Skilled labour shortage challenges India's infra ambitions

File Photo

Engineering and construction companies have been struggling to meet their skilled labour requirements for a while, but the magnitude of the issue was driven home by industry leader Larsen & Toubro when it revealed on June 26 that it faces a staggering deficit of 25,000 to 30,000 labourers across the group.

This alarming statement comes at a time when India is on course to take its economy towards the $5 trillion mark. The Engineering, Procurement, and Construction (EPC) industry is a critical part of this journey, and the shortage of skilled workers raises concerns over the pace of execution of infrastructure projects.

Industry players say that the construction sector never fully recovered from the exodus of migrant workers during  Covid; many didn’t return, and those who did were not equipped with the required skill sets. Extreme weather conditions such as heatwaves, especially in north India this year, further aggravated the situation. Executives also pointed out that workers who travelled to their hometown for the elections didn't return to the cities.

Skills shortage

India’s construction sector is the second largest employment generator and as of  December  2023, 71 million people were estimated to be employed in  the sector. However, 81 percent of this workforce is unskilled, according to a report from consulting firm Knight Frank, published in August 2023. This is at the root of the problem.

The shortage has prompted companies to up their game on upskilling the workforce by setting up skill centres.  "To address the shortage, we have set up skill centres to train people and get them to sign up for our projects," said SN Subrahmanyan, Managing Director, L&T.

To put things in perspective, L&T alone has an order book of Rs  4,75,809 crore as of March 31, 2024, about 62 percent of which  is in India. The execution of these projects hinges on timely availability of the right talent.

Meanwhile, another EPC player, Afcons Infrastructure,  said that it was facing a severe shortage of hands in its projects, and was focussing on digitising certain operations to address the issue.

"We are also looking to navigate this shortage through  various upskilling initiatives. However, after Covid, there have been a lot of government initiatives for the unemployed in rural areas, so much of the labour force has not come back to the cities," Afcons Managing Director  Paramasivan Srinivasan told Moneycontrol.

Konstelec Engineering,  which primarily provides  EPC services for industrial and infrastructure projects, said that the economic boom in certain states has made the workers there reluctant to relocate.

"Before Covid, labourers were managing in the cities even if the costs were higher, but the pandemic  was an inflection point. Further, economic development in certain states made labourers reluctant to relocate. Also, those who travel to their hometowns during festivals, don't return," said Amish Shah, Director,  Konstelec Engineering.

Shah added that the company has set up small training facilities to upskill the workforce, while also ensuring that workers are provided with facilities such as transportation and accommodation.

Climate change

While the exodus has left construction firms struggling, extreme weather conditions have compounded the problem, resulting in lower worker turnout at project sites.

According to a 2022 World Bank report, nearly 75 per cent of India’s workforce — or 380 million people — is exposed to extreme heat at work. "By 2030, India may account for 34 million of the projected 80 million global job losses from heat stress-associated productivity decline," says the report.

Companies are battling this challenge by handing out energy drinks, timely meals, and ensuring proper rest hours.   "We  have also taken measures to transport people in buses, and provide meals, and health and energy drinks during breaks," said Subrahmanyan.

Shah noted that the company has ramped up spending this year to provide such facilities.