Orders flowing in, but not enough hands for SMEs

Chennai-based entrepreneur N A Raghu is a worried soul. Recovering from the downturn is a struggle, but more worryingly, he can’t get enough workers for his boiler audit and related businesses.

“There is a serious shortage of both skilled and unskilled labour,” says Raghu, managing director of Technoplus Services, which has a turnover of around Rs 10 crore a year.

The populist government schemes are a reason.

“The Tamil Nadu government has a scheme where people can get rice at Re 1 a kilo, so a lot of unskilled workers go back to their villages and earn a minimum wage of about Rs 150 a day,” says Raghu.

He isn’t alone. Small and medium enterprises (SMEs) across the country are feeling the pangs.

“In my interaction with SME bodies in Delhi, I found that some labourers are migrating back to where they came from because of schemes like the National Rural Employment Guarantee Scheme (NREGS),” says Parag Patki, chief executive officer of Small & Medium Enterprise Rating Agency of India.

NREGS, introduced by the government in 2005, guarantees 100-days employment in a year to every rural household.
The lack of enough skilled workers is just as worrying.

Purushottam Agwan, who runs an engineering firm in Thane, currently has only two engineers as against eight earlier. “Even during the downturn we needed engineers, but could not find any,” he says.

This is despite the fact that over 6.5 lakh engineers graduate every year from 1,700 colleges affiliated to the All India Council for Technical Education.

Even welders and mechanical draughtsmen are hard to find, notwithstanding the scores of technicians being churned out by industrial training institutes and polytechnics across the country.
“Whoever we train for three years, once he has learnt the job, leaves for a bigger company,” says Raghu, who normally hires people on contractual basis.

SMEs, which employ over 6 crore people, are typically seen as stepping stones to bigger corporates.

An entrepreneur running an auto ancillary firm in Karnataka laments that he is unable to grow his business because of paucity of trained manpower. “There has been a turnaround in orders in the past few months, but I can’t take as many as I would like to because I don’t have many workers,” he says, requesting not to be named. His firm employs 45 people and does business worth Rs 4 crore a year. 

In an attempt to call attention to the issue, finance minister Pranab Mukherjee in his budget speech said the National Skill Development Corporation had approved three projects worth Rs 45 crore to create 10 lakh skilled workers at the rate of 1 lakh a year.

The textile ministry, on its part, plans to train 30 lakh persons over five years.

Entrepreneurs sure hope such measures from the government, coupled with industry efforts, will help ease the manpower crunch, and soon.