A labour shortage in Pune’s industrial belt has begun to affect operations and productivity. The manufacturing and construction industries have been hit the most with labour moving back home and not returning.
Deepak Karandikar, managing director and CEO of Praditi Press Parts and managing partner of Fine Fittings, said MSMEs have faced the brunt of the labour shortage, and the situation is becoming grave. He used to have a workforce of 180 and 90 in two of his units. He is now down to 120 and 45 in both units. The workforce is drastically down because labour has not returned, as if 100 go back, only 30 return, says Karandikar.
Workers now expect a 30% hike to switch jobs. The gas shortage, more opportunities closer to their homes, and state elections have contributed to this shortage. He has seen a 3x increase in labour costs in the last four years. OEMs are unwilling to consider these challenges or offer higher pricing for auto parts, and continue to pass the burden of rising costs to MSMEs, points out Karandikar. Many units are considering shutting shop and monetising assets, rather than the daily battles to keep operations going, he adds. Larger companies can absorb rising costs, but the 19,500 SME units in the region, each employing around 30-50 workers, are finding it tough, adds Karandikar.
Incentives vs. Attrition
Electric vehicle company, Omega Seiki Mobility, which has a plant in Chakan, has seen a 40-50% drop in labour in the last couple of months. According to Uday Narang, founder of Omega Seiki, the shortage of labour is hurting production. They are now offering daily cash incentives of Rs 200 per day to workers, apart from regular wages, to incentivise workers to return to work.
Omega Seiki has also started offering meals twice a day to help workers faced with gas shortages and rising food costs. Omega Seiki has no issues with demand remaining strong and the market can absorb all they can manufacture, but the worker shortage is hurting them, and production is down to 70-80%, Naranga said. Fears of a Covid-like situation have had a psychological impact on the migrant labour force, and they prefer returning home rather than struggling here, he points out.
Even larger OEMs are faced with similar challenges. Prasan Firodia, managing director, Force Motors, said the labour shortage situation got aggravated with a combination of the election and gas availability. There is a shortage of both skilled and unskilled labour, and the situation was severe last month, Firodia said. The company has a unit in Tamil Nadu, which was affected by the state elections and labour returning home. The company could not deliver as much as they would have liked despite demand holding strong and orders in hand. Firodia is hopeful the situation will improve in the next 10-15 days.
Cascading Impacts
Apart from the manufacturing sector, the construction industry is being challenged. According to Kapil Gandhi, managing director, Sigma One Universal, and Convenor, CREDAI Maharashtra, the labour shortage across construction sites has intensified. “Stoppage of supply of essential raw materials due to the cascading effect of the west Asia war leading to irregular work continuity, shortages in LPG supply affecting daily cooking and basic living conditions for workers and seasonal migration patterns further amplified during the election period in multiple states and disruption in Ready Mix Concrete plant operations in Pune have together, forced a large section of the construction workforce to temporarily return to their native places or shift to sectors offering more stable continuity of work and living support,” Gandhi said.
Even a short-term disruption in labour availability has a cascading impact on project execution, productivity and timelines, Gandhi said. “Once the labour movement begins at scale, remobilising skilled manpower becomes both time-consuming and expensive, particularly at a time when developers are already facing increased material and logistics costs due to the ongoing war”, Gandhi said.
Karandikar believes the way out for him will be to automate, use AI and do everything possible to reduce dependence on labour. He is willing to pay more for those who choose to stay. The government will have to help by offering `Ease of Living’ for workers, such as providing last-mile transport in industrial clusters, better living conditions and making it worthwhile to return, he adds.