India : June May See Easing of Labour Problem

An extension of the country-wide lockdown on account of COVID-19 till May 3 has put a question mark over a key issue across several industries and that is of labour availability. There are certain industry segments that are highly labour-intensive - construction, real estate, manufacturing etc - and there is a dire need to resume these sectors to offset some of the losses that are being incurred because of the lockdown. Industry sources are, however, upbeat that starting June, work can be resumed in some segments and the available labour should be put to good use in such areas.

According to real estate services company Anarock, there are over 44 million labourers working in the construction sector as of financial year 2019-20 (FY2020). Of these, it is reasonable to assume that over 80% or around 35.2 million are migrant workers. Soon after the Prime Minister's announcement of the lockdown on March 24, droves of migrant workers began returning home, while around 20 lakh have been provided shelter across the country.

Speaking to SteelMint, Rajeshwar Burla, Vice-President, ICRA Ratings, said there will be problem in terms of labour availability in April and May but the issue may not last very long, otherwise the delay would have a significant economic impact on the working class if work is not resumed. "Things have come to a standstill and certain packages have been announced by both the state and the Central governments for the working class. The ones who moved back to their home towns may take time to come back. However, from the government's side, there will be efforts to see that work recommences as soon as it is possible to do so," Burla said.

Therefore, he emphasised that, starting June, things should improve as far as labour resources are concerned. However, he clarified, the timing of their availability would coincide with the monsoon season. "But, still, there are certain construction activities which may be carried out during the rainy season, which may not be exposed to the environment and here the available labour could be put to fruitful use. And there are many such works," Burla said. These include building constructions where the superstructure has already been completed. "These need not be private real estate projects but building construction pertaining to the government as well. Thus, there are projects which are not impacted by the monsoons that can be kick-started June onwards," Burla stressed.

Overall, infrastructure would account for a large chunk of construction. Some projects which are remotely located and not in COVID-19 hotspots can be started early using some of the labour currently available in the camps at project sites. Building-based projects along with remotely located projects outside COVID-19 zones where the labour force can immediately start work, would be 45-50% in terms of value, Burla said.

Govt keen to resume construction

Meanwhile, in a recent letter, Ajay Bhalla, the Union Home Secretary, has told all the chief secretaries of states, among other things, that, "Local authorities should facilitate the easy to and fro movement of workers to workplace and back, in respect of all their permitted industrial/commercial activities. Railways, airports, seaports and Customs have already been authorised to issue passes for their staff and contractual labour.

In fact, in a bid to restart construction, which has been completely stalled, Nitin Gadkari, Minister for Road Transport & Highways of India, recently asked ministry officials through a video conference meet to complete pending work such as clearing of dues to contractors and granting project approvals, so that construction work can resume in full swing as soon as the lockdown is lifted.

The road ministry plans to seek the home ministry's nod to resume road maintenance work in areas that are not so densely populated, and at low-risk places, where the number of COVID-19 cases is not large.

Subdued construction

However, Burla said that construction activity will be very subdued because the resumption is coinciding with the monsoons. "But post-monsoon, may be the third quarter (Q3) onwards, things should revert to the earlier level. And, by this time, the labour force should be back in full strength," he said.

Other sources indicated that those migrant labourers who were unable to reach home post the lockdown may want to return to their villages after May 3 (in the event of the lockdown being lifted), to be engaged in farming activities. In such a scenario, shortage of labour can be a challenge even after the lockdown is lifted and this could hurt construction and other activities for some more time, they added.

A source in a merchant miner said in a worst-case scenario, the entire labour force could be back only post the festive season, for various reasons. One is the relief packages and transfer of money into Jan Dhan accounts which would give them a financial buffer. Second is the festive season, which is a slow period for labour-intensive indust