Indian Migrant Workers Skill Mismatch- Concerns and Solutions- Explained Pointwise

According to some reports, the construction labour arrangement agreed between India and Israel is under strain due to glaring skill mismatch between Indian workers’ abilities and the expectations of them. While some workers have now returned to India, others have been redeployed to other sectors, taking into consideration the strengthening ties between India and Israel.

The issue of skill mismatch, and shortage of skilled Indian migrant workers despite a huge labour force, has often been highlighted in the past. Several Indian firms have raised this matter in the past with regard to jobs across the entire skill spectrum. In this article, we will delve a little deeper into the issue of skill mismatch of Indian Migrant workers, as it constitutes a significant portion of our domestic revenue.

What is the status and importance of Indian Migrant workers?

Status and Data on Indian Migrants abroad- There are approximately 30 million Indians residing overseas. A substantial portion of them reside and work in the Gulf Cooperation Council (GCC) countries (9 million Indian Diaspora) and Southeast Asia. The GCC region is home to more than 90% of Indian migrant workers, primarily low and semi-skilled labourers.

Sector of Employment- Indian migrant workers typically fill roles in sectors such as construction, domestic work, and various service industries. Many are temporary migrants who return to India upon the completion of their contracts.

Remittances- According to World Bank, in 2023, the remittances sent back home by the Indian migrant workers reached a staggering $125 billion. These remittances highlight the significant financial contribution of overseas workforce, which translates to 3.4% of India’s GDP. According to the World Bank, India is the world’s leading recipient of remittances, followed by Mexico and China.

What are the reasons behind the increase in Indian Migrant Workers abroad?

1. Demographic Shifts- India has a large and growing working-age population, with many young people seeking employment opportunities. This demographic dividend creates a significant pool of potential migrant workers to meet labour shortages in other countries. For ex- Labour Shortage in Israel on account of Israel Palestine War.

2. Skill Shortages- Destination countries often face skill shortages in certain occupations and turn to migrant workers from India to fill these gaps. Indian migrants bring a range of skills and expertise to meet the demands of the global labour market. For ex- Skilled construction worker shortages in India.

3. Cost Advantages- Hiring Indian migrant workers is sometimes more cost-effective for employers compared to local labour in destination countries. The wage differential creates an incentive to recruit workers from India. For ex- Software jobs to Indians with no obligation of minimum wage requirement.

4. Globalization and Mobility- Increased globalization and mobility have made it easier for workers to migrate across borders in search of better economic opportunities. For ex- Better flight connectivity between India and Gulf Countries.

5. Increased demand in labour sector- The Global Skill Gap report prepared by the National Skill Development Corporation (NSDC) has estimated the demand for labour in key sectors such as construction, trade, health and social care, in the GCC countries (Gulf Cooperation Council) and the EU in 2020. Some countries in the western world are now advocating for temporary work contracts to meet the labour shortages.

What is the Significance of Indian Migrant Workers?

1. Economic Contribution– Remittances from Indians abroad account for around ~3% of India’s GDP.

2. Skill Development- Migrating to different countries help Indian workers to acquire new skills and gain experience. When they return to India, they can bring back valuable knowledge and expertise that can help different sectors of the Indian economy.

3. Enhancement of India’s Soft Power– The presence of a large Indian diaspora abroad, strengthens diplomatic and trade relations between India and these nations. The diaspora serves as a bridge for cultural exchange, investment, and business partnerships between India and other countries.

What are the Skilling challenges with the Indian Migrant Workers? 

1. Education-Occupation Mismatch- There exists huge discrepancy between the education levels of migrant workers and the skill requirements of available jobs. For ex- According to labour force survey, only a small segment of those in the age group of 15-59 years have received formal vocational/technical training.

2. Labour Market Dynamics- In periods of high demand, employers prioritize filling positions quickly over ensuring candidates meet skill requirements. This results in a workforce that is not adequately qualified for their roles.

3. Quality of Education- The quality of education and training programs in India does not always align with market needs. Many educational institutions focus on theoretical knowledge rather than practical skills.

4. Geographic and Sectoral Mismatch- Indian Migrant workers often face geographic barriers that prevent them from accessing jobs that match their skills. Also, the sectoral shifts in the economy leads to a mismatch between the skills of the workforce and the needs of emerging industries.

5. Informal Employment Sector- A significant portion of migrant workers is employed in the informal sector, where job requirements does not often match their skills. This sector often lacks proper job descriptions and qualifications, making it difficult for workers to find positions that suit their expertise.

What are the Skilling initiatives taken up by the Government for Indian Migrant Workers?

What Should be the Way Forward?

1. Holistic skilling- The National Skill Development Corporation (NSDC) should focus on revamping the entire skilling ecosystem. This should encompass the technical and training institutes, the trainers, and the skilling curriculum.

2. Emulating the Sri Lankan Model- India should aim at emulating the Sri Lankan approach of ensuring that workers receive a few weeks of additional training before their departure, and they are exposed to international processes and work practices.

3. Identification of Pre-Skilled Candidates- We should aim at assessing the existing skill sets of potential emigrants through standardized tests and certifications. This would enable targeted training programs focused on specific skill gaps.

4. Finishing Schools with International Standards- Finishing schools need to be established across states, adhering to standards aligned with international industry needs. Incorporation of technology upgrades and engaging internationally qualified trainers will ensure the effectiveness of these schools.

5. Language Training- The skilling model should include language training programs that go beyond basic conversational skills, focusing on business communication and industry-specific terminology.

6. Financial Literacy- Incorporation of financial literacy programs would further strengthen the skilling model. Equipping workers with financial management skills would empower them to maximize the benefits of overseas employment and make wise financial decisions.

The future of work demands continuous learning and adaptability. A well-rounded skilling model can pave the way for a more competitive and globally relevant Indian workforce, leading to increased remittances, economic growth at the national and state levels, and a stronger global presence.