Only six companies out of 90 spent over 50% of their CSR budget on skill, livelihood development

CSRExcerpts from the report “Enhancing Capabilities, Empowering Lives – CSR in Skills and Livelihood: What are India’s top companies up to?” published by Samhita, and supported by Ambula Cement Foundation, DHLF, Godrej, and UNDP:

With India at the forefront of a ‘demographic dividend’, it is essential for the country to capitalise on the advantage of a young workforce through developing a skilled manpower base. While the corporate sector had always recognized the need for skill development and invested in skilled manpower for their own operations, the introduction of Section 135 of Companies Act, 2013 gave a fillip to their efforts through Corporate Social Responsibility (CSR). Under the ambit of CSR, skilling and livelihood development have appeared to garner considerable interest among companies.

India is currently facing a huge socio-demographic challenge given that majority of its population is in the working age with limited or no skills. As per the Labour Bureau Report 2014, the size of the skilled workforce in India is only 2%, which is extremely low when compared to countries such as China (47%), Japan (80%) and South Korea (96%). It is estimated that by around 2025, 25% of the world’s total workforce will be in India.

It has also been forecasted that the average age of India’s population would be 29 in 2021 as compared to China’s average age of 37, thus giving India a unique advantage of having one of the world’s youngest populations. However, a large young population alone does not guarantee India an advantage. The country needs to ensure that its young workforce is equipped with the skills and knowledge required in a workplace so it can reap the “demographic dividend”.

In order to understand the implementation process of skills and livelihood development programmes, a survey was conducted with approximately 155 non-government organisations (NGOs) involved in the skills and livelihood development space. Detailed interviews were also undertaken with a smaller subset to obtain a more nuanced understanding of the processes.

Overall corporate participation in skills and livelihood development is very high

Ninety out of the top 100 companies reported at least one programme in skills and livelihood development over the last three years. Most industries, apart from media and entertainment and financial services, reported a strong participation of over 75% in skills and livelihood programmes. Public sector undertakings (PSUs) showed a slightly higher involvement in skills and livelihood programmes (96%) than private sector companies (88%).

The high level of participation is not surprising as most companies are well-aware of the desirability of investing in human capital to build and run viable and successful businesses from their own experience. The government’s call to action through the “Skill India”, “Make in India” and “Digital India” campaigns could also have contributed to the high level of interest among companies.

Budget distribution

Budget calculations are based on data reported by 90 companies. Data shows that the amount allocated towards skills and livelihood development programmes accounted for around 12.7% of a company’s total CSR budget on average. Only six companies spent over 50% of their CSR budget in this sector. This reflects the general finding that most companies supported 4-5 causes on average.

The median CSR budget allocated to skills and livelihood development was Rs 3.92 crore with a median spend of 92% in 2015-2016. The budgets varied widely among companies as shown in the table below. Twenty-six companies (29%) reported a budget below Rs 1 crore, 37 companies (41%) had budgets between Rs 1 to 10 crore and 24 companies (27%) between Rs 10 to 50 crore. Three companies (3%), belonging to the IT and banking sectors had budgets above 50 crore, the highest amount being Rs 9,519 crore.

The CSR contribution to skills and livelihood development for the year 2015-16 was slightly more than one-third of the government’s budget towards key skills and livelihood schemes such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), National Skill Development Agency (NSDA), National Rural Livelihoods Mission (NRLM) and National Urban Livelihoods Mission (NULM) – the total CSR contribution amounting to Rs 944 crore, as compared to the government’s budget of Rs 2,618 crore.

CSR programmes are plugging sectoral skill gaps

Out of the 90 companies undertaking vocational trades, seven companies have not published any information on the type of trades supported by them. Hence, the valid total for analysis in this sector is based on information given by 83 companies. The data on types of trade supported indicates that almost all companies supported multiple trades. Based on the quantitative mapping, the top five sectors supported through CSR programmes were agriculture (52%), textiles (mainly sewing) (49%), building, construction and real estate (47%), auto and auto components (37%) and IT and ITES (30%).

While agriculture may not face a shortage of labour, it definitely requires skill enhancement in order to raise productivity — almost all companies (95%) supporting agriculture focused on improving productivity by enhancing the knowledge and skills of the farmers by emphasising on improved practices such as multi-cropping, sowing, irrigation, pest management, poultry and cattle training, among others. However, only 5% (two companies) facilitated market linkages. Enhanced productivity may not lead to income increases for farmers, if market linkages, especially those that reduce the role of middlemen, are not well established.

A few companies recognised the fact that it is not possible to look at agriculture in isolation—water scarcity is a key problem in many parts of India. Thus, their agricultural livelihood programmes were part of larger integrated community development programmes that included promoting better watershed development and management and storage practices; aiming to increase the resilience and productivity of farmers. The predominance of sewing programmes could indicate a worrying trend where certain trades are stereotyped for certain target groups (sewing for women, in this case), with little cognizance of the actual market requirement or value to the trainee’s life.

Strategic orientation is slowly gaining traction in CSR interventions

With 28% of companies (24 out of 83) aligning their CSR in skills and livelihood development to their business in one of the three ways mentioned below, data indicates that while some companies are beginning to think strategically, many others still do not subscribe to this approach. A strategic orientation could be articulated in three ways:

  • Aligning programmes to business objectives
  • Aligning programmes to a company’s core product or service or expertise
  • Aligning programmes to the needs of key stakeholders

Companies that aligned their programmes to their company’s core product, stakeholder or business objective believed that it helped to bring a higher level of rigour and expertise within the skilling ecosystem and also encouraged sustainability as the company saw these interventions as central to its business, and not just as philanthropy. Many companies reported following a dual approach—while the flagship programme was aligned to their expertise and synonymous with their brand, they also undertook more localised programmes in skills in the vicinity of their factories or plants to respond to the community’s needs.

Companies move towards rural areas for imparting skills and livelihood training

Only 57 companies clearly reported the type of geography of their programmes, with six companies mentioning pan-India as the focus areas of their programmes. Thirty companies did not provide any information on this aspect. Available data points towards a mixed pattern, with 25 (44%) companies conducting programmes in only rural regions, 10 (18%) companies conducting programmes exclusively in urban areas and 16 companies (28%) in both rural and urban areas. The same pattern held true for most industries, except for the IT (50%: only urban, 25%: only rural, 25%: both) and Telecom sectors (100%: only urban), where the concentration of skilling programmes was in the urban areas.

Interviews indicated that many companies were actively moving to address the skills gap in rural areas as they believed that urban areas were saturated with programmes. However, a few respondents believed that skills development in India was a predominantly urban phenomenon with urban NGOs running urban operations; there were very few expert NGOs in rural areas.

State-wise distribution of CSR programmes in skills and livelihood development reveals imbalances

Only two companies out of 90 did not publicly disclose the location of their programmes. The “Human Resource Deficits and Surpluses across India” map shows the expected surpluses and deficits in semi-skilled and unskilled workforce per state by 2021/2022, calculated as demand for workers by industry minus supply of workers. Ideally, skilling programmes should focus on states with a surplus of semi-skilled and minimally skilled workers (such as the north-eastern states, Jammu and Kashmir, Jharkhand, Chhattisgarh and Telangana) as these workers would be either under-employed or unemployed, thereby creating a greater need for them to be absorbed in gainful occupation through skilling or upskilling.

However, these are states in which less than 20 companies run skill development programmes individually. Maharashtra, Karnataka and Tamil Nadu were the most popular states for CSR programmes, even though their needs were not as critical. This analysis highlights two conclusions –

  • Essentially, training programmes occur where the need from industry is felt more acutely. Companies also appear reluctant to invest in training in geographies where the challenge of ‘placement’ is higher.
  • States in the north-east, and Jharkhand and Chattisgarh are economically backward, have suffered from political turmoil and unrest and/or geographical isolation and, hence, do not have industrial markets to absorb the labour, leading to a surplus.

Solutions to these are two-fold—increase demand by focusing on developing micro enterprises that can create employment opportunities and simultaneously reduce the supply by undertaking “informed and safe” migration to states with employment opportunities.

CSR programmes in skills and livelihood largely ignore people with disabilities

Of the 88 companies that explicitly mentioned beneficiary groups, most companies reported conducting programmes across a multitude of beneficiaries. The youth (84% companies) and women (70% companies) were common target groups for programmes. On the other hand, only 30% of companies had programmes for people with disabilities. This falls in line with the lack of support received by disabled people in India in general.

Non-financial support by companies was marginal

While every company offering skills and livelihood programmes supported it financially (either covering infrastructure or trainees’ fees or both), only 17% (15 companies) offered non-financial support to the programme and their implementing partners. When provided, nonfinancial support was in the area of curriculum development (10), accommodation (six) and transportation (one) for the duration of the training. In the space of skills and livelihoods, companies have much more to offer than mere financial support. Companies and their industrial associations could leverage their expertise to help develop better curricula in their areas of expertise.

Additionally, companies could also use their cross-industry connections to facilitate trainee placements outside their operation areas. Employees can also play an active role in training or contributing to soft-skills programmes. The nonfinancial contribution of a company needs to be harnessed to ensure that this does not become a missed opportunity.

 Click HERE for the full report


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