Labour crunch, not high wages pinches SMEs

Infrastructure projects and employment guarantee programmes have created a scarcity of labour, which has left SMEs with no option but to pay much higher than the minimum wages

Small and medium industrialists in the northern region are not worried by the hikes in minimum wages being announced by state governments at periodic intervals.

Industrialists say it is the shortage of skilled labour that is pinching them more than the wages being offered to unskilled and semi-skilled labourers. Labour costs, they say, comprise 10 per cent of their input cost.

Rajiv Chawla, president of the Faridabad Small Industries Association, says five years back when the minimum wage for unskilled labour in Haryana was raised by 52 per cent – from Rs 2,300 to Rs 3,500 – there was a protest by industrialists in the state, who even approached the courts.

However, Chawla says now industrialists are already paying wages that are well above the minimum wage level.

The minimum wage in Haryana for unskilled labour is Rs 4,967 and for semi-skilled and skilled labour it is Rs 5,097 and Rs 5,227. For semi-skilled labour, Chawla says he is paying salaries as high as Rs 8,000.

Similarly, Bharat Garg, a member of the Haryana Chamber of Commerce and Industry, who is in the aluminum cookware business, says that wage rates for semi-skilled labour in his industry are hovering at Rs 6,000.

The problem, according to Vishnu Goel, also a member of the Haryana Chamber of Commerce and Industry, is that even after paying higher wages, entrepreneurs find it hard to get labour. Raj Bhatia, chairman, CII Haryana State Council, says obtaining skilled labour is a particular challenge for industry in the state.

Infrastructure projects and employment guarantee programmes have created a scarcity of labour, which has left them with no option but to pay much higher than the minimum wages. To tackle the labour shortage problem, industrial units are now focusing on training manpower themselves.

Bharat Garg has carried out some automation in his factory, to reduce his dependence on labour.

Similarly, Rajiv Chawla says he has started a vocational training institute in Faridabad with an intake of 300 students. The students are trained and later absorbed by industry.