Bridging the chasm: Rethinking education and skill systems

By Sabina Dewan

India's much-touted demographic dividend comes with an expiration date. In about 15 years, the window where the working-age population outnumbers the dependents will close. But with the current period marked by youth unemployment, which is more than triple the overall rate, widespread underemployment and pervasive informal jobs, what once appeared to be India’s biggest advantage is now turning into a liability.

What’s more, technological advancement, trade shocks, climate change, and the energy transition are transforming how we live and work, faster than the ability of our education and skill systems to keep pace. We must do more. We must do better. We must act faster.

In 2024, nearly half of India’s youth —  53.5% of those aged between 15 and 29 —  were neither employed nor looking for work. Alarmingly, data suggests that one in four is not even in education or training. Among those in the labour market, 10.2% are unemployed. Even when young people find work, it is often informal or contractual work, jobs that are marked by low productivity and limited labour protections. These facts point to more than a lack of jobs; they indicate a deeper problem of a mismatch between skills and opportunities available.

The skills mismatch is a double-edged sword affecting both job seekers and employers. Even though more young people are entering the job market with higher levels of education than ever before, many find it difficult to find jobs that align with their interests or expertise. At the same time, employers often struggle to find candidates with the right capabilities.

The root of the problem lies in the existing education and training systems, which are ill-equipped to prepare young people for a rapidly changing world of work.

While school enrolment has improved across genders, the quality of even basic education remains poor, let alone secondary and higher education, which is where the preparation for the world of work should be happening. The skills training system has scaled up in the past two decades, but its quality is even more suspect. Only 4.1% of youth in the 2023/24 Periodic Labour Force survey identify as having any formal training. The current system of skills training does not have a track record of success in helping youth find jobs. Many of the occupations that our systems skill for are oriented toward self-employment. Several young people acquire skills through informal means, but go unrecognised due to the lack of effective systems or certifications that validate prior learning. This leaves their skills and experience undervalued.

Be it in education or training, opportunities for students are stratified by income. Most young people from lower-income groups are limited to short-term training programmes through schemes like Pradhan Mantri Kaushal Vikas Yojana. Those slightly better off pursue vocational training at Industrial Training Institutes (ITIs) or polytechnics. And those with greater means pursue higher education. However, a widening gap between what education and skill training programmes offer and what the job market demands has made youth unemployment and underemployment persistent challenges across all groups.

Contributing factors include outdated curricula, limited industry partnerships, and ineffective focus on emerging technologies and soft skills. These are exacerbated by regulatory and certification regimes that are over centralized and over tight, limiting institutional autonomy to be responsive to the dynamic demands of the labor market. Consequently, too many students lack the competencies for meaningful employment, resulting in low job retention and hardly any wage advantages. These challenges are even more acute for girls and women. 

These realities demand an immediate, structural overhaul of India's education and skills systems — not just to meet today's needs, but to be future-ready.

Going forward

The rapidly changing world of work, where today's students will likely change careers three to four times, demands a fundamental transformation of secondary education that develops both critical thinking and practical skills. The National Education Policy (NEP) 2020 and National Curriculum Framework (NCF) 2023 provide a real blueprint for this transformation – by addressing all relevant dimensions – from regulation and institutional autonomy, to, curriculum and faculty development.

Crucially, with the NCF being implemented vocational education (VE) becomes a compulsory subject from Classes 6 to 10 for all students much like Math or Science, and there is an option to specialize in VE in Classes 11 & 12. This creates real pathways to employment without sacrificing quality liberal education. This develops foundational capacities such as critical thinking, communication, empathy and learning-to-learn, which are critical for employment, particularly with the changing nature of work.

This holistic approach in school prepares students equally well for higher education or direct entry into the workforce. However, its success hinges on NEP implementation, particularly building teacher capacity and developing high-quality curricular resources. Technology or infrastructure investments can follow once these fundamental elements are in place.

If implemented quickly and effectively, NEP and NCF could transform the country’s education and skills ecosystem. Simultaneously, reforms are needed to enable the skills system to keep pace with the needs of a constantly evolving economy.

We need better ways to gauge the market demand. Skill-gap studies that identify growing sectors and anticipate skills at the 10,000-foot level are so removed from how people make decisions related to education, training, and employment that they have little real use. While some workers migrate across state lines or even internationally, many seek livelihoods locally, working in micro and small enterprises or through self-employment. We need better ways of assessing opportunities in local markets within a reasonable geographic radius to assess required skills. If we do not start taking a narrower approach, the constant quest for scale will continue to affect efficacy.

It needs to be easier for ITIs and skills training institutions to adapt their curriculum, including by easing regulatory regimes and increasing institutional autonomy as envisioned in the NEP. Currently, it is a long and drawn-out process for ITIs to adapt their training to market demand. This prevents them from catering to local demand.

India must invest in building digital skills and promoting thoughtful technology adoption, with a clear-eyed understanding of what truly effective use of technology in the skills ecosystem entails. Research shows that online-only education or training models are substantially less effective than in-person learning. The question is whether an ITI course on artificial intelligence equips students with usable skills required for the job, or whether it merely reflects an institution’s fascination with buzzword technologies. “Modernising education” means deploying technology in ways that enhance employability and not just for the sake of using it.

Currently, the dual system of training, internship and apprenticeship schemes, all aim at improving industry ties. However, poor implementation, duplication and low participation have undermined its effectiveness. Streamlining the implementation of these programmes requires ensuring that interns and apprentices have necessary protections and are not exploited as low cost labour. At the same time, we need to explore clear and concrete incentives to promote more industry-led and cluster-based approaches to training and better oversight of and accountability from sector skill councils.

India's demographic window is narrowing rapidly, even as economic and technological changes accelerate. Urgent, comprehensive reforms —  from effective implementation of the NEP to stronger industry partnerships — are necessary to improve our education and skills systems. Without that, we risk wasting the potential of our youth and an opportunity to fully realise the country’s economic potential.

Sabina Dewan is founder and executive director, JustJobs Network