Covid-19 impact: After being locked down, companies now set to suffer labour pain

Mumbai | New Delhi: Entrepreneurs and exporters are struggling to crank up operations just when the government has relaxed stern restrictions, because labourers have imposed a virtual lockdown by returning home in droves.

Apart from labourers anxious to return home after over a month of rough, jobless existence, businesses are also being squeezed by problems of logistics and transportation and financial hardships owing to the lockdown. Industry leaders said April-June quarter would be a washout even for the high and mighty, but would be catastrophic for SMEs. ET spoke to industry leaders across sectors and regions on their struggle to crawl back to life.

“We will have to deal with it by incentivising workers at least for sites that need urgent attention due to onset of monsoon. Hopefully, supply of raw material will smoothen out soon,” said Jaxay Shah, national chairman of CREDAI.

Projects may miss deadlines. “As the supply chain for construction materials is expected to be normalised in the next few weeks, insufficient labour strength could severely impact the construction operations in the weeks to come,” said a spokesperson for Shapoorji Pallonji Engineering & Construction.


‘Manpower a Herculean Task’

Experts said smaller real estate developers may not be able to absorb higher costs of giving incentives as cash flow has dried up.


George Angelo, chief executive of Bisleri, said reverse migration will create shortage of trained labour in industrial centres and put stress on logistics and local distribution. “It will increase the labour costs and impact operating efficiencies in the medium term.”He said migrants faced extreme hardship. “Thousands have become skeptical of their future, and combined with the looming fear of exposure to the pandemic, are returning to their villages.”

“The lack of migrant labour does pose a problem, but we are hopeful that going forward, local labour will make up for the absence of the migrants,” Parle Products category head Mayank Shah said.


The India Cellular & Electronics Association expects 30% normalcy by the end of May. “Departure of labour to their home towns should be avoided by motivating them,” said chairman, Pankaj Mohindroo.

But even 30% normalcy seems difficult. Foxconn has got approval to resume production with 10% workforce, but getting labour is turning out to be a big challenge, said a source.

Manpower was a “herculean task”, said Manu Jain, Xiaomi India head. “We have manpower, yes; sufficient, no … It will take a few weeks to sort it out,” he said.


Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small & Medium Enterprises, said workers won’t return soon because of welfare schemes. “They will not want to come back to cities anytime soon, unless they were making a lot of money,” he said, adding that small businesses would resume with 20-25% activity.

Mukesh Mohan Gupta, president of the Chamber of Indian MSMEs, said small businesses were still facing issues pertaining to social distancing, sanitisation and difficulty in finding labour. “For the labour still present in the cities, lack of public transport is a deterrent for movement to factories … Many businesses are reluctant to start because of fear of inspection by district authorities and subsequent sealing of facilities if things are not found in order,” Gupta said.


“Supply of jams, sauces, juices and purees could be in short supply due to labour shortage and difficulty in getting working capital loans at low interest rates. Retail shelves may dry up soon as manufacturers have stock for only 3-4 weeks,” said Subodh Jindal, president of All India Food Processors’ Association.

Shipments of bulk agricultural commodities from India are choked by labour scarcity at ports. Many migrant workers at big ports in Mundra, Kandla and Nava Shiva want to return home. “In two days, around 10,000 workers engaged at Kandla had registered to return to native states. The reverse migration would halt global shipments for several months,” said Tushar Anam, chairman of V Arjoon Shipping Private Ltd. He said daily dispatches had revived to 30-40 containers from the usual 200-250 containers in the past few weeks.

“Most workers are unlikely to return for the next three months once they reach home. Local leaders in Uttar Pradesh, Bihar and Rajasthan need to appeal to the workers to stay put in their places of work,” said Devendra Shah, MD of Liladhar Pasoo Freight, based in Mumbai. He said the Container Freight Association of India has written to the Centre to prevent reverse migration of workers.

(Nishtha Saluja, Prashant Krar, Danish Khan, Sobia Khan and Faizan Haidar also contributed to this report)

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