Dr. Sarvepalli Radhakrishnan, India’s second President and a staunch advocate of practical education believed that “Education is not the learning of facts, but the training of the mind to think.” His wisdom resonates today as India’s apprenticeship programs emerge as a bridge between theoretical learning and workplace readiness.
Indian employers often face significant challenges in hiring entry-level employees, particularly those with little to no work experience (zero to two years). While most may not be familiar with Nobel Laureate Peter Diamond’s research on labour market search costs, they grapple with its implications daily. The difficulty lies in the inefficiencies of matching suitable candidates to roles. These challenges include:
- Matching Issues: Connecting a skilled individual from a smaller town like Kanpur with an employer hiring in a city like Bangalore.
- Skill Mismatches: Candidates may possess qualifications on paper but lack the practical skills employers seek.
- Low Signaling Value: Resumes from entry-level candidates often fail to stand out, reducing their chances of being shortlisted for interviews.
India’s government recently announced the PM Vishwakarma Kaushal Samman Yojana (PMVIKAS), an initiative aimed at elevating the skill landscape for the informal and semi-formal workforce. By integrating this scheme with the National Apprenticeship Promotion Scheme (NAPS), India’s apprenticeship model now stands as a robust solution to address the hiring challenges faced by employers. This integrated approach fosters skill development while bridging the gap between education and employability.
India’s New Apprenticeship Framework: A Fresh Start
Historically, the Apprentices Act of 1961 constrained apprenticeship opportunities in India, leading to limited participation. Currently, India has only 1.5 million apprentices as opposed to the 15 million annually it needs to meet its aspirations of becoming a $5 trillion economy. Only about 40,000 Indian employers engage apprentices, a stark contrast to the UK’s 175,000.
The new apprenticeship framework brings significant reforms:
- Legislative Amendments: The Act has been made more flexible.
- CSR Integration: Apprenticeship stipends are now eligible under Corporate Social Responsibility (CSR) initiatives.
- Curriculum Overhaul: On-the-job training is now a part of Industrial Training Institutes (ITI) curricula.
- Administrative Shift: Oversight has moved from the Ministry of Labour to the Ministry of Skills.
The National Apprenticeship Promotion Scheme (NAPS) is a flagship initiative under this regime. With a budget of ₹10,000 crore, it aims to increase the number of apprentices tenfold by 2025. Key features include financial support for employers, state-backed apprenticeship corporations, and technology-enabled matching platforms such as national portals and mobile apps. Additionally, the program links apprenticeships to distance and online education, creating a more holistic system.
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Addressing India’s Unique Labour Market Challenges
India’s economic and social trajectory starkly contrasts with China’s. While China’s labour force is shrinking, India grows by one million new entrants every month. Unlike China’s transition from farm to factory for export-driven growth, India’s fastest-growing job sectors include sales, customer service, and logistics. This shift underscores the rising importance of skills over degrees.
Notably, the earnings gap between degree holders and skilled workers is narrowing. For instance, the lowest 20% of engineering graduates now earn less than the top 20% of ITI graduates. This highlights the critical role apprenticeships can play in addressing the employability crisis among graduates. Globally, this challenge is not unique to India. Over the past 35 years, the number of graduates has exceeded that of the previous 700 years combined. As a result, many degree holders worldwide find themselves in roles far below their qualifications.
Why Apprenticeships Make Sense for Employers
For employers, apprenticeships provide multiple advantages:
- Practical Evaluation: A “test drive” period to assess candidates’ skills and cultural fit.
- Tailored Training: Functional and firm-specific skills are imparted directly.
- Soft Skill Development: Essential yet hard-to-teach interpersonal skills are cultivated on the job.
- Reduced Attrition: Apprenticeships often foster stronger employer-employee bonds.
- Lower Hiring Costs: Improved selection processes reduce rejection rates and overall costs.
Additionally, apprenticeships address a critical market failure in skill financing. Employers often hesitate to invest in training due to three major risks:
- The candidate might not secure a job post-training.
- The candidate may secure a job but lack productivity.
- The candidate may become productive but leave for another opportunity.
By mitigating these risks, apprenticeships offer a sustainable model for talent development and retention. However, for this system to succeed, employers must view skill development as integral to their growth and productivity, rather than as a CSR obligation.
Recent data indicates that the apprenticeship conversion rate—apprentices transitioning into full-time employment—has risen to 70% in 2024, up from 55% in 2018. This improvement reflects the growing effectiveness of apprenticeship programs in preparing individuals for the workforce.
Breaking the Chicken-and-Egg Dilemma
The frustration of entry-level job seekers is aptly summarized by the common refrain: “How do I gain experience without a job, and how do I get a job without experience?” India’s new apprenticeship regime seeks to resolve this conundrum by providing a structured pathway for skill development and employment. Unlike the old system, the new framework is designed to be flexible, scalable, and aligned with market needs.
For employers weary of the inefficiencies in bottom-of-pyramid hiring, the apprenticeship model offers a transformative solution. It’s time for them to embrace this change and reap the benefits of a skilled, productive, and loyal workforce. After all, it’s far more rewarding to nurture potential than to endlessly search for perfection.
As Mahatma Gandhi wisely said, “The best way to find yourself is to lose yourself in the service of others.” By investing in apprenticeships, employers not only serve their own growth but also contribute meaningfully to shaping India’s workforce and future.
