For the past couple of years, any conversation with senior executives in India has elicited passionate comment on the sudden lack of manpower in labour-intensive sectors such as construction, hospitality or manufacturing. “There is an acute shortage of labour. People refuse to leave their villages to come work for us,” is a common refrain. Hospitality majors working to create a pan-India footprint with a hotel in every town complain about having no access to subcontracted labour, as do factory owners reliant on a migrant workforce.
Companies say the main culprit is the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA), a government scheme that assures 100 days of paid employment each year to adults in rural households for unskilled manual work. The scheme was launched in 2006, but its effects have only been acutely felt recently.
“NREGA has created a shortage of skilled workers in weaving and processing sectors,” Arun Jariwala, Chairman of the Federation of Indian Art Silk Weaving Industry, told Indian media last year. “The scheme has made employment available in rural areas. Workers are therefore not keen to migrate out of their villages like before.”
Wide disparity
An unending pool of cheap, unskilled labourers has traditionally been tapped to build other people’s fortunes — workers earning a few hundred rupees a day build apartments that sell for as much as Rs120,000 (about Dh7,200) per square foot.
The profit margins fund lavish lifestyles at the top, allowing industry executives to book out the entire Emirates Palace in Abu Dhabi for a wedding celebration, as we saw in 2011. On the other hand, in a cliché of sorts, the workers usually shack up in tarpaulin shanties on construction sites with no running water, cooking on makeshift stoves.
The Confederation of Real Estate Developers’ Associations of India pegs the overall labour shortage at 40 per cent. Jariwala estimates the textile sector has lost 100,000 workers to NREGA from 2007-2012.
But the shortage cuts across sectors. According to a June 2013 survey by consulting firm PWC, about 81 per cent of Indian chief executive officers (CEOs) see the unavailability of key skills as the biggest threat to their growth prospects and want to change their organisation’s talent strategy in the next 12 months.
While an empowered workforce forces employers to examine their policies towards staff, once this is factored into final profitability, the result is higher per capita income. This, in turn, leads to a recharged economy.
Home for lunch
“A few women in our village have not worked as wage labourers since the NREGA was implemented here to build roads and plant trees,” says social worker Asha Kamble in Surli, a village in Maharashtra’s Satara district.
“Instead of walking two to three kilometres to work all day with only a 20-minute break for lunch, they can now find work in their villages. They can go home for lunch and take care of their school-going children. They are not paid cash, but the payment reaches their bank accounts, which means their husbands don’t have access to this money to spend on alcohol. They can earn between Rs200-250 a day as wage labourers, compared to Rs100-150 under NREGA, but prefer the latter, as they actually save more,” she says.
If earning minimum wage for one-third of the year at home is preferable to travelling for work, clearly the immigration offer isn’t good enough. While the nitty-gritties of the scheme’s implementation are under review, there’s little doubt that India, like China — which has introduced the concept of minimum wages — has woken up to inclusive development — even as multinational companies queue up to sell to India’s 1.2-billion-strong consumer market.
“It angers many people that they no longer have access to the cheap labour that feudal and hierarchical systems allow,” says Gomathy Balasubramanian, Assistant Professor, Programme for Noetic Action, Director’s Office, Tata Institute of Social Sciences (TISS). “It suits their interests to create a myth that the policy is flawed, when, in fact, the vision of such projects is to build local resources such as health centres and recover fallow lands for marginal farmers, all towards integrated rural development. It makes the funds available to village-level governing bodies and panchayats instead of being centralised. Its implementation has been limited until now for small projects such as building roads since the framework in terms of local level expertise is being created.”
Deep democracy
Under the thought leadership of its Director, Dr S. Parasuraman, Mumbai-based TISS advises the government on social policy matters. The university has field action programmes across India and sends out fellows armed with concepts such as Deep Democracy. This is a methodology that harnesses collective wisdom to create a framework that allows both central and marginal voices to have a say in the decision-making. Asha Kamble is one of these fellows; her job is not to address the shortage but to ensure everybody is part of the development story.
Many employers in India, whether corporations or farmers, still believe employees are their property. “The older systems are very hierarchical, instead of being networked,” says Varun Talwar, founder of the HR Fund, a venture capital company that bankrolls HR entrepreneurs and pushes them to create networked systems.
“These beliefs were driven by feudal systems. The traditional Indian mindset is very ownership-based — your employer thinks he owns 24 hours of your time and perhaps even the weekends,” he says.
Since its launch in 2011, the Rs600-million HR Fund has attracted HR heads from India’s biggest companies, such as Santrupt Misra, CEO, Carbon Black Business and Director, Group HR of the Aditya Birla Group, Pratik Kumar, Executive Vice-President for HR at Wipro, and Venky Mysore, CEO and MD of Kolkata Knight Riders. In a short time, it has attracted equity participation from many majors, including funding by HDFC bank.
Talwar is one of several working to change things at industry level. “I want to create more networked companies through the HR Fund. If we encourage HR outsourcing, we enable the HR head to focus on strategic, not mundane work. Eventually, she is able to get a seat on the board, influencing the new way of thinking,” he says.
New right-hands
The focus on humans as the most crucial resource for growth — as opposed to factors of supply and demand or financial charts — is a global trend, one that is more noticeable after the economic downturn, says Brad Boyson, Executive Director, Society for Human Resource Management (SHRM), Middle East and Africa. Chief Human Resource Officers (CHROs) have replaced Chief Financial Officers (CFO) as the right-hand men of the CEO. “We are introducing a CHRO networking hub, which is not a very common term yet in this region or India,” says Boyson.
He sees an internal debate in corporate India: “Earlier the trend was to make work more fun, with Silicon-Valley-style branding — foosball tables and Xboxes in offices. Now it is moving towards improving productivity.”
The talent shortage has also forced companies to look inwards, and many larger players have invested in education. B.S. Nagesh, the founder of fashion retail chain, Shoppers Stop, set up Trrain, a not-for-profit organisation to arm front-end retail staff with workplace-relevant skills.
Dipti Rane, Manager Global Business Development, SHRM, attributes some of these changes to demand and supply. “When the Indian economy is growing so fast, HR means leveraging the talent that we have,” she says.
While it may be some time before the benefits of functional HR trickle down to the wage labourer, the thought process across sectors is the same.
IDBI Bank, the world’s tenth largest development bank with a network of more than a thousand branches and nearly 2,000 ATMs, for instance, has teamed up with TISS combining financial inclusion with access to citizenship entitlements. Interns have been placed in nine villages across three states — Maharashtra, Madhya Pradesh and Chhattisgarh — and in the two years the programme has been operational, they have helped create more than 800 savings accounts, says Kamble.
With the Prime Minister’s office, TISS created a programme across universities in nine central Indian states, where each college is a site of action and the fellow an agent of change. Balasubramanian says, “The training is subject-agnostic and can be applied in any complex human system as long as you have commitment.”
Employers are beginning to display that commitment, too. Following a government announcement to link the textile industry with NREGA, industry bodies recommend that skilled workers be paid by both the government and the employer to lure them out of the villages. Plans to train about 1.5 million workers in the sector in the next three years are already being discussed.
