented:

No doubt, Malawi too has complex problems including corruption at political and
bureaucratic levels, but they have a political party which has shown tremendous
commitment to poverty alleviation. It is certainly checking corruption for the betterment
of people. It is due to this distinguishing feature that I see TEVET concept progressing in
Malawi much faster than a VT programme under any such law in any other country.
More importantly, this country’s policy is as much concerned about its informal sector as
it is about its formal. It has also had a much clearer strategy and a facilitative law.
Strangely, India with so much resources and intellectual potential has neither. It never
seems to have bothered to respond to the needs of its informal sector. I do not see
anybody bothered to respond to the needs of the poor in this country except of course
some of the self-help groups I know. India is losing fast to China its market for small-
scale-sector products because it has no will to develop skills and process sensitivity
amongst its workforce in its informal sector and to integrate this sector in the national
economy.

C. VT law in Philippines

In Philippines, Government realized the needs for creating a VT policy-making body early
enough under the Technical Education and Skills Development Act (TESDA) that was enacted
in 1994. It has created an Authority which is responsible for planning vocational education and
training. It runs some training institutes as well. TESDA is administered by the Ministry of
Labour and not by any autonomous body. TESDA members are nominated by the President;
there is no system of election by the collaborating partners. One of the main aims of this law was
tightening policy coordination among various institutions so as to develop the middle-level
workforce as per the demands of the changing economy. The TESDA combines integrated
learning that involves formal schooling with industry-based apprenticeship. Considerable
decentralization is visible as this law confers Regulation-making powers to the TESDA Board,
which in fact did frame the regulations in 1994 itself. There is a provision in the TESDA about

18
the auditing of its working every five years, which puts pressure of accountability on the officials
manning the system.

Unlike the TEVETA of Malawi which creates an autonomous body, TESDA is part of the
government system responsible for coordinating and promoting technical vocational education
and training. As such, it assumes the task of improving the quality of technical vocational
education and training to support the national economic development objectives. The Philippines
system suffers from problems of different types. Speaking on the working of the TESDA in
Philippines, an official of a foreign agency which is collaborating with the Philippines
Government in the efficient working of TESDA, observed:

The incidence of corruption in Philippines is higher than what it is in India. The system
there is also bureaucratic. But private vocational training institutions in this country have
done a good job in making the skill levels competitive. Also, the TESDA-run training
schools offer short-term courses for the informal sector. On the other hand, I hardly see
any such training scheme for the Indian poor belonging to the informal sector.
Bureaucracy can be bad anywhere. In Philippines, a visionary world-renowned lady Ms.
L. Lazo took over as the chairperson of TESDA, but the bureaucracy saw her removed
from her position in an honourable way––she was promoted and sent for another
assignment. But one thing is sure that in Philippines things move faster than in India. I
have not experienced a more sluggish and indifferent bureaucracy than what one finds in
India.

The following findings of a report on Labour Market Intelligence by TESDA point out other
problems being faced by the VT system in the Philippines:

1. Philippines is still a Choice for MNCs due to its large pool of educated, English-speaking and
highly trainable manpower. They continue to be the driving force in attracting foreign capital to
the country. However, deficiencies in infrastructure, political unrest and peace and order were
seen as hindering factors.

2. There is a skill shortage in the country which could be attributable to pervasive technical
change and faulty educational system.

3. There are educational flaws stemmed up from poor curriculum, inadequate teacher's training,
and low public and private investment in education. Mismatches between industry requirements
and educational preparation of new entrants to the labour force also exist.

The above-mentioned observations notwithstanding, it is important to note that Filipino

workers have been ranked as the best in Asia in performance as well as competitiveness. One
possible reason for this is greater industry–technical–vocational coordination in the country.
Somehow, the TESDA has been of help despite its several limitations (Ofreneo, 2003).

In order to be efficient, the VT system has to be run by professionals. But TESDA is largely
run by bureaucrats. Still, comparatively speaking, one finds that it is able to do a reasonably
good job. One of the reasons for this is that in Philippines private institutions are dominant in
vocational training. Some systems are particular in entrusting VT design and planning to
professionals than bureaucrats. For example, the Japanese system provides an excellent example
19
in this regard. There the Central Human Resources Development Council at the national level is
part of the administrative organization of the Ministry of Labour, established to reflect the
opinions of academic, business and labour communities in the administration of human resource
development. Its main task is to research and deliberate upon, in response to the Minister's
request, the basic HRD plan and to examine other related HRD items. The Council has also been
given the power to advise related administrative organizations on matters in the areas that it
considers important (Kituara, 1996).

It is also important that the number of members in the regulatory or advisory bodies is kept
lean so as to facilitate its efficacious functioning. The Central Apprenticeship Council (CAC)
under the Apprentices Act in India has 69 members. The Central HRD Council in Japan has 20
members, none of whom is a bureaucrat; all are from business, labour and academic
communities. In the Philippines TESDA Board consists of 13 members. The proposed AIAVT
Act in India discussed in the next section provides for 21 members of the Authority.

C. Comparative Perspectives from the Two Legal Frameworks

The following lessons may be noted from the structure and working of these two VT systems:

1. In order to ensure effectiveness of VT it is desirable to combine technical/vocational

education and vocational training under one ministry and authority. It helps clarifying the
goals more fully and minimizes problems of coordination and planning. Even though it is
likely to face a lot of resistance by the concerned ministries in India for example, but this
should be pursued as a desirable alternative. Malawi Government could show the requisite
courage when it asked the Ministry of Labour and Vocational Training to take over the
policy responsibilities from the Ministry of Education in 1996.

2. The need for autonomy of Authority governing the VT policy from Governmental control is
essential. It may come through structural framework or/and through conviction of the
members who are selected to man the system, or/and through a higher level of
decentralization of powers to carry out the entrusted duties. It may also be a function of the
cultural configurations in a country, like it is the case in Japan and Malawi. In Tanzania, VT
strategy is made by the Government and passed on to the “Authority”, thus eroding its
autonomy and making the system problematic. The VT system in Philippines also shows
problems in this regard.

3. In the developing world, the VT discourse has to cater to the needs of industry by providing
the requisite skills and removing a skill mis-match. But trickle-down is difficult to happen
for the informal sector. Therefore, more proactive interventions of the State through a
professionally managed body in necessary. This can especially help in VT-needs
identification, integrating the informal sector in the national economic stream, and devising
appropriate schemes and courses on the basis of these. It is necessary to establish special
labour-market resource centres or “TEVET resource centres” as they are called in Malawi.

4. There is a tendency to keep the governance structure lean as well as representative of all
stakeholders. The question of nomination versus election depends on the cultural milieu of
the country concerned. For example, in India nominated bodies do not give a sense of
20
 ownership. Election of representatives of stakeholders to the autonomous Authority should
therefore be seen as a starting point of democratization of VT administration.

5. The determination of the Government concerned in implementing a projected agenda is as

much important as the legal framework itself. In the absence of this, any legislation is likely
to remain merely symbolic. The NDA Malawian government’s concern for a VT concept
responsive to social and economic demands gets support from its general concern for
transparency in country’s governance as also its concern for demand-driven poverty
alleviation programmes.

6. There is a need to evolve a careful combination of public–private sector participation in VT

design and administration. For, poor people can not finance their own skill-development
training and have to be provided public support.

7. An enlightened society has to change the cost of VT from the industry in general, which is
going to be the beneficiary of skill-development in general in the long run. It may not be
proper to ask for establishment of short-term linkage between payment for VT and benefits
to the contributors.

8. VT is looked at as a wider concept involving technical and soft skills to promote a mindset
for performance apart from knowing the how of working.

V. A SUGGESTED MODEL OF VT LAW IN INDIA

As talked about earlier, the need for an appropriate legislative framework of VT has long been
felt by VT specialists in India for nearly a decade and the thinking in this regard has been going
on since long. But the bureaucratic system so works that very little could be done on this front
and proposals for reforms kept on wandering around in the corridors of bureaucratic power. So
as to overcome the limitations of the existing VT law and policy, the country needs a statutory
autonomous “Authority” to devise and administer a responsive VT system. Efforts are now being
made to enact such a law. This Authority is expected to strengthen and unify a demand-driven
national VT system (See Figure-2 for the broad purposes of this proposed body). A state-of-the-
art draft law on VT has been developed with the help of a foreign agency6. This law seeks to
establish the proposed body; and enumerates its objectives comprehensively so as to guide the
administrators about their duties (See Box-1). When the law to this effect is enacted it will be
called the All India Authority for Vocational Training (AIAVT). The AIAVT will replace the
non-statutory NCVT. The key functions of the AIAVT have been enumerated in Box-2.

As per the Draft Bill, the features that this Authority is expected to reflect are the following:
work democratically with representation from all stakeholders including Government; work in a
professional manner through Secretariat manned by people possessing professional
competencies; represent the requirements of the concerned individuals, groups and organizations
in all matters of VT before the concerned agencies and authorities as part of a single window
concept; and recognize and encourage a complementary role of public and private sector
institutions in providing VT. Some of the aspects of this proposed law can be stated as follows:

21
A. Structure of the proposed AICVT

The AIAVT will be established as an autonomous statutory body with a membership of 21 and a
corporate status. Chairperson of most such bodies created by Government is generally the
minister concerned. In this case, however, the provision is for election of the chairperson by its
members. Its Executive Director General will be its Chief Executive Officer and will be a person
possessing defined competencies in management of a VT system, who can give a dynamic
direction to its mission and policies. Some of the key competencies that the CEO should possess
are enumerated in Box-3. The AIAVT shall have representatives from Central Government
ministries/ departments, State Governments, employers, workers, non-government organizations
in the field of VT and self-help groups active in the subsistence sector.

The secretariat headed by an Executive Director General, will be responsible for

implementation of strategies and policies developed by the AIAVT, and also for devising action
plans and programmes to promote the objectives of Act. The CEO will be assisted by functional
experts in different areas of VT administration and other staff to help them discharge their duties
and responsibilities.
.
The Apprentices Act 1961 shall continue to be in operation in its present form for the time
being. After the notification of the AIAVT Act, there will be a transitory phase of one year.
During this phase rules/regulations of the AIAVT will be framed and notified. After this phase
is over the AIAVT will be constituted and run as per the regular provisions of the proposed Act.

B. What is Unique about the “Authority” to be created by the Proposed AIAVT Act

1. Addresses the concerns of both the organized and unorganized sectors and focuses on the
VT as per social and economic demands.

2. Ensures representation of the interests of all collaborating partners and democratic

governance of the national VT system.

3. Takes cognizance of the peculiar needs of the subsistence sector by giving it

representation and envisaging special programmes of VT for it; also takes care of the
needs of the vulnerable groups and women.

4. Training is looked at as a wider concept including development of technical as well as

soft skills.

5. Provides smaller number of members to constitute the Authority, which will facilitate
quicker yet considered decision-making (See Fig-2 for distribution of the proposed
number of 21 among various collaborating partners).

6. The governance structure provides for constitution of “Forums” as larger representative

bodies of the collaborating partners which will send their nominees/elected members to
the Authority.

22
 7. Prescribes the competencies to be possessed by the members of the Authority as well as
its Chief Executive Officer, which will facilitate a more professional as opposed to
bureaucratic management of the Secretariat (See Box-3).

8. Ensures need-based regulation-making by conferring requisite powers on the Authority.

9. Provides for auditing of the activities of the proposed AIAVT by a panel of experts at
periodical intervals.

C. Likely Positive Impact of Establishing the “Authority” under the AIAVT Act

1. Quality VT will help meet the needs of competitive world economy.

2. Increased employability and productivity of work force leading to reduced poverty.

3. Reinforcement of the values of efficiency, productivity, work culture and self-discipline

through inculcation of technical and soft skills.

4. More effective implementation of VT schemes and higher rate of employment.

5. Greater access to VT for those in the unorganized sector and the vulnerable groups.

6. Greater possibilities for sustainable livelihoods.

7. Effective integration of informally-acquired skills into the mainstream.

Apart from a dynamic direction by the professional Executive Director General, possessing
the defined competencies in management of a VT system, perhaps the most important issue is to
ensure the democratic working of the authority with a sense of ownership by all the collaborating
partners and safeguarding its autonomy. Going by the past experience of the working of
supposedly autonomous institutions in the country, safeguarding of the authority’s autonomy
from the bureaucratic apparatus is the most difficult issue. It is also surmised that the
bureaucracy may not even allow such a law that will have underpinnings in the proposed VT
concept to be enacted at all and may like to distort it to such an extent as to ensure a virtual status
quo.

VI. TOWARDS A CONCLUSION

Most parts of Asia and Africa have very high incidence of poverty. It is estimated that “in low
income countries only about 15 per cent, and in middle income countries 45 percent, of the total
workforce earn a living in the formal economy” (Bremen, 2003: 174); a large number of
countries in both these continents fall in the first category, even as there are patches of labour
aristocracy in them. As has been noted, India’s employment in the formal economy is just 7 per
cent of the workforce. This paper aims at learning some lessons in establishment of a
professionally-managed and sustainable skill-development system through comparative
examination of the structure and working of the VT legal frameworks of some developing
23
countries. The idea underlying this effort is to enable these countries develop perspectives in
handling the challenges of globalization in the export market as well as for supporting their
poverty-alleviation programmes in more effective ways. Legal frameworks that facilitate
building demand-led skill-base are essential for their economic prosperity. Development of an
autonomous, transparent and professionally-managed VT system requires a strong political will;
commitment to a professional than a bureaucratic approach to issues; innovative and bold
thinking on the part of Governments; and a greater sense of direction in Governments’ working.
These can make substantial contribution in dealing with this important issue in a more holistic
way.

Interestingly, a good amount of these concerns are evident in abundant measure from the
projections of the present Malawian Government (NDA, 2002). Despite India emerging strongly
in some sunrise industries on the global business scene, its VT-system development appears to
be a case of lost opportunity. The establishment of the requisite autonomous Authority for
facilitating VT is overdue for more than a decade; but the same has got convoluted in the
indifference of the bureaucracy or its phobia of losing power to professionals. Most countries
have adopted some mechanism of skill standard-setting, accreditation of VT providers, skill-
development-fund administration, and certification of skill-acquisition by an autonomous
statutory authority; this has been largely done at least in the formal sector. It is believed that
even at this late stage, the probability of acceptance by the Indian bureaucracy of the proposed
framework of VT law in the suggested form is not high.

By and large, experiences of social and economic change in South Asia and sub-Saharan
Africa through the instrumentality of laws have not been quite encouraging. Laws there have
been so devised and worked that indifference of legal draftsmen and administrators to the real
issues, and the subjugation of the legal goals to those of powerful alliances of vested interests, is
well-known (See Baxi, 1995). Many scholars convincingly prove how Indian laws enacted in the
name of the poor in effect work to their detriment. (Debroy, 2000; Patel and Desai, 1995; Saini,
2003 and 1995). In the sphere of social change, either requisite laws are absent or they have
been reduced as mere symbols. It is to be seen whether the Indian government can deviate from
the past and show the requisite sagacity in developing a workable skill-development agenda on
the lines of the proposed draft Act or the exercise would end in another fiasco. Like it is being
projected by the Malawian Government, it is essential that transparency and accountability in the
working of the Indian bureaucracy is ensured. However, that appears to be a somewhat distant
dream, given its stronghold on the governance structure.

Participatory approach in VT administration is especially important in a country like India

where political democracy is in vogue for more than half a century, and has thus aroused
aspirations among people for being involved in decisions affecting their lives and interests. The
proposed Indian law should, therefore, reflect these expectations. The methodology of creation
of “forums” in the Draft Indian law is a unique way of ensuring stakeholders’ participation. So
are the provisions related with the management of the VT system by professionals having
defined competencies. But these propositions are difficult to find favour with the alliances of the
vested interests in the bureaucracy; for they are viewed as unacceptable radical ideas from the
viewpoint of the bureaucracy’s interest. They could be operationalized only in those cases where
the Minister concerned has a full understanding of the issues at stake and also a strong conviction
to carry the related issues to the cabinet for approval7.
.
24
 As has been rightly argued, it is the demand for labour not the supply of it which makes
difference to job and wage growth (World Bank, 1995). The Indian approach being supply
driven would require a U turn in its policy, which will have wide-ranging ramifications for the
Government’s involvement in the exercise. Apart from being needs-driven, competency-based,
pluralistic and democratic, VT system should be supported by a credible system of skills
acquisition, assessment, accreditation and certification at all levels of learning. Also,
Governments have to realise that in a highly competitive world that we are in today, technical
skills alone are not sufficient; people have to be taught “the desire for excellence; the desire for
the best” (Ghoshal et al., 2002: xiv). In most developing countries this aspect is missing in their
present systems of skill development, though some like Philippines have been successful in
inculcating a higher sense of world-class professionalism in this regard despite a
bureaucratically-managed VT system. It has been rightly observed that there is a real dearth of
efforts to put these concepts into operation (Ebeling, 2002). For, this will require not just
exhortation, but seeing the bigger picture and breaking the steel frame of resistance to the
development of an accountability-based professional system of VT.

While the above observations are reflective of the structuring of the prevailing systems, we
also have to look at the normative policy-making prescriptions in related areas. The need to
promote professional excellence in the governance structure of the VT system is imperative; but
it has been rightly emphasized that these efforts can be successful only if they are well-knit and
are dovetailed in an appropriate “macroeconomic policy to maintain adequate aggregate demand
and pace of economic growth, specifically in the non-agricultural sector” (Mathur, 2002: 17).
This is one of the biggest challenges in skill development at the macro level that the low-income
agriculture-sector-dominated countries face today. In the formal sector, the VT policy has to be
built on the edifice of better industrial–technical–vocational coordination, like it has been done in
the case of Philippines. On the other hand, a well-articulated labour market intelligence system
and a professionally managed LMIS can help in creating a better sense of relevance and
excellence in VT policy design and administration for the informal sector. The suggested
framework of the proposed Indian VT law has been built on these assumptions, with help from
comparative lessons from legal frameworks of similarly placed countries. It is to be seen whether
the vested interests can allow it to see the light of the day.

NOTES:

1. AT Kearney’s, a management consultancy firm, developed a 2003 globalization index for

various countries (Times of India, 2003: 11). It found that the low pace of integration
with global economy together with decline in portfolio capital investment caused India to
slip to 56th rank from 49th in the year 2002. This ranking has put many countries ahead
of India including Pakistan (50), Bangladesh (54), China (51), and Philippines (52).

2. Some of the ministries/departments of the Central Government that undertake VT are:

labour, women and child labour, small-scale industries, rural development, urban
employment, textiles, information technology, and hotel management (Planning
Commission, 2001).

3. See the SEVENTH SCHEDULE of the Constitution of India. As per this schedule,
Entry 25 of the Concurrent List talks of “vocational and technical training of labour”.
25
 4. In Taiwan, in 1995 the number of persons who received employment training was
565,768, of which only 3.72 per cent received training courses in public employment
training institutes and 96.28 per cent were trained in private employment training centres
(Lin and Rau, 2002). Even in Philippines trainees in their VT system prefer private institutions
to public ones. Overall 44.7 per cent of the respondents say "yes", 18.9 per cent say "no"
and 36.4 per cent say "don't know" to the question asking them whether in their opinion
private training institutions offer better training.

5. The following factors have been considered as critical in delivering effective training:
autonomy (operational, financial), quality of skills delivery, dedication of staff, holistic
approach, focus on specific target groups and skills, freedom of admission and staff
policy, effective management, adequate fees, employability of skills, marketability of
products, capacity building of providers, networking, needs assessment, local resource
base, and scientific support in training and technology design. Effective VT also
emphasizes focus on soft skills apart from technical and job skills (Adam and Krishnan,
2003). Any effective system of VT design and delivery has to facilitate these.

6. See, for example, the Report of the special group on targeting ten million employment
opportunities per year set up by the Planning Commission (under chairmanship of Dr. S.
P. Gupta) (Government of India, 2002b) and the Report of the Task force on Employment
Opportunities set up by the Planning Commission (under chairmanship of Dr. M.S.
Ahluwalia) (Government of India, 2001). Both these reports have recommended the
creation of a statutory body to facilitate a skill development programme in the country.

7. The Government of India has a cooperation agreement with a European country as per
which a six-member team was constituted by an agency of this European country (I was
the only member with a legal background; others being social scientists, training
specialists from abroad and labour administrators). The team debated a suitable draft law
on VT on the basis of which the suggested VT law was drafted by me.

8. For example, India’s recently-enacted Information Technology law is appreciated for its
effective structure (Government of India, 2000).

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30
 Facts

 Vocational Training So Far Has Been Influenced By A Focus On The

Organised Sector. But The Organised Sector Constitute Only 7 Per
Cent Of The Labour Force.

93 per cent 7 per cent

Organised
Sector

 This Proposal Is Strongly Influenced By The Concern To Include

The Needs Of The Unorganised And Subsistence Sector Who
Constitute 93 Per Cent Of The Labour Force.

Figure 1: Employment in Organized and Unorganized Sector in India

31
 Seven good reasons for having an Authority

To have a single statutory and To continuously respond to changing

autonomous body with a mandate to
frame national VT policy
To develop national strategies for policy
implementation
To develop synergy in delivery and
reach of VT, between and among the
different central and state government
ministries, and the other stakeholders
social and economic demands and
respective VT requirements
To ensure efficient use of national
resources
To broaden the focus of VT and ensure
its balanced delivery to respond to the
various social and economic demands

To ensure relevance and quality of VT at all levels

Figure 2: Objectives of the proposed Framework of the AIAVT

32
 Formation of the Authority (AIAVT)

Central
Government
Ministries SSIs / Micro-
Employees
Enterprises

Communities 5 State
2 2
and SHGs Government

3* 4

Twenty plus one NGOs and

Employers
Board Member 2 VT Providers
2

Chairperson Executive Director General Member

LM ex officio for one year with one vote each
Selection of subsequent
Secretariat
chairperson from among Executive Director
members within one year General (CEO), no vote

Figure 3: Governance Structure of The Proposed AIAVT

33
 Box-1: Objectives of the Proposed AIAVT ACT

An Act to develop a national VT system that facilitates the provision of a single window to
the requirements of the concerned individuals, groups and organizations; that is transparent,
democratic, pluralistic and participative; to create a statutory body to frame national VT policy
and to strengthen and unify a national demand-driven VT system; and to make available a
professionally-managed quality VT so as to:

a) develop synergy in design, delivery and reach of VT between and among different Central
and state government ministries and other stakeholders;

b) to to cater to the needs of the organized, unorganized & subsistence sectors and provide
greater access to all social groups including women & vulnerable sections of society;

c) to ensure effective and significant integration of informally-acquired skills into the national
socio-economic mainstream;

d) to improve the living conditions of people in general by enabling them to acquire and use
professionally-imparted skills for more effective income generation;

e) to cater to the growing demand for appropriate skills at formal as well as informal levels in
the service-sector to ensure competitively superior service delivery;

f) to recognize and encourage the complementary role of public and private sector institutions in
skill development as an essential feature of the national VT system;

g) to encourage and sustain values of efficiency, productivity, work culture, self discipline and
self development among working people;

h) to facilitate fostering a culture of life-long learning among people with a view to meeting the
needs of skill upgradation, multiple-skills, and flexibility needs of the economy.

34
 Box 2: Functions of All India Authority for Vocational Training (AIAVT)

1. Establishing synergy in design, delivery and reach of VT between and among different
Central and State Government ministries/ departments involved in providing VT and those
outside the Government to ensure a minimum standard of skill.

2. Coordinated development of national strategies, action plans and programmes for making
available effective provision of VT to organized, unorganized and subsistence sectors.

3. Facilitating the integration of the VT system into the global economy and devising state-
of-the-art methodologies in VT management and delivery.

4. Help in broadening the VT concept and its delivery as per social and economic demands.

5. Developing skill standards for various trades and sectors.

6. Developing trade testing and certification in formal as well as informal sectors.

7. Developing systems and procedures for accreditation and affiliation of VT providers.

8. Developing strategies for ensuring open VT for the unorganized and subsistence sectors.

9. Developing database for VT management information system & promoting research in VT.

10. Raising resources for financing a sustainable VT system.

11. Reviewing existing VT institutions and systems and deciding the necessary changes in them.

12. Making plans for integrating disadvantaged groups including the mentally & physically
challenged persons into mainstream employment through devising appropriate VT schemes;
and facilitating empowerment of women through provision of appropriate skills for them.

13. Facilitating the capacity-building of VT including instructional and management support.

14. Facilitating trainers’ training and setting up of appropriate institutes including centres of
excellence in VT.

15. Building international cooperation in various areas of VT organization and delivery.

35
Table 1: Training Systems and Their Features operating in Different Countries
S.N. Training System Main Features
Countries

1 Co-operative Pressure to undertake training resulting

Austria, Germany,
from strong cooperation amongst
Switzerland, many
employers’ organizations, the state and
countries in Latin
trade unions
America

2. Enterprise-based
Low labour turn-over Japan Low labour-mobility, life-time
employment for many staff, “long-
termism”, arising from absence of
stock-market pressures. Wage-system
based on seniority and enterprise-based
trade unions.

United States and Few institutional pressures on firms to

Voluntarist United Kingdom provide training

3. State-driven
Demand-led Hong Kong, Republic of State plays a leading role in
Korea, Singapore, coordinating the demand for and supply
Taiwan and China of skills. Operates in open and
competitive economic environment.

Supply-led Economies in transition, Government takes on a prime

many developing responsibility for formal sector training
countries, especially in in training institutes. Little or no
Asia and Africa pressure on employers to train

Source: ILO (1999)

36
 Box 3 : General &Particular Competencies for the AIAVT members and the CEO

The forums shall select members of the Authority from amongst those who possess necessary
competencies to devise, sustain and administer a professional, need-based VT system in the
context of socio-economic realities of India.

The Executive Director-General shall also possess the general competencies prescribed for
members of the Authority.

In particular, as far as possible, the competencies expected to be possessed by the CEO are as
follows:

1. Ability to understand the dynamics of social, political and economic realities in India
including sensitivity to the needs of the organized, unorganized and subsistence sectors.

2. Sound technical knowledge and expertise in policy planning and management of VT.

3. Experience of conducting studies and publishing papers in VT.

4. Management skills including experience of managing similar body and ability to manage a
multi-functional organization.

5. Leadership skills including:

team-building;
visioning a goal-focused than a rule-focused approach to getting work performed;
ability to handle problems proactively;
promoting efficiency and effectiveness in programme achievement;
sense of process sensitivity in work organization;
ability to promote a sense of urgency among his or her people;
ability to promote a sense of professionalism and performance culture;
ability to build collaborative partnerships through communication and negotiation skills;
ability to promote a sense of commitment among employees;
willingness to accept, implement and leading change programmes;
ability to promote and sustain a learning organization;
ability to integrate contemporary global thinking in VT design & delivery; and
international experience in handling similar assignments.

37
Brief Profile of Debi S. Saini

Debi S. Saini, Ph.D (Delhi) is Professor and Chairperson--Human Resource Management Group
at Management Development Institute (MDI), Gurgaon, Haryana-122001, INDIA. He has
published 7 books (edited or authored), 51 papers and management cases, and over 110 book
reviews in management and social science journals. He has also authored a book-size volume on
“Social Security Law in India (2000)” which forms part of the International Encyclopaedia of
Laws published by Kluwer Law International, the Netherlands. Among others, he has done
assignments for International Labour Organization (ILO) and GTZ (Germany). Dr. Saini is the
editor of Vision––The Journal of Business Perspective, the journal of MDI. He was the founder-
editor of Management & Change, a management journal, and has been on the editorial board of
Industrial Relations Journal (Blackwell, Oxford). His areas of interest are: employee
involvement, strategic HRM, new industrial relations, employment law, diversity management
and change management. He obtained the “Best Researcher of MDI Award for 2005” for
excellence in research.

38