Vocational education, skill training and self-employment: evidence from India’s non-farm sector

ABSTRACT

Does vocational education and skill training induce self-employment remains a significant open policy question in India. A connected question is how workers from different socioeconomic, demographic and educational settings relate their vocational education and skill training with employment type. In this paper, using nationally representative household survey data, we investigate how vocational education and skill training are associated with the uptake of self-employment activities (vis-à-vis wage employment opportunities) in the non-farm sector in India. This paper shows that individuals with vocational training are more likely to engage in self-employment activities than those with wage employment in the non-farm sector in India, with stark socioeconomic and demographic differences. Our results suggest significant gender and caste inequalities in self-employment based on their vocational education and skill training status. We also find some evidence suggesting that youth with vocational training opt for wage employment vis-à-vis self-employment than their older counterparts. Examining socioeconomic and demographic complexities in connecting vocational education and skill training with self-employment in this study aligns with the recent education and labour market policy of the Indian government.

KEYWORDS:

• Vocational education
• skill training
• self-employment
• youth
• non-farm sector

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. The unemployment rate in India, which had fallen to 7.71% in 2010 from a peak of 19.59% in 2002, gradually increased to 11.67% in 2020 (as per International Labour Organization estimates reported in the World Development Indicators; World Bank 2020).

2. The individuals are treated as the self-employed who work as own-account workers and unpaid family workers.

3. The PLFS is an open dataset that is available on the official website of the Ministry of Statistics and Programme Implementation, Government of India (http://mospi.nic.in/unit-level-data-periodic-labour-force-survey-plfs-july-2018-june-2019). The unit-level data is available in the raw format and was extracted by the authors to STATA format for the analysis. As this is a publicly available dataset, ethical clearance was not required to use this data for our study. However, we have given the source of the dataset in the paper. In fact, an important objective of making this data publicly available is to use it for research and to make policy recommendations.

4. For a detailed discussion on sample design, sample size, and the concepts and definitions of some important terms used in the survey, see the Annual report of PLFS 2018–19, National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India.

5. The responses to employment status include: worked in household enterprise (self-employed): own account worker −11, employer-12, worked as helper in household enterprise (unpaid family worker) −21; worked as regular salaried/wage employee −31, worked as casual wage labour: in public works −41, in other types of work −51; did not work but was seeking and/or available for work −81, attended educational institution −91, attended domestic duties only −92, attended domestic duties and was also engaged in free collection of goods (vegetables, roots, firewood, cattle feed, etc.), sewing, tailoring, weaving, etc. for household use −93, rentiers, pensioners, remittance recipients, etc. −94, not able to work due to disability −95, others (including begging, prostitution, etc.) −97.

6. The caste system in India is an old social stratification primarily based on the rituals followed by different groups and their engagements with different occupations. Over time, the discourse of caste has shifted from ritual hierarchy and social discrimination to an instrument to mobilise people for economic and political gain. The caste system in India is classified into four major groups namely Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), and General. It is well recognised that the SC, ST, and OBC households fare relatively poorly in several socio-economic indicators when compared with the general category households. Therefore, SCs, STs, and OBCs are given special treatments by the government of India in many welfare fields like education, health, and employment, etc (Choudhury 2016, 545).

7. According to PLFS 2018–19 survey, the training that is acquired through institutions/organisations and recognised by national certifying bodies, leading to diplomas/certificates and qualifications is considered formal vocational or technical training. Vocational or technical training other than formal training includes that which occurs in daily life, in the family, in the workplace, in communities, and through the interests and activities of individuals, and typically does not lead to certification. Broadly, these are categorised as hereditary, self-learning, learning on the job, and others (NSO 2020).

8. The PLFS data includes households’ usual monthly consumer expenditure (in Indian Rupees). This information was used to calculate the monthly per capita expenditure and the households were then classified into five different quintile groups, that is, Q1 to Q5. While the first quintile (Q1) includes the bottom 20% of the sample, the fifth quintile (Q5) includes the top 20% of the sample in the monthly per capita expenditure (INR). Q1 is treated as the poorest category, whereas Q5 is considered as the richest group. And this is used as a proxy to households’ economic status.

9. We define individuals’ decision either to opt for self-employment or wage employment. In the absence of any job opportunity in the labour market, individuals may be forced to take up self-employment for earning their livelihoods; however, this is an alternative that they decide upon themselves. Some individuals may not take up either self-employment or wage employment unless the quality of jobs available to them matches their expectations. Individuals with entrepreneurial capability may opt for self-employment if they are dissatisfied with the jobs available in the market. In summary, the decision to join the labour market in India is quite complex, and this study interprets it in a limited sense.