Estimating the Educational Structure of the Labour Force in the Economy for the Target Year
The educational levels of persons within each occupational structure for the base year are noted. For instance, service workers may be either 1-year certificate holders or diploma holders with 2 to 3 years of technical education. Further, the area of workers would be different depending on the area of specialization pursued (e.g. secretarial practice, radiology, photography, hotel management, etc.).
Proportion of each level and type of education within each occupational category needs to be computed. In conjunction with the results of the exercises obtained earlier in step 4, the requirement of the number and type of educated workers can be estimated for the target year. In sum, the steps involved in forecasting demand for educated manpower are: fixing the level of GDP or national output for the target year, distribution of this GDP across economic sectors, determining labour productivity by economic sectors, assessing the occupational structure in each economic sector, and estimating the educational structure of the labour force.
The MRP technique became quite popular among planners though it has certain limitations. The limitations are rooted in the nature of assumptions made. One of the assumptions is that the state of technology will remain stagnant. If this assumption is belied, that is if new technologies enter the market or innovations and adaptations are effected in the existing technologies, then these developments would be accompanied by substitutions between labour and technology. For example, modernisation of the Amber Charakha or indigenous spinning machine may bring large-scale changes in the handloom industry. It may carry spin-off effects on textile and manufacturing industries. This would disturb the estimates of the demand for manpower. Another assumption that is on a slippery ground concerns the investments in the economy.
In a mixed economy as that in India it is not feasible to speculate on the investment potentials and plans for diversification of the private sector. They tilt the economic balance and thus hamper the estimates of the manpower plans. Still, with all the reservations, MRP technique remains a sophisticated and systematic method of manpower forecasting/planning.