Labour pains, the silent crisis undermining India's infra boom

Severe shortage of skilled, unskilled workers threatens to pull emergency brakes on India's industrial engine

- ISHITA AYAN DUTT, AMRITHA PILLAY & SHINE JACOB

For an ambitious India Inc aiming to leap forward, an acute shortage of workers both skilled and unskilledis threatening to hold it back.

Recently, India's largest engineering and construction firm, Larsen & Toubro (L&T), flagged a shortage of 25,00030,000 labourers. The 'sit up and take note' comment from Group Chairman S N Subrahmanyan comes at a time when L&T's clients are accelerating project execution, making the gap more noticeable than ever before.

The talent shortage or skills gap has been a persistent issue in the industry. A marathon general election and extreme heat have only exacerbated the problem. The shortage of skilled labour appears to have hit India's engineering and capital goods firms the hardest. Industry executives attribute the shortage to a mix of India's growing order book and increasing demand, while other factors impact the supply end.

An executive who does not wish to be named says: "Not all labour is skilled, and those we skill, we tend to lose to markets like West Asia due to better pay. Preference for an air-conditioned work environment is another factor impacting labour supply for engineering firms." L&T alone has an outstanding order book exceeding ₹4.75 trillion, last reported for March.

Mind the gap

The shortage in the skilled workforce is a concern, says Jayant Acharya, joint MD and CEO, JSW Steel, India's top producer of the alloy.

"The propensity for labour to work in their areas has increased after the pandemic. Some moved back to vote during elections, and coupled with the heatwave, many didn't return or delayed their return. But we expect this issue to be resolved with the monsoon setting in," Acharya says.

JSW Steel faced an outflow of migrant workers at Vijayanagara in Karnataka, where it is adding 5 million tonnes (mt) of capacity. The company's capacity in India currently stands at 28.2 mt and will increase to 37 mt in 2024-25.