Indian migrant workers fled lockdown but now factories offer free travel, food and housing to lure them back
- Businesses are reopening after growth forecasts suggested the economy was heading for its worst performance in decades
- But there’s a shortage of labour, adding to challenges for companies and pushing up their costs
While some companies are promising benefits such as free travel tickets, housing and food to draw workers to urban areas, others are managing by hiring new faces from nearby locations. Some are trying a mix of both.
“We have offered food and other incentives to woo them back to sites,” said V.V. Benugopal, country manager with Linfox Logistics India, a unit of Australia’s Linfox Group.
The company is also skilling a new workforce to mitigate potential delays in return of the migrant labour and arranging buses for workers’ transport, he said.
The result is a shortage of labour. It’s adding to challenges for companies and pushing up their labour costs as they try to match incentives that are being provided by the government back in their rural homes.
“The shortage of labour has affected the construction projects which will slightly delay the completion,” said Rajan Bandelkar, president of the National Real Estate Development Council’s Maharashtra unit.
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The realty body is trying to bring back the workers, including by air, he said.
Finance Minister Nirmala Sitharaman in March announced free food, fuel and cash transfers to workers and farmers, in addition to providing jobs to the poor in rural areas, for three months. Modi last week extended the free food programme until November.
Freebies from the government aren’t the only factor keeping workers from returning to their previous jobs in cities. By staying in their villages, they are saving big on rent, which makes a sizeable dent on their earnings in urban centres.
In the absence of those benefits, they will eventually return to work, said Sudeep Sen, business head for industrial manufacturing and engineering at TeamLease Services, one of India’s largest staffing companies.
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For now, the efforts of companies to bring them back seem to be yielding some results. Indian Railways’ train services to various cities from Uttar Pradesh and Bihar – home to the bulk of migrant workers’ population – are running full, according to a report in The Times of India.
India’s jobless rate dropped to 11 per cent in June after hovering above 23 per cent in the previous two months, according to data from the Centre for Monitoring Indian Economy. That’s in part due to the return of some workers after factories reopened, and partly because of the government stepping up spending on its jobs programme, the research firm’s managing director Mahesh Vyas wrote in Business Standard.
Workers get paid 202 rupees (US$2.71) for a day’s labour under the rural jobs programme and they are guaranteed at least 100 days of employment in a year. Modi’s government increased this year’s allocation for the scheme by 400 billion rupees.
“I had more than 500 migrant labourers working in various plants,” said M.K. Hamsa, founder of Southern Plywood Group company in the state of Kerala, one of Asia’s biggest plywood manufacturing hubs. “I am willing to offer food and other incentives for those wanting to return.”
Protocols related to social distancing and higher spend on getting and retaining talent are worrying companies about the costs of doing business when consumption, which is the bedrock of the economy, has already taken a hit.
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“Focus is also on hiring and training local talent available,” said TeamLease’s Sen.
There’s an increase of as much as 10 per cent in hiring costs, which would push up operating costs in the coming months.
“Reset and restart came at an additional cost with facilitation of safety, social distancing preparation.”
The impact is so severe on some companies that they had to scale down their business plans.
“All migrant labourers left from our international ship repair facility and dry dock site,” said Jose V.J., director of finance at state-run Cochin Shipyard. “The delay has forced us to slash our capital expenditure plans by half.”
