Skill-vouchers: Giving precedence to merit and performance

A common thread binds all developing and developed nations today - the issue of skill-creation. Dynamics of commerce are shifting, and in these changing times, our skill capabilities can help keep our countries competitive and relevant. Efforts have been made in many countries, including India. Innovations have been implemented to make those efforts more impactful, one being to use "skill vouchers".
Skill voucher is a reimbursement that the government gives to the institutes that provide the training to the candidates, instead of running the institutes itself. It has shifted the government's role from a training provider to a financier/ facilitator. Resultantly, its role is more relevant now towards the objective of skill creation. The government was not good at running institutes itself. Instead, the training is done by specialist institutes, who are better suited for that job.
While skill vouchers have positives, there are shortcomings: (a) raising the training quality so that companies do not need to retrain the candidates, (b) creating awareness of the skills/institutes and enabling candidates to take best decisions, (c) ensuring candidates who utilise the vouchers enter the job market instead of squandering it, (d) ensuring the economic benefit of vouchers reaches those who need it the most, (e) creating incentives, i.e. for the candidate to choose the training that is best suited for him, for the institute to provide the best training, and for the company to recruit the best candidates.
This situation suggests a redesign/restructure of skill vouchers, in order to minimise the probability of these shortcomings. Realistically speaking, the implementation of such complex initiatives in developing countries, like India, is never going to be 100 per cent perfect. But one can think how the probability of these shortcomings can be, at least, minimised by focusing on ownership based on who is ultimately impacted, giving precedence to merit, creating incentives to perform, putting responsibility of ensuring quality standards, and genuineness of participants.
CATEGORIES OF SKILL SHORTAGES: There are three categories of skill shortages which confront most nations, in varying proportions. The first is vocational/job-specific training which includes production roles, as well as self-employment and small-scale artisan opportunities.
The second is professional-related/educational training which is slightly higher on the education-grade than the vocational training category. The third category is the need for non-cognitive, soft-skills, analytical category that can enable candidates to move up the professional ladder based on their seniority/experience.
Starting with the professional-related/educational training category, these include skills related to computers, book-keeping, process-oriented roles, etc. It can significantly use talent that is currently languishing in unorganised sector jobs by giving them the "wings to fly".
In this category, the ultimate ownership might be with the institutes. These skills are too varied and generic for the companies to involve themselves directly in, and may not be worth their time and effort. To avoid cases of non-serious candidates enrolling for trainings on a whim without the intention to move into jobs and sorting out those candidates who are really genuine in utilising the training, the skill voucher can be restructured as a subsidised loan.
This means the candidates have their "skin in the game", and would enroll only if they are serious and put more thought in their decisions. Failure to get jobs means paying the interest-bearing loans, or losing the collateral. The loan might be paid off by the voucher in periodic instalments, rather than at one-go, to ensure the candidate sticks to the job.
Aptitude tests done initially might help the candidates take the best decisions related to skills that would be relevant for them. It is pointless going for a course just for the fascination of it, if the candidate does not have the inherent competencies. Making and delivering these aptitude tests might require co-ordination between the institutes, companies and career agencies.
The job of advising the candidates in their decision-making might be outsourced to career agencies. They get paid as a percent of the voucher amount, part of which is paid when the candidates enroll for their training and part is paid when they enter the job market. This creates an incentive for the agencies to give the best and relevant advice. Institutes would also be under the scanner to perform. They need to ensure quality of their training, since the inability of the candidates to get job placements would determine their future enrolments.
The government's role might focus on creating awareness of the skill courses through SMS/email alerts to registered candidates, and through advertisement/pamphlets in local newspapers. In short, the objective here is to focus on merit - merit in terms of performing candidates, performing career agencies and performing institutes.
Moving to the non-cognitive/soft-skill/analytical category, it is ironical that the countries which need these the most to climb the "ladder of economic relevance", are those who give it the least importance. In this, the ultimate ownership has to be with the companies as they benefit by building relevant senior teams for their own expansion ambitions.
Such ambitious companies themselves have to lead this initiative. Companies can accredit institutes based on the training quality and infrastructure. The government in its role as a facilitator can register those companies who are keen to participate in this skill-building category along with the laundry-list of skill components and quality levels that it would include. Institutes filling these criteria can be examined initially by those companies, to arrive at a list of accredited institutes.
This list might need to be periodically renewed, as it will create the incentive for institutes to build the best-quality/delivery, innovate and ensure requisite skill levels are reached, as the quality of its previously trained candidates would be tested on-ground by the companies already. While the companies might use employment-bonds to retain the trained candidates and avoid fast attrition, it might also create an incentive for the companies to provide good working conditions and opportunities, so that the candidates themselves do not feel the need to switch jobs continuously. Indian companies like Larsen & Toubro and TATA Group are examples in this context. Companies might need to co-ordinate with the institutes to build practical test modules, which create an incentive for the candidates to put efforts into learning, as their ability of rise in the companies post-training would depend on their testing scores.
While it involves a larger role from the companies in terms of ownership, the soft-skilled senior category (who can stay for long-term) are critical for the companies' own growth objectives. Hence, companies themselves need play a role in this category.
Coming to the vocational/job-specific category, it reminds one of the old adage - "a country needs only that many engineers, and it will amount to nought if it does not have enough electricians". In this category, the ownership might lie with multiple stakeholders, given its sheer mass. Institutes, government and companies might draw a priority-list of skills as per National Manufacturing Policy and give precedence to industrial production skills that are urgently required.
Aptitude tests on motor-skills and hand precision might need to be done by the industrial training institutes. Another priority-list is of those skills that create self-employment jobs in this mass category. In many developing countries, youngsters learn their trade by working with experienced tradesmen hailing from their families/hometown. While this means a low-cost resource for that tradesman, it may not always be relevant in terms of the youngster's aptitudes, impacting their performance and job stickiness. Apprenticeship post-training might be relevant, but this would require a psychological shift in tradesmen to let go of low-cost resources.
The government/institute's role is to focus on the youngsters, by creating awareness of skill options and institutes, and the better/relevant job opportunities they can get post-training. A significant challenge here is the network of accredited institutes, as most candidates in this category might not be able to bear travelling costs if institutes are located far from their towns.
This means prioritising the network based on economies of scale where institutes get access to a large pool of candidates, like Tier 1/2/3 urban towns, or including the travel expense within the voucher's amount. Quality of the institutes would be under the scanner, as the inability to make the candidates job-ready for factories, workshops or self-employment can create negative publicity through word-of-mouth in the area's captive candidate pool.
Companies might need to get involved for those skills that they require on regular basis and in large quantities, for their own assured supply of trained labour. This also creates an incentive for candidates to enroll for training.
IDENTIFYING DESERVING CANDIDATES: An issue that the above-mentioned suggestions might fail to address is on delivery of this subsidy to economically-backward families by identifying deserving candidates from that pool. While ideas like restructuring vouchers in the form of subsidised interest loans might be relevant to weed out non-serious candidates, they cannot bring in economically-backward candidates as they have no collateral.
Reserving a per cent of vouchers per year to economically-backward candidates is useless, since it is possible to misuse it by showing wrong documents related to family income/assets. A possible solution might be physical checks to the candidate's dwellings to estimate the family's economic position. While this also does not mean accuracy and can be prone to wrong estimations, it might weed out some inappropriate candidates at least. The investment in physical checks is substantial, and the institutes/government might outsource this activity to microfinance field-officers covering that area for a commission.
In conclusion, the above-mentioned suggestions for the three categories of skill shortages focus on the twin pillars of giving precedence to merit and performance, and on creating an ownership/responsibility for achieving the required standards in skills and training, from the perspective of all the stakeholders - candidates, institutes, companies, career agencies and the government.
In this process of weeding out non-serious players, there might be fewer institutes, fewer agencies and fewer candidates participating, but at least they comprise the genuine, serious and quality lot. No suggestion is 100 per cent perfect, and there might still be scope for slippages.
The broader purpose here is to enlarge the talent pool of skilled resources who can perform as per requisite levels, and help keep their countries relevant to these rapidly changing economic times. As the skilling cycle sees success, more and more serious players would be incentivised to enter, thus enlarging the pool of candidates and institutes over a period of time.
The author is a finance professional based in India. Views expressed are entirely personal. sourajitaiyer@gmail.com