Textile firms compete for labour

With the spread of services sector, higher rural incomes and job creation schemes, workers opt for alternatives

The textile industry, whose fortunes had started to improve due to a fall in the rupee, faces a new hurdle —shortage of labour.

In the past six months, the severe shortage here has resulted in a 10-15 per cent increase in cost. The industry has started to see a migration of skilled and unskilled labourers to their home towns and villages, as they now find work closer to home. The attrition rate in the sector is around seven to eight per cent.

“It is the unskilled labour which has seen a bigger attrition rate, as they now find job opportunities closer home, due to the growing rural economy,” said Rahul Mehta, president, The Clothing Manufacturers Association.

In areas around Mumbai, skilled labourers were paid Rs 7,500-8,000 a month; now, it has crossed Rs 10,000 a month. For unskilled labour, it has risen from Rs 5,000-6,000 a month to Rs 7,500-8,000. “Textiles is no longer an employers’ market; it is now an employees’ market,” said Mitesh Shah, vice-president of corporate finance at Mandhana Industries.

Employees’ market now
This has pushed companies to raise wages and offer other benefits to retain labourers. Earlier, these incentives were only offered by major  ones but now even those in the small and medium sectors have been forced to offer incentives for labourers to stay back. There are offers of subsidised or even free meals, plus accommodation. Many have also started to offer a bonus if an employee gets others to join the company. Also, offers of health checks; some have also begun to offer insurance.

What has also started to impact the industry is the attitude of the new generation. Many are reasonably educated and have better job opportunities as sales people or in mall management, were the educational qualifications required are not very high.

This reverse migration has also impelled many to consider shifting their production base to Bihar or Chhattisgarh, where most of the labourers come from.

Need for shift
“The industry is growing and there is a huge shortage of skilled labourers. It will now have to invest in training workers, as well as motivating them to stay,” said D K Nair, secretary general, Confederation of Indian Textile Industry.

State social welfare programmes, notably the central government’s national rural job guarantee scheme, coupled with less tedious jobs created by the growth of the services sector such as hotel and tourism, has brought more prosperity to rural India. With the consequent reverse migration of labourers from city to the hinterland, this is set to affect the manufacturing sector adversely, Nair added.

This has also caused the cost of production of textile goods to go up by 12-15 per cent in recent months, as mentioned earlier. Analysts say this won’t affect India’s competitive edge, as the falling rupee favours textile companies. The rupee is still lower by 20 per cent compared to last year.