Not many countries present their people with a surprise pay increase. But that is exactly what India has just done by bestowing a 23 percent one time “raise” on 10 million government workers and pensioners throughout the country. An estimated 4.7 million government employees and 5.3 million pensioners stand to benefit from the pay hike, which was recommended by a government commission that meets once every ten years.
Although approved by Prime Minister Narendra Modi as a means of boosting consumer spending, the move will put considerable stress on India's government budget and is not without some risk. Inflation is currently under control at roughly 5%, but increased consumer spending—the increase will cost the central government an estimated $15 billion during the current financial year-could push prices up.
The monetary supplement will be backdated to January 1 and will increase the minimum salary for a government employee from 7,000 rupees ($100) per month to 18,000 ($270) per month. Cabinet secretaries and other top employees will be paid 225,000 rupees ($3,300) per month.
The “raise” is one of India’s latest endeavors to work with the country’s population which has been growing phenomenally and is expected to continue to do so. By 2020, economists predict that there will be 900 million people of working age and the average age of its citizens will fall to 29. Two years later, it will surpass China to become the world's most populous country.
Tens of millions of young people enter the workforce in India each year and the Indian government believes that these workers will provide the key for lifting millions out of poverty and could help to finally unlock India's vast potential.
If this is ever going to happen, it is of paramount importance for the country to provide immediate training to its workers. According to Ernst & Young, only 2% of India's workers have received formal skills training, compared with 68% in the U.K., 75% in Germany and 96% in South Korea.
The Royal Institution of Chartered Surveyors points to India's education and professional development system which has not kept pace with economic growth and is in "dire need for reform" and that the quality of training offered in most colleges is not at par with the high demands generated by tech industries. An example of industry scarcities can be found in the engineering industry where in 2010, nearly 4 million civil engineers were needed but only 509,000 professionals had the right skills for the jobs. By 2020, India will have only 778,000 civil engineers for 4.6 million slots. Among architects, India will have only 17% of the 427,000 professionals it needs in 2020.
Despite Prime Minister Narendra Modi efforts to provide workers with training by recruiting skilled instructors, supplementing training courses and turning old schools into learning centers, the most pressing need seems to be in primary education. Pupils in India are expected to perform two-digit subtraction by the age of seven, but only 50% are able to correctly count up to 100. Only 30% of the same students are able to read a text designed for five-year-olds.
With this sort of education, it will be hard pressed for most students to find the jobs they want, which surprisingly, is not with Google, Apple and Facebook but rather with the country's central bank, the Reserve Bank of India which currently is one of the country's most desirable employers.