Home News Amid Labor Shortages, Indian Businesses Rethink Worker Benefits

Amid Labor Shortages, Indian Businesses Rethink Worker Benefits

Amid Labor Shortages, Indian Businesses Rethink Worker Benefits

As Kerala’s industrial heartland cranks back to life post-lockdown, orders are returning to its printing presses, workshops, and chemical plants. But to bosses’ dismay, many workers are in no hurry to come back from their villages.

“There is a strong reluctance among the workers to return,” said Rajesh Gopalakrishnan, head of an industry association representing 200 small businesses in the southern state.

“Maybe they have jobs in their home states. Or maybe they just felt bad they were not taken care of properly during the lockdown,” he said.

Anxious to plug the shortfall of informal workers and heal the scars left by last year’s strict lockdown, a growing number of Indian companies are offering off-the-books laborers perks normally reserved for payroll staff.

More than 90% of India’s 450-million strong workforce are informal, recruited through tiers of labor contractors with low wages and no social security benefits such as health insurance or pensions.

Almost a quarter of the informal workers are migrants who typically travel from their villages to bigger cities in distant parts of the country to work at brick kilns, garment factories, in hospitality, or at construction sites.

Many of them lost their jobs and savings at the start of the pandemic – their hardship making global headlines as they trekked hundreds of miles (kilometers) to distant villages.

For Rati Forbes, director at Pune-headquartered engineering firm Forbes Marshall, the images of weary, penniless migrant laborers walking home from the cities impelled her company to rethink its relationship with informal workers.

“It was imperative to do something,” she told the Thomson Reuters Foundation in a video call.

“We realized we were employing many of these most vulnerable people and how we also could change some of our approaches.”

Her company is now planning health insurance for daily wage workers, discussing an unemployment cover with other industry leaders, and is contacting employees throughout its supply chains to find out what social security safeguards they have.

‘We Need To Act’

Two billion people work in the informal economy globally, with most of them in emerging and developing countries mainly in South Asia and Southeast Asia, according to a United Nations report, a challenge to achieve the “decent work for all” goal.

For years, informal workers in India have demanded higher wages, regulated work hours, and better living conditions, but until now their voices went largely unheard.

Labour campaigners say it is a race against time to lock in long-overdue improvements to employment terms before the visibility the workers gained during the pandemic vanishes.

“The migrant story is already forgotten and before it totally goes out of the window, we need to act,” said Rajiv Khandelwal, co-founder of migrant rights group Aajeevika Bureau.

The non-profit is part of the Social Compact Project, an initiative backed by Forbes Marshall and other companies that aims to secure social security cover for a million workers by enlisting 150 firms in the cities of Pune, Mumbai, and Ahmedabad.

“The project calls upon industries to improve labor standards in terms of wages, safety, health among others for contract workers. This is not about corporate charity but about core labor policies,” Khandelwal said.

Another major problem for unregistered, unbanked workers during the COVID-19 crisis has been accessing state aid, prompting some of the country’s biggest employers to address the workers’ lack of documentation.

Under an accord signed this month with an association of about 20,000 real estate developers, the state-run postal bank will open zero-balance accounts for about 100,000 informal workers in western Maharashtra state.

“Most banks require documentation that workers don’t have. A bank account would connect them to aid from state welfare,” said Swati Rathi, labor welfare convener at the Confederation of Real Estate Developers’ Association of India (CREDAI).

The construction industry, the biggest employer of informal laborers in the country of 1.3 billion, has also sought to address dire living conditions.

It announced an award for best labor camps and has since circulated booklets on best practices – safe drinking water, clean housing, and entertainment zones – from the 90 entries it received.

“We realized if we have proper facilities and food for them, why would they return to their hometowns,” Rathi said.

Elsewhere, auto parts manufacturer Bosch Chassis System – a Bosch subsidiary in India, engineering firm Sandvik and auto major Tata Motors have rolled out free staff transport, health checks, and other bonuses to protect their informal workforce.

‘No Change In Our Lives’

Still, workers said it could take a long time for such steps to have a significant impact, especially if wages remain low.

Kushu Gope, 20, did not want to return to Pune where he worked at a building site, but he went back after struggling to find work back home in eastern Jharkhand state.

“We had no money so we asked for a 50-rupee ($0.69) hike on our daily wages of 400 rupees. They gave us 20 rupees,” Gope said. “There is no change in our lives. We’re unable to even raise our voice since we need work. We have no choice.”

Money, rather than a job contract and employer social security contributions, is still the biggest draw for most Indian workers.

When the Kochi-based Centre for Migration and Inclusive Development (CMID) decided to connect informal workers to formal jobs offering health cover and pension contributions, it managed to draw a list of 1,500 vacancies but found few takers.

“We placed 70 people, but many dropped out,” said Benoy Peter, CMID executive director.

At the Edayar Small Scale Industries Association in Kerala, Gopalakrishnan said many cash-accustomed workers were skeptical about the formal openings being advertised at local companies, which include employer and employee savings contributions.

“They don’t understand these deductions,” he said. “They want full wages and employers are not able to convey that these deductions will be deposited as savings on their name.”

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