Congress' Right to Apprenticeship Proposal: Would it Solve Employment Issues?

Ideally, the choice to hire should be left to the employer's discretion and not mandated by the government.

Rahul Gandhi speaking during the Bharat Jodo Yatra 2.0 Image used for representation only. 

(Photo: PTI)

One of the solutions to the grave job crisis in India is ensuring skill training at the workplace. Apprenticeships bridge the gap between higher education and economic prospects through practical skill training. It removes the obstacles that separate work and learning, thereby opening fresh avenues for career growth. 

The Congress party, in the run-up to the 2024 Lok Sabha elections, has announced that it will bring in a ‘Right to Apprenticeship’ law and make it a demand-driven legal guarantee. 

According to the Congress, any diploma or degree holder below the age of 25, will now have a legal right to demand employment and shall be paid up to Rs one lakh per year. The party proposes to amend the Apprentices Act, 1961, which mandates obligatory apprentices for employers having more than 30 workers. As of now, only 39,000 establishments are enrolled in the National Apprenticeship Training Scheme under the flagship Skill India Mission of the Modi government.

Has the Party Proposed an Effective Solution?

The Congress party proposes to increase these establishments to one million, and Rs 20,000 crore is estimated to be spent on implementing the law. There are two scenarios for funding. One is a 100 per cent government-funded programme, that would have the potential to generate 20 lakh apprenticeships, per year. The other scenario is where the government and private sector equally share the funding, this would in turn create 40 lakh apprenticeships per year. There are suitable dispute settlement provisions in the 1961 Act, which would be followed if a said private establishment defaults on the agreed terms and conditions.

Has the Congress party proposed an effective solution to remove the first barrier of employment? Or is to too much interference in the market, through state intervention? Would it solve the employment crisis? Are there better ways to implement apprenticeship programmes? Do we need a legal right to implement it? These are some questions which need to be critically examined. 

Fundamentals of public policy tell us that state intervention is needed only when there is market failure. India is estimated to have close to 0.5 million apprentices which is only 0.11 per cent of the total workforce. This is a dismal number when in contrast, with developed countries like Germany, which has 1.3 million apprentices (2.96 per cent). For a country rooted in guru-shishya parampara and practical aspects of learning, India has so far not enabled a culture of apprenticeships. There are various reasons for this. 

First, there is a ‘skill shortage’, which means there is a scarcity of candidates with the necessary skills for the job. Second, there is a ‘skill mismatch’, a qualitative challenge where companies do not find fresh graduates even when they have the right qualifications on paper. We are infamous for unreliable CVs and personal recommendations as far as jobs for freshers are concerned. Hence there is some information asymmetry – a type of market failure. Third, firms are also reluctant to invest in training candidates, for fear of them jumping ship to ‘greener pastures’, yet again a market failure of negative externalities for the firm. Therefore, there is some scope for government intervention. 

However, ideally, the choice to hire, even temporarily, should be left to the employer's discretion and not mandated by the government. Then why should Congress make it a legal guarantee?

Drastic Times Call for Drastic Measures

Every second youth in India is unemployed. Even though almost one crore graduates pass out every year, 42.3 per cent of graduates under 25 of years age, remain unemployed. Credible surveys tell us that nearly a quarter of apprentices secure full-time positions within the same company where they underwent their apprenticeship. So, if India, according to the Congress party, provides a legal guarantee to young graduates, we may be able to solve some part of the unemployment problem. Critics would say that India has had an obligatory apprenticeship programme since 1961, but it hasn’t drastically solved an employment crisis.

The answer to that is the huge compliance norms surrounding the Apprenticeship Act, of 1961 and the subsequent rules enforced in 1992, which were further amended in 2019. For instance, according to the existing Act, apprenticeship contracts must receive approval from apprenticeship advisors. This hampers 'ease of doing business' for employers. 

A major obstacle to the effectiveness of the Act is the mandatory full-time participation and the on-site nature of apprenticeship programmes. Post the pandemic, there has been an increase in the intake of apprentices, but the challenge is that part-time and virtual training options are not recognised by the Act. 

Furthermore, employers primarily shoulder the expenses associated with apprentices. While in smaller businesses with fewer than 250 employees, the Central Government does contribute to a small extent, the financial responsibility primarily remains a significant challenge for these employers. 

In the past 10 years, at least 2.5 crore MSMEs have been closed in India. One of the reasons is the lack of skilled workforce, but the government has done little to encourage innovative mechanisms like degree-embedded apprenticeships and acknowledge educational institutions as ‘establishments’ under the Act. So, a lot of reforms are needed in the law. 

It is now clear that Apprenticeship programmes help employers, save their recruitment costs, groom custom skills suited for the industry, secure young talent, and build long-term relationships with employees. Government-supported apprenticeship programmes also help the industry, especially MSME firms, to leverage financial incentives for better productivity.

The Congress party has certainly initiated a conversation on the importance of apprenticeships to fight the ‘ticking bomb of unemployment’. It is a welcome step, and we must deliberate it further for a solution which enables India’s demographic dividend. 

(Rachit Seth is the Founder of Policy Briefcase and works as a Policy Analyst with the Indian National Congress. This is an opinion piece, and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)