Workforce crunch in industries may lead to skill mismatch

Businesses, especially small and medium-sized enterprises in the industrial hubs of Bengaluru, Mangaluru, as well as sectors like construction, plantation and transportation are staring at a massive crisis, with the reverse migration of workers.

The industrial estates in Bengaluru are facing an acute shortage of labourers after the return of migrants to their natives following the lockdown. An estimated one million workers have left Bengaluru since the beginning of the lockdown in March.

Migrant workers are typically employed in the construction, transportation sectors and also work as domestic workers, daily wage labourers and artisans.

“Currently, the exodus of these personnel will impact the construction segment negatively, including the large projects like National Highways Authority of India. It might positively impact agriculture sector in their home states till the sowing season,” says Lohit Bhatia, President, Indian Staffing Federation (ISF).

The stress in the manufacturing sector in India is not visible currently, as factories now only work on one shift. Shortage in the sectors such as transportation, warehousing or production will be felt only when they resume work in two-three shifts, Bhatia says.

The micro, small and medium enterprises (MSMEs) in Karnataka employ around seven million workers, of which close to 40% are migrants, predominantly seen working in Bengaluru. They come from Uttar Pradesh, Bihar, Rajasthan, and northeastern states.

“The workers from other districts in the state may return in a couple of months. But workers who have gone back to their natives in north and eastern states may not return immediately,” says R Raju, President, Karnataka Small Scale Industries Association (Kassia).

He says the government, NGOs and trade associations should focus on conducting skill development courses in the state to prepare local youth, especially from rural areas, to fill the gap. “We cannot expect the entire migrant workforce to return until the coronavirus is controlled and eradicated,” Raju adds.

Most of the daily wage earners don’t have direct relationship with the employers, which is another reason they will not return immediately, says Rituparna Chakraborty, co-founder, Teamlease Services. “There is a fear psychosis everywhere. No incentive package will make them come back immediately. The problem of workforce shortage will continue over the next four to five months,” she says.

Worker ecosystem

As economic activity ramps up, labour shortage will become visible and painful. This might lead to some sectors hiring workers from unrelated spaces, like delivery functions in e-commerce companies, gig workers, where wage rates might come under pressure. “Temporarily this may be beneficial for the workers who are still left in the cities. However, it will lead to added cost to doing business,” Bhatia says.

The shortage of workers also prompted the state government to cancel special trains arranged to transport migrants. The government even tried to persuade migrant workers to stay back in the state and get back to work. In the construction sector, large real estate developers have arranged special camps for their workers and provided them with food, water, essential items so that they don’t leave their place of work.

“The employers are facing several challenges to restart their business, especially retaining workers. The reverse migration will lead to wage escalation. They may even face mismatch in finding skilled workers for a temporary period of time,” Rituparna adds.

According to ISF, larger companies will resort to giving benefits including providing extended insurance beyond the ESIC cover to offset the fear that the pandemic has created, especially Covid-19 being projected as a “city virus”.

The current situation may turn into a blessing in disguise for the government to effectively create an environment of ‘total employment solution’, where large industrial or construction activities are supported by worker ecosystem
that provides not just livelihood, but also food, security, transport, healthcare and sanitised environment to stay, besides work. Lower medical issues and better attendance shall ensure higher productivity at these units, Bhatia adds.