The growing skill mismatch questions the benefits of India’s ‘demographic dividend’. To tackle this challenge the Prime Minister’s Council for Skill Development set up a man-power target of 500 million skilled workers by 2022. Recently the government abandoned this supply driven target and announced that skill training will be demand driven. What prompted this policy change? Can one incentivize a demand-driven strategy? We argue that if students and workers see the benefits of education and training they would be willing to invest in themselves. Further, if most enterprises see the benefits of conducting training for their employees, there will be no poaching across enterprises. The enterprises will be able to reap the benefits of their investment and would be willing to undertake on-the-job training activities. A demand-driven incentive structure can replace the supply driven approach and help to reduce the skill mismatch and improve employability of workers.
Keywords: Employability, Skill, Education, Gender, Workforce