1. 5 September 2013
Manthan
Boosting Skillsets: Increasing the employability of youth
Proposed Solution: Employability Enhancement Bonds and
KarmaNet (National OnlineTrainee Exchange)
•The Excelators
•Abbas Sura
•Anindita Das
•Bhuwan Mahajan
•Gaurav Mahajan
•Sanchari Samui
2. •^ Employment Annual Report 2012, Ministry of Labor; ^^Aspiring Minds’ National Employability Report
UNEMPLOYABILITY:THECHALLENGE
Current Need
Skill development
measures in terms of
innovation and scale
Wider reach to
youth across regions
and socioeconomic
levels
High involvement
by industry to
achieve higher
efficiency and
success of adopted
measures
6% Unemployment Rate^
Despite several government
measures, schemes, and plans,
the country struggles with
47% Unemployable Graduates^^
With nearly half our graduates deemed unemployable, our country
faces a mammoth task of imparting large-scale effective skill-training
• Percentage of workforce in India receiving skill training (2008):
Only 10%
• No. of people trained by various ministries/ organizations during
Jan-June’13: 0.76 Mn
o Target: 7.3 Mn for 2012-13 (only 10% achieved so far)
Lack of skilled
population
• 48% of employers in India have difficulty in filling their job
requirements (2012)
o Global standard: 34%
• Only 3% of graduates employable in accounting roles, 13%
in IT services, and 15% in teaching
• Corporate are not actively involved in designing trainings for
the youth
o Lack of check on the quality of training imparted
• At grass root level, in the economy there is lack of awareness
about skills required to become employable
Lack of skilled
population
Low Corporate
Involvement in
Government
Initiatives
3. Outcome-based Payment: Invests tax-payer money in
only effective programs that achieve the desired outcomes
Upfront Raising of Finance: Frees govt. funds initially as
govt. pays only when the program is successfully executed
Innovative substitute for grants and loans: Compared
to grant-based programs, increases accountability of
private players towards the government and trainees
Flexibility to Training Providers: Provides flexibility to
raise funds based on needs and thereby, providing more
room for innovation
Online platform to bridge skill demand-supply gap:
KarmaNet allows an effective platform for trainees and
industry to engage
Government , in collaboration with NSDC, to establish
an independent body - Employability Enhancement
Bond Committee (EEBC)
An online database of unemployable youth – KarmaNet
– to be built to assist in selecting trainees for each
program
EEBC to issue bonds to investors for raising capital for
the skill-development programs
Training programs to bridge the gaps between skill
demand and skill supply
An independent evaluator to determine and assess
the outcomes, basis which government to make
payments to investors and service providers
EEBs are performance-based bonds that will allow government to raise capital from private investors for running skill-
development programs run by independent third-parties (e.g., NGOs and social entrepreneurs)
o Trainees for each program to be selected through an online trainees database – KarmaNet – to be setup by National Skill
Development Corporation (NSDC)
Investor returns and third-party service providers’ payments will be based on the outcome of training programs
Thus, EEBs will ensure utilization of taxpayer-funds for only effective training programs AND mobilize enough funds upfront to
launch skill-development initiatives at a huge scale
Proposed Solution: Employability Enhancement Bond (EEB) and KarmaNet
We propose to launch performance-based bonds to raise capital for
training programs and develop a portal to map skill demand-supply
Implementation Model Innovation
4. Parent Body of EEBC
IndependentEvaluationand
MonitoringAgency
Employability
Enhancement Bond
Committee
(EEBC)
Government
Investors
Training Providers
Employable and
Underprivileged Youth
• Selected from the national training
register, ‘KarmaNet’, based on their
existing skills
• Will include pool of unemployable
graduates
Performance –based
Disbursement of Funds
ROI based on
Performance
Investment in Selected
Training Program
Operating Capital
Training-program customized
to Industry demand
•1
•2
•4
•5
•6
Evaluation of Outcomes
National Skill
Development
Corporation (NSDC)
Representing social impact investors, private
companies, and development agencies
Includes social entrepreneurs and
NGOs having past track record in the
field
•3
Solution Design
EEBs will engage stakeholders across the society and ensure high
degree of transparency and accountability at each stage
5. • Financial and social returns through single
investment vehicle
• Opportunity to invest in transparent social
programs that also actively engage them
• Tax rebate on the investment in EEB
• Promotion of training programs meeting their
specific needs
• Increased pool of skilled labor trained according
to their standards and requirements
• Enhanced government and consumer credibility
• Investment of funds in only effective training
programs
• Improvement of prevalent training
infrastructure
• Development of credible database of potential
trainees to gauge skill demand and supply
• Effective mapping of market demand with
aptly skilled labor supply, thereby reduction in
unemployment
• Effective training in in-demand skill sets
• Higher absorption in organized mainstream
• Increased probability of employment within
vicinity of inhabitance
• Certification providing credibility, thereby
assisting in securing better job opportunities
• Reduced burden of job placement as training
program directly mapped (through KarmaNet) to
skill demanded by industry
• Easier access to flexible funding
• Assistance in training program development
through industry engagement
• Access to repeat opportunities if program
executed efficiently
• Returns based on transparent evaluation
system
ADVANTAGES
Government
Training Providers
Youth
Investors
EEBs offer unique financial and social benefits to each stakeholder
while providing the society a huge pool of effectively trained youth
6. Establish EEB
Committee
NSDC will establish the
independent
Employability
Enhancement Bond
Committee (EEBC)
EEBC will be responsible
for implementation and
monitoring of the program
It will have representation
from the government,
private players, and NGOs
on its boards
NSDC will build the
KarmaNet
All unemployable youth in
age group 18-35 years can
be part of KarmaNet
KarmaNet to enable
mapping of training
needs with potential
skills of registered youth
Youth enrolled in a training
program to provide
refundable security (say
INR 3,000) at the start
ImplementationProcessStakeholders
EEBC will identify gaps in
availability of skilled labor
Then identify service
provider through tender
process
Each service provider can
offer training in more than
one discipline
Then EEBC to raise
required capital by issuing
bonds to investors
Then disburse only the
operating capital to the
service provider
EEBC will select an
independent evaluator
that will:
o Formulate the contract
o Assess desired outcomes
Evaluator to establish the
threshold outcome-level
and ROI-based on
outcomes above threshold
Then, provide report to
the government for the
contract period basis which
payment to be released
Government
NSDC
EEBC
NSDC
EEBC
Youth
EEBC
Social Entrepreneurs
NGOs
Social impact investors
Private companies
EEBC
Government
Independent evaluation
agency
Develop ‘KarmaNet’
Identify Providers and
Issue EEBs
Independently
Evaluate Outcomes
Implementation of the Solution
The model will be managed and implemented by the independent EEB
Committee, acting under purview of NSDC
7. Supply Side
Unemployable youth in the age bracket of 18-35
years will be able to register on the online
database by creating a user account
o The database would target both educated
and uneducated audience
To create awareness about the database,
dedicated camps would be organized across the
nation
o Computer illiterate youth will be able to
register on the database through these
camps, supervised by NSDC representatives
Registration process would be fairly easy and
require basic demographic and skill-related data
Further, it would be adept in vernaculars of the
concerned region and contain images
• KarmaNet will be an online platform that will allow employable youth and the industry to engage thereby helping in reducing the
critical gap between skill demand and supply
• The online database will be owned and managed by the National Skill Development Corporation and will be similar to National
Employment Exchange database
Demand Side
Employers would be able to register their specific
job and skill-set requirements on this database
o Including period when skilled-labor required,
potential remuneration offered, and the region
of placement
Gauging the demand for the skills, EEBC will
float EoI and tenders for relevant training
programs in the specific region
The database will allow the service providers to
submit their EoIs and tenders through the
database itself
o The tender will be evaluated based on the –
past experience in the particular skill-set
training, experience in the region,
infrastructure, efficacy of course module,
and the bid amount
KarmaNet will offer a platform for youth and private players to engage,
thereby assisting in mapping the skill supply and demand
8. Selection of Independent
Evaluation Agency
• Independent evaluation agency will be selected through an RFP process
• The selection will be based on following criteria:
o Experience in the training program and contract formulation
o Credibility of the institute
o Price quoted in the RFP
Development of
Evaluation Metric for
Desired Outcome
• The agency will be responsible for determining the desired outcome levels for each training
program monitored by it
o It will establish the outcomes in-consultation with EEBC, investors, and training providers
• The agency will develop a scoring metric based on:
o Social excellence parameters: E.g., % trainees placed, presence of quality manuals, etc.
o Financial excellence parameters: E.g., total capital utilized, etc.
• Success of the program will be evaluated based on this scoring metric
• The evaluation will be done over a long-term horizon (e.g., at least a period of 2-3 years)
Determination of ROI
based on Evaluation
Metric
• The evaluation agency will determine a threshold score below which the program will be deemed
unsuccessful
o Investors and service providers will not be offered any payment in such a case
• Further, the agency will set discrete outcome-levels (above the threshold) that will determine the
returns on investment
o E.g., for a score of 80, the investor will be given a return of 8%, while for score of 85 a return of
12% will be offered
Implementation of the Solution
Independent agencies will regularly monitor the progress of training
programs, delineate desired outcomes, and define the criteria for RoI
9. NSDC
EECB Board
Independent Director
(Nominated by
Society)
Government
Representative
Corporate
Representative
Chairman-EECB
EECB Team
Corporate
Relation Team
Recruitment
Team
Marketing/
Media Team
Finance Team IT Team
Evaluation
Team
Stakeholders
Investors
(Corporate and
others)
NGOs and
Other
Institutes
Potential
Workforce
(Society)
EEBC Board will have representation from the government, private
sector and the society
10. •Greater involvement of
Corporate
•Increase in Number of
Vocational Skills Institutes
•Poverty Reduction •Balanced Regional
Growth
•Demand Supply
Matching
•More Employment
Generation
•Economic Growth
EECB
•Funds
Skill Requirement
•1000+ new corporate joining the
cause each year for next 9 years
(Pan India)
•1000+ new institutes join the
initiative each year to teach
vocational skills
•Each new player imparting
vocational skills to 1000+ new
persons across India
•1 million+ additional trained people
across India per year
•81 million+ additional trained
people across India by 2022 with
ready market to for employment
•Reduction in unemployment by 81
million+ people and reduction in
regional employment imbalance
Impact of the Solution
The EEB model will be able to provide effective training to more than 1
million youth each year
11. Risks Involved Mitigation Measures
Low Awareness
Failure to create awareness about
KarmaNet among masses
Launching dedicated promotion through
national TV, social media, and in-person
physical camps
Reputation Loss
Consistent under-achievement by
institutions to attain expected results,
leading to loss of reputation, credibility,
and trust
Proper due-diligence prior to finalizing a
contract with an institution
Economic Condition of
Market
Dampened market conditions leading to
potential investment-aversion sentiment
Bond committee to ensure market return
by measures such as adjustment of
interest rates, provision of tax exemption
as incentives, etc.
Investor Interference
Interference by investors due to their
vested interests in the training-
impartment processes
Regulations to be incorporated to
regulate the level of interference in the
process by corporates
Sustaining Focus
Without additional resources, maintaining
focus on the EEB structure may become
a challenge in the long-run
Dedicated personnel should be
employed to create awareness about
advantages of EEB
Risk Mitigation Strategy
While the EEB model faces marketing, economic, and social risks, with
upfront planning each of these can be successfully mitigated
12. Appendix
Calculation of Impact On Employability
Participating
Investors/Corporate Base
Participating NGO/ Skill
development Institutes
People covered Under the
Programme
1000 1000 1,000,000
2000 2000 2,000,000
3000 3000 3,000,000
4000 4000 4,000,000
5000 5000 5,000,000
6000 6000 6,000,000
7000 7000 7,000,000
8000 8000 8,000,000
9000 9000 9,000,000
Total 45,000,000
Average 9,000,000
•On conservative basis, assumed 1000 people trained by each institute annually and number of institute increase 1000 per year
13. National Skill Development Corporation
Labor Bureau, Ministry of Labor & Employment, India
Instiglio
Social Finance.ca
Federal Reserve Bank of San Francisco
Directorate General of Employment & Training, Ministry of Labor & Employment
Aspiring Minds’ National Employability Report
IMaCS & Aon Hewitt
CAG, India
“Knowledge Paper on India Skill Development in India”, FICCI and Ernst & Young, Sep
2012
Appendix
References