The Myth of Demographic Dividend
Across the rich world the well educated people are working longer than the less skilled. In the age group of 62-74 in America, 65% people with a professional degree are still working compared to only 32% of people who didn't go to college. The incomes of the highly skilled are rising at the expense of the unskilled. Ironically the employment rates are falling among younger unskilled people.
In another twenty years more than a billion people will be more than 65. The greying population will largely be in the developed world. The old people to working age population will get severely skewed in many countries. According to The Economist, by 2035 Japan will have 69 old people for every 100 in the 24-65 age group. Germany will have 66 and America will have 44.
The source of labor will have to come from Asia and Africa which will in 2035 have 22 people over 65 for every hundred who are in the 24-65 age group. While we keep flaunting India's demographic dividend we conveniently ignore the dropping rates of employability with passing year. Less than one out of four MBAs is employable. One out of five engineers can claim to be employable. Only one in ten graduates is employable. What are we missing?
Historically, colleges ensured employability. The gap between what the employer needed and what the new hire came in with was met by mandating a certain number of training days for the employees. The world was slow to change. Hence the skills that a person picked up and sharpened lasted a lifetime.
The world outside is changing rapidly. Business is not booming as it did in the pre-dot-com era. Opportunities are like rainbows. They appear for a brief while and suddenly. Those who are agile and skilled get the spoils. By the time the competition has caught on, the opportunity dries up and appears in another unexpected part of the world. That basically means that people have to constantly reskill themselves. The skills have short life spans.
Academic institutions have not changed over the years. While the real world problems are often solved by cross functional teams, colleges and business schools are still organised by the silos that existed decades ago. Information that was once available only through a professor is now available for free online. The role of the professor should reflect this reality. In the absence of that fresh entrants into the workplace will find it harder with each year to be relevant.
Education has worked on the principle of fixed tenure and variable quality. Every student spends the same three or four years to get a degree but there is a wide variation in the level of proficiency between students. The employer on the other hand cares about proficiency and not the time that a person has taken to acquire the skill. Academics argue that employability is not the end goal of education. It is all about opening the mind and making the person a global citizen. That is a luxury only the rich can afford. Ask a fresh MBA who is unable to find a job, what he or she believes to be the purpose of education. We acquire skills so that we can use it.
The world today needs people who can learn to constantly reskill themselves without waiting for their college or employer to nudge them. That is a big mind shift needed.
The workforce for the future will come from Africa and Asia and from countries which have a crumbling education system. It then is no longer a problem that we can leave to the respective countries to deal with. The countries which have the wealthy but ageing populations must invest heavily in boosting up the infrastructure, teacher training and the resources needed to prepare the next generation workforce. The next set of entrepreneurs and innovators are in all these countries which are youth-rich and proficiency-poor. Time for a rethink on how we view the world.-----------------
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First written for The Economic Times dt 20 June 2014