INDIA - A COUNTRY AT RISK OF MEDIUM-SKILL LABOR SHORTAGE
There is a present and growing need in India for employees trained in basic communication skills to support the growing service sectors. Low income young adults want to be upskilled, but are unable to pay the training costs upfront. The result is that millions of young adults are unnecessarily trapped in poverty: they are confined to temporary jobs in the informal sector and earn less than US$1 a day.
By 2020, it is estimated that without a drastic change in education capacity, India will experience a labor shortage of medium-skill workers; service sectors such as retail, hospitality and call center operations are expected to be hardest hit. By 2020, 285 million Indian adults will not have a high school education and hence need appropriate training to secure medium-skill jobs (McKinsey Global Institute, 2012).
Private and Non-Profit Vocational Education and Training (VET) Institutes are able to transform the lives of these young adults by upskilling them and placing them in well paid jobs in the service sectors. A twelve month course in communication skills costs approximately $150, but enables a graduate to increase his/her earnings six-fold and become a member of the lower working middle-class.
Strong demand for VET training exists, but growth of VET providers is limited by access to financing. Students typically have limited savings to fund tuition and corporate employers are unwilling to pay for tuition upfront despite their need for trained workers. Consequently, VET schools rely mostly on donations, which severely constrains the school’s ability to achieve scale and impact.
OUR PILOT PROJECT
We have developed a new way to fund vocational training: we pay for students’ tuition upfront and upon completion of their training, students enter paid internships, where a portion of their wage is taken to repay tuition costs.
To test our model, we are conducting a pilot research project in India in partnership with ETASHA Vocational Education Society (http://www.etashasociety.org). Founded in 2006, ETASHA Society is a non-profit organization providing vocational training, employability skills training and career guidance to young people from disadvantaged communities in India. ETASHA has an excellent track record in placing students in well-paying jobs in the service sector.
The aim of the pilot project is to further research our concept by sponsoring 400 students to be trained and tracking their transition from schooling to the workforce. Once the concept is proved, we plan on expanding the program with more schools across India: our goal is to attract funds from professional investors to help educate over 4 million students over the next 10 years.