SMEs: Factory workers are returning, to labour and an uncertain life – The Economic Times

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Synopsis—-For India Inc, the pandemic is a stark reminder about the gaps in the working conditions of labourers and the issues that need immediate attention.

Like a bolt from the blue, the announcement of the first phase of lockdown caught India’s migrant workers off guard. The rest that followed was nothing short of a human tragedy. The country saw an exodus of migrant workers from the manufacturing hubs of the country, with lakhs taking the long road back to their villages by whatever means of travel possible.

Migrant labourers carrying their essentials, with children on their shoulders, walked for days and most vowed to never return to the big cities. But ten months since, have things changed on the ground?

“The reverse migration back to work is gradually picking up pace since mid-August. Almost 35% of migrant workers are back to their states where they were employed earlier,” says Suchita Dutta, Executive Director, Indian Staffing Federation. Dutta, however, adds that as most workers are from different parts of the country, their return has so far only added slight relief to the pandemic affected productivity across sectors.

Despite industry stakeholders’ best effort, a sizable section of migrant workers continue to be in their native places. The number is not clear as to how many migrants made the journey back home, but in June, the Indian railways stated that it carried 60 lakh passengers in Shramik Specials run since May 1. Scores of migrants also took other means to reach their destinations.

Considering the labour shortages still rampant at many places, not all workers appear to have returned by now. Most of them were not inclined to return before Diwali.

Now, this has had a serious impact on many city-based manufacturing firms that depended on a steady supply of migrant workers for their economic output. The unavailability of skilled labour has, in fact, has now prompted several firms to start the training of locally available manpower to man the machines in factories.

Mixed bag
One takeaway that stood out of the migrant crisis is the fact that it affected each employer differently. With migrant labourers at the very heart of the issue, factors such as the size and location of the enterprise — whether it’s rural or urban based, and more importantly, how near it is to its workforce —played a role in deciding how quickly a firm could overcome this crisis. While big firms with lots of resources at disposal took less time to woo back workers, smaller firms had to bank on personal rapport and goodwill to address the issue.

One advantage that seems to have worked in favour of relatively larger companies is their ability to source workers from their own vicinity. Donear Industries Ltd is one such firm that leverages on this advantage. “Currently, we have resumed operations in full swing with about 70-80% of the workforce… we normally have a steady flow of labour from in and around our factories and therefore once Unlock commenced, factories began running at close to full capacity within a matter of days to weeks,” says Rajendra Agarwal, Managing Director, Donear Industries Ltd.

The Indian Railways ran ‘Shramik Special’ trains to help stranded migrant workers.Similarly, leading engineering company Kirloskar Brothers Limited is an example of firms making use of this strategy. The company boasts of Kirloskarwadi, an industrial township in the Sangli district in Maharashtra, considered to be the second oldest industrial township in India. Sanjay Kirloskar, Chairman and Managing Director, Kirloskar Brothers Limited, maintains that since most of the company’s workforce lives in and around the neighbourhood, the migrant labour issues have not affected its operations significantly. “Our workforce supply is consistent, and our factories have been continuing to operate optimally,” he says.

So, in terms of workers’ availability, what percentage of the workforce is back in the factories? Several firms that ET digital spoke to disclosed that although the workforce is returning, securing pre-Covid level efficiency will take time.

“Our company is going steady with the manpower being steady, almost back to normal. But yes, now there is a constant fear in everyone’s mind. Although the labour force is growing, the efficiency is still not 100%, which is okay since we operate in such stressful times,” says Manish Bansal, Director and CEO of Window Magic, a firm based in Delhi-NCR. Bansal adds that as an organisation, it paid worker salaries. “The work was completely shut for about two months so after resuming we gave a 15-day notice to everyone to return and paid everyone who returned the complete salary for the entire lockdown period,” he adds.

Clearly, if workers are based in and around a factory, it can be helpful in several ways. Citing the non-availability of organised accommodation facilities as a key reason triggering the exodus, Adil Zaidi, Partner, Government and Public Sector, EY India, therefore suggests that industries and various labour departments should have provisions for rental housing facilities for labourers/ workers near industrial areas. Such a strategy would “ensure conducive living conditions for them and create an integrated infra for the industry,” he says.

Quality of jobs
The crux of the issue around migration is related to opportunities of work in the villages and smaller towns of India and the need to escape poverty. The problem with our workforce is closely linked to the nature of jobs itself. “Economic growth has been largely fuelled by internal consumption where we never created ‘good jobs’. Employment has been largely restricted to low-end jobs that do little to uplift the poor,” Nobel laureate Abhijit Banerjee said at the recently held TiE Global Summit.

The situation is worse now with the pandemic leading to large-scale job losses. “People estimate we lost anywhere between 4-20 million god jobs, but I think 20 million is an over estimation since we did not have that many good jobs to begin with. However, what is true is that we have lost a bunch of them,” says Banerjee.

India has plenty of low-skilled jobs which do little to uplift the poor.Growth contributes to poverty reduction, but in India it has been happening through bad jobs, which is in the area of construction, and in the low-end of the service sector. “Till 2012, if you see where the jobs were growing, you would see it was in transportation, food delivery, restaurants and construction. It was a domestic consumption led boom,” says Banerjee. This has meant manufacturing and industries involved around exports are not using a lot of our labour.

The bad jobs, according to Banerjee, are, “Typically, where there isn’t really a lot of potential for skill upgrading. Young people who are 18 or so are going into these jobs, but for a lot of them it’s sort of a dead end. One fact about India that’s rarely emphasized is that if you look at 26-year-olds with 10 years of education, 25% of them are not working. They’re looking for a good job, but they don’t want to settle for what they can get. By the time they are 32, they’re pretty much all employed, because at some point they give up and take a job,” he said, adding that there was no dearth of low-end jobs.

The second aspect about these jobs that makes them a dead-end is that they lack the important infrastructure- social support infrastructure and residential infrastructure. “If you look at where these people stay, they sleep under their trucks, in the shops, in the construction sites. They have very uncomfortable lives and they don’t stick at any job for very long-three months at the most. They are not getting skilled because they are not really in the city for long enough. They work at one job and they get tired of it since the working conditions are horrible, go back to their village to take a rest and then come back. Due to this very short term migration, there isn’t really much investment in skill upgrading,” he said. India’s labour market is characterized by people who get jobs, but not necessarily the ones they want. When the lockdown came into effect, many without any social security or a permanent roof on their head, were the ones to be hammered. Most simply decided to pack up and leave.

The big picture
The pandemic triggered crisis was unprecedented on several counts. Labour providing states like Uttar Pradesh, Bihar etc. faced a massive labour influx, while it left industrialised states high and dry because of an acute shortage of labour. The Indian economy was already sailing against rough tides, and the migrant exodus could not have come at a much worse time.

The Economic Survey of India 2017 states that the magnitude of interstate migration in India was close to 9 million annually during 2011-16. The Census 2011 pegs the total number of internal migrants in the country at a massive 139 million. As per official estimates, Uttar Pradesh and Bihar are the biggest source states, followed by Madhya Pradesh, Punjab, Rajasthan, among others. Highly industrialised states such as Delhi, Maharashtra, Tamil Nadu, Gujarat and Andhra Pradesh remain the top destinations for migrant workers.

As per official estimates, Uttar Pradesh and Bihar are the biggest source states of migrant workers.The country’s manufacturing sector, the bedrock of India Inc, remains top employer for the migrant labourers. India rating research and rating estimates that the country’s manufacturing sector alone employs close to 6 million inter-state migrant workers. Across different states, the manufacturing sector is exposed to a higher risk with MDR (Migrant Dependency Ratio) at 12.86 because of labour shortages driven by the pandemic, says the agency’s recent report. It further classifies Delhi and Haryana as highly vulnerable to reverse labour migration with respective MDRs at 93.52 and 51.74. The manufacturing sector itself is overwhelmingly micro and small in nature, and the jobs available are generally low-skilled in nature.

Hence, given the current state of workforce-related dynamics, industry stakeholders are now delving into factors that could help limit the chances of a repeat of a similar crisis. Experts think the exodus happened primarily because of lack of information dissemination to the bottom of the pyramid, creating a situation of uncertainty among the workers.

“The government could have planned better measures for transport by local bodies working hand in hand with major manufacturers to assess connectivity between factories and workers’ homes,” believes the Donear Industries’ representative.

As a long term solution to the issue, EY India’s Zaidi stresses on the need for strengthening the labour database (migrant/ local) of each region under the Labours Act. Zaidi further suggests linking that database with Aadhaar to ensure a quality database which can be handy in understanding the labour flow and plan how labourers could be provided better employment opportunities with little movement across regions.

Formalisation as the panacea
Among all sectors, the country’s unorganised sector bore the major blow of the migrant crisis. Despite being home to thousands of SME firms dotting nation’s every region, the segment’s adherence to the labour laws and compliances governing hiring and laying off of the employees remains very dismal. The result: businesses within the segment traditionally offered no or very little job security to workers. Unsurprisingly, for most of the migrant populace, the migrant crisis was the one event when employers turned their back on them, leaving them with no option but to return to their far-off villages.

Suggesting a remedy, ISF’s Dutta underlines that India with almost 85% informal labour needs a structural shift/overhaul to move towards formalisation. “The country, which is proud to be the youngest workforce of the world, requires a vital push for formal employment to raise sustainable livelihood through social security protection for over 39 crores informal labour workforce,’’ emphasises Dutta.

Another inconvenient reality that only aggravates this issue is that India is shaped up in such a way that its city-based industrial hotspots always depended on migrant labour. And this dependency appears to remain as it is in the foreseeable future. What’s the way out then?

Zaidi adds that dispersing the economic growth across state/country rather than only a few growth centres should now be a key focus area. In his view, well thought out relocation of industry and services — such as automated industries can be in and around the cities, and the labour-intensive industries can be in tier 2/3 cities, is one idea worth applying.

“The industry must train employees with cross-functional skills to ensure continuity of business operations. As a long-term measure, policymakers must create distributed and equitable opportunities across the country to avoid such occurrences,” he sums up.

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