Chinese President Hu Jintao (right) greets Indian Commerce and Industry Minister Kamal Nath at a business seminar in Mumbai, India Thursday. Hu wound up a trust-building visit to India on Thursday with a call for the two Asian giants to strengthen energy and infrastructure ties and invest more heavily in each other's economy. -Reuters
NEW DELHI, India (Reuters):
A makeshift poster in a run-down part of New Delhi's business district reads: Wanted urgently, salesmen, call before 4:00 p.m. Assured employment for candidate with right skills.
The poster exemplifies India's booming job market, but also highlights its biggest problem - a shortage of skilled workers.
Talk of a talent shortage in a country with a billion-plus population sounds odd, but India has too many unskilled workers.
With Asia's fourth-largest economy set for a fourth straight year of 8.0 per cent growth, employers from technology firms to financial services complain of talent shortages, rising vacancies and an increasing wage bill.
"I suspect the problem is worse in some sectors like technology than others. But I also think it is becoming more and more widespread," said HSBC Asia economist Robert Prior-Wandesforde.
"Clearly the quantity of labour is not an issue in India, but the quality of labour is."
The supply of cheap, English-speaking labour has been a prime draw for companies in booming services.
However, if the shortage persist and wages keep rising, analysts say economic growth will suffer, and India could lose its edge as a destination for foreign firms in both manufacturing and services, putting at risk the government's plan to push growth to 10 per cent.
WORKER SHORTAGES
Industries like financial services, media and information technology require staff to build on knowledge, but they are finding it increasingly tough to train new workers fast enough.
Of every 10 graduates turning up to walk-in interviews, only three or four are taken on as the rest lack the required skills, according to Soumen Basu, executive chairman of recruitment firm Manpower India.
Skill shortages emerged two years back in technology and outsourcing, with attrition rates ... the rate of staff turnover - topping 25 per cent, according to industry estimates.
With the expansion in services and manufacturing, shortages have now spread to other sectors. A recent survey by Manpower found that finance firms were expecting to hire at the highest rate this quarter, followed by services, public administration and education.
No wonder, then, that bankers' wage increases have topped 25 per cent and salaries of private equity managers have doubled in the past year. Pilots' pay has risen more than 30 per cent.
Media and entertainment firms have raised salaries by 40 per cent and hoteliers are paying 20 per cent more than last year.
Human resource consultants Hewitt Associates says managers' salaries will rise 14.3 per cent in 2006 while supervisors and technical workers will see their wages rising 15.1 per cent.
But retaining talent is still the biggest challenge.
"If somebody is in the sales area, they are able to switch jobs between various industries, unlike the situation 10-15 years ago," said Manpower India's Basu.
"They could well be in banking today, insurance tomorrow and selling consumer goods the day after. So it is one pool of people that is being drawn across several sectors."
ALL EXPENSES PAID
As Indians get richer and buy televisions, cars and air conditioners, the Confederation of Indian Industry reckons eight million new factory workers will be needed by 2013.
Eight new airlines launched in the past two years have led to a severe shortage of pilots and the Centre for Asia Pacific Aviation expects 3,000 additional pilots will be needed by 2010.
The challenge has prompted firms to find novel ways to attract and retain talent.
One television news channel handed out 100 cars to senior and middle-ranking employees to prevent poaching by newer, richer channels, while a foreign bank sent some middle-level employees and their families on all-expenses-paid holidays abroad.
ICICI Bank, India's largest private bank, has spent 10 million rupees (US$220,000) working with management institutes to design courses to get graduates ready for industry.
"There are certain skills that are not being taught. Raw material is there but someone has to invest to finish it," said Saurabh Singh, joint general manager with ICICI Bank.
But ultimately, analysts say, it is down to government to ensure that the two million graduates leaving college every year have the appropriate skills for the changing economy.
"The stress should be more on vocational education rather than traditional textbook learning. We are such a populous country, still we have expats flying planes," said Samrendra Kumar, director with human resource firm Calibre India.
"If the trend persists, growth will be at risk since there will not be enough skilled people to sustain the pace."
