Migrant labour exodus may defer economic growth by a few months

The coronavirus crisis has led to migrant outflows in large numbers. Owing to uncertainty in availability of food and shelter, mass exodus of migrants has left various industries of India in quandary. The challenge will be now be to manage ramped up production without a large chunk of migrant labour workforce along with managing a steep rise in number of Covid-19 cases.

Migrant Labour Workforce Exodus May Defer Economic Growth by Few Months

India finally acknowledges the issue of migrant labourers as the most ignored and contentious talking point. Individuals in our country have been migrating from one place to another in search of livelihood since years. The wrath of COVID-19 has just enlarged the micro-picture. Lakhs of migrant workers started for their homes, clambering on to trains, packed into trucks and buses, by simply cycling, hitchhiking, or walking as the nationwide lockdown started.    

Waging a desperate battle against poverty, they are the invisible millions who live a precarious living as construction workers, painters, food vendors etc that suddenly became jobless in these COVID-19 days. Most of them are daily wage workers living with their families who cannot afford to pay even their house rent during the current spell of unemployment.   

Bhupesh Kumar, a 22-year-old daily wage labourer from Bihar’s Begusarai district and Manoj Barik, a construction worker from the capital of West Bengal, lost their jobs as their respective sectors suspended all services. Not left with many alternatives to feed mouths of their family members, they are now returning to their home states.  

“We have decided to walk all the way to our villages because if we stay here we will die of hunger,” said one labourer. “No hotels or shops are open. At few outlets which sell food, one roti costs Rs 50. We cannot afford it,” he said. Left penniless with the sudden closure of their factories or workplaces, the workers had no option but to trudge home on foot. Thus, there are numerous such stories on roads of clueless labourers willing to reach their destinations.  

Number of affected workers 

No organisation can estimate the actual number of workers affected due to COVID-19. Uncertainty of health, poverty, and security of family members is driving millions of labourers for reverse migration. The country’s economy is run by unorganised workforce but government doesn’t possess the accurate data on them.  

Further, it is difficult to classify people under the category of migrant workers with various forms of workers in it. Roughly India’s migrant workers comprise of daily wage labour, skilled or unskilled workers, local migrants, seasonal migrants, or long distance migrants. According to the census 2011, the total number of internal migrants would be 450 million.  

The number now would be perhaps much larger. On the other hand, latest economic survey report states that 93 per cent of workforce belongs to the unorganised sector. This number was 85 per cent in 2018 according to the NITI Aayog’s report. World Bank states that lockdown has impacted nearly 40 million internal migrants. 

Uttar Pradesh and Bihar reportedly are two states that have witnessed maximum reverse migration. MP, Punjab, Rajasthan are other states that have followed these states in reverse migration. In a latest statement, central government apprised the Supreme Court that around 91 lakh migrants have travelled to their home by different means from 1 to 27 May.  

Solicitor General Tushar Mehta appearing for the apex court informs, “Uttar Pradesh and Bihar account for more than 80 per cent of the migrant workers. The government has said that 40 lakh workers travelled by road, while rest had travelled by trains.” As of now since May 1, more than 44 lakh migrants have been transported to their home states through Shramik Special trains.   

Aviation ministry is also sending people to their home and at least 41,673 people have returned till Tuesday on day two of flight operations. Estimates by CMIE on job loss states that job loss rate plunged to 27.1 per cent making 12.2 crore people jobless just in April. It includes daily wage workers such as hawkers, roadside vendors, construction workers and rickshaw pullers.   

Infographic1-Migrant Labour Workforce Exodus May Defer Economic Growth by Few Months
Re-Opening of sectors and condition of workers 

As we are trying to live along with an unprecedented crisis, sectors are trying to re-open in order to revive the economy. However, reverse migration of labourers has become an additional challenge for sectors that depend heavily on the availability of labour workforce.  

A quick survey on post lockdown business scenario by PHD Chamber of Commerce and Industry asserts the fact. At least, 49 per cent of the respondents stated that retaining full workforce is a key challenge in re-starting industrial operations. As migration still goes on, it has disproportionately impacted real estate, food and hospitality, retail and wholesale, tourism and transport and manufacturing.  

Commenting on the challenge, PHDCCI President D K Aggarwal said, “Labour workforce is critical irrespective of industries. Labourer migration caused by coronavirus outbreak is a major setback for the growth of drooping economy. I assume people going back to their home towns are not going to come back soon. In this view, we are in talks with government and have suggested some measures to change the scenario such as providing them with some kind of livelihood.”   

As PHDCCI mentioned, due to the reverse migration, reopening of the industries can suffer in coming times. A research conducted by McKinsey & Company states that India’s economy has functioned at 49 to 57 per cent of its full activity level in past six weeks.  

Moreover, rating agency CRISIL has predicted a fall of 5 per cent in GDP for the current fiscal along with a staggering contraction of 25 per cent in quarter one. As per the report, about 10 per cent of the GDP could be permanently lost in real terms. Hence, witnessing the growth rates witnessed before the pandemic is unlikely to occur in the next three fiscals.  

Impact of Indian Industries  

Although, economic loss was inevitable but a huge workforce will be required to boost economy when productions ramp up. Reverse migration is therefore a challenge. For instance, in the case of textile industry, cotton is bought in the western parts of India. Yarn is then spun in the north and west, weaving takes place in the south, and apparel is eventually manufactured in clusters of north and south.  

Textile industry consists of around 80 per cent of MSMEs. According to CMAI, textile sector is looking at 1 crore job cuts overall with the imposed lockdown and migrant workers on move.  If the garment industry closes down, it would impact the entire value chain from fabric supply to brand and zipper industry and further to label industry.  

Similarly, the construction industry is the second largest employer in India after agriculture. The sector provides employment to approximately 50 million people. Hence, the workforce comprising primarily of migrant workers play a significant role in this sector. Six states (including Andhra Pradesh, Kerala, Maharashtra, and Tamil Nadu that account for 30 percent of construction activities) rely heavily on migrant construction workers from other states.  

Hurdles in the return of migrants would affect building activity in these states tells McKinsey & Company. However, construction has resumed on most of the project sites after government announced restorative measures and relaxed lockdown in several places. But, the reduced labour capacity and safety norms are definitely impacting project timelines.  

Infographic2-Migrant Labour Workforce Exodus May Defer Economic Growth by Few Months

According to JLL India report ‘Labour Availability on Construction Projects’, more than 60 per cent of the contractors predict that there will be labour shortage for next couple of months.  This will have a severe impact on the entire real estate sector. Moreover, lack of manpower and delays in supplies will potentially impact project budgets.  

It thereafter tells that the lockdown has made migrant workers more vulnerable in many ways and around 92.5 per cent of labourers have already lost one to three weeks of work. Also, more than 80 per cent of the workers have not registered for the social security umbrella. This was especially meant for construction workforce due to lack of awareness. As of now, the bigger challenge will be to bring them back for work while the construction activities resume across various regions.   

Speaking on the topic Dr. Samantak Das, Chief Economist and Head of Research at JLL India says, “Reverse migration is happening from some time now and the real challenge is to bring them back. Real estate experts are all working on re-entry strategies. These will be driven primarily by implementation of strict COVID-19 norms such as minimisation of the touch points, sanitisation and hygiene factor. Few construction sites are already following the norms with whatever workers are left.”  

If there is any divergence in maintaining the norms, the individual or people responsible will be penalised, he informs. Another trend to counter the impact of pandemic is that construction sites cannot allow full capacity of workers to work. The project will be managed in a phased manner, and this again invites job loss. “In my opinion all these factors will lead to at least six months of deferment of construction projects. On the other hand, a lot of investment needs to be done at construction sites to follow COVID-19 norms,” claims Dr. Das.   

With this community of manufacturers is also in dilemma. Facing challenges due to non-availability of labour and concerns over health and safety management on the shop-floor has pushed the production down in various sectors. Due to growing apprehensions during the lockdown, workmen are refraining from attending work. Some shop-floors are left deserted.  

Further, availability and redeployment of contract labour after ending of the lockdown period is a major concern due to a large-scale migration. For instance, Indian mobile phone company Lava has resumed production at its manufacturing facility in Noida. The company has started operating with 20 per cent of its production capacity after receiving an approval from the state authorities. 600 out of its 3500 labourers have resumed work.  

Sanjeev Agarwal, Chief Manufacturing Officer of Lava on resuming factory operations with limited workforce says, “We might face some challenge due to the delayed availability of manpower and materials, but we have sufficient inventory to maintain the pace of our production for the initial period.” As manufacturing of a unit required components, their availability could be a challenge.  

Agarwal then asserts that they are focused on accelerating efforts towards the localisation of components to reduce dependency on other countries.  

Auto-component manufacturers also see labour shortage as a challenge. Vinnie Mehta, Director General of Automotive Component Manufacturers Association of India (ACMA), an apex industry body apprises that automotive component market mostly runs on contractual workers.  

He says the sector comprises 70 per cent of the workforce on contractual basis out of which mostly have gone home. This will affect the sector badly. He adds, “The situation remains fluid for the component sector post lockdown as concerns over commencing operations remains unsettled. It is human for labourers to move back to their families due to coronavirus. But, the challenge arises on their return to shop floors.”  

An EY Report on future of the automotive factories states that the contract labour accounts for more than half of workers in India’s automobile industry. Hence, the lockdown could lead to several complexities around supply of contract labour such as forcing companies to automate and thereby reducing the dependence on contract labour.  

EY India Partner and Automotive Sector Leader Vinay Raghunath confesses, “In a post COVID-19 world, we do expect a continued adherence to social distancing norms. Apart from demand variability, the auto sector will continue to face challenges related to non-availability of labour and concerns on health and safety management on the shop-floor.”  

 Mehta of ACMA believes that the crisis has affected the consumer behaviour extensively. This has resulted in not very bright prospects among customers for buying vehicles. This may affect hiring along with the ongoing labour shortage. “The consumer demand is going to be quite muted. We expect production to cut down while manufacturing will resume with workforce capacity of 10 to 30 per cent on a shop-floor, partly by low consumption and COVID-19 norms,” adds Mehta.    

Once the production ramps up again, the low labour capacity will rattle manufacturers again, tells Mehta.  

In addition to this, sectors such as hospitality and energy are also waiting for the situation to get normal along with hospitality expecting 4 crore jobs losses. The hospitality industry is going through the similar fate as construction with workers migrating to their hometowns.  

Migration of non-technical workers in the energy sector is going to impact industry heavily. According to the CARE Ratings, there will be a delay in project execution due to supply and labour disruptions till the time labour resume work. However, due to the spread of the disease limited O&M staff is providing their services.  

Rise of Corona Cases Due to Migration    

Reverse migration is not only a concern for various sectors and industries but also for state authorities. States are recording a steep rise in number of COVID-19 cases with each time there is an influx of people coming home.   

According to the government data, the number of cases rose between 4 to 10 May from 528 to 707. Out of the 179 infected, 150 were migrant workers, including 41 from Delhi-NCR, 36 from Maharashtra and 35 from Gujarat. India has till now registered more than 7,466 new COVID-19 cases in the past 24 hours. The cases have now climbed to 1,74,000 with 4,971 deaths while 82,370 have been recovered as of 28th May.    

Meanwhile, Supreme Court has directed central and state governments to provide immediate relief measures such as providing food, shelter and travel arrangements free of cost for stranded migrants. It can be rightly said that ineffective relief measures is one of the primary factors behind reverse migration which has further led to proliferation of disease in the states where maximum migration was witnessed.    

World Bank’s report, ‘COVID-19 crisis Through a Migration Lens’ quantifies the magnitude of internal migration in India to about two-and a-half times that of international migration. According to the body, government policy responses to rein in the COVID-19 crisis have largely excluded migrants and their families.  

It further said there is a strong possibility for including migrants in the near-future health strategies of all countries, considering the externalities associated with the health of entire population in the face of a highly contagious pandemic. The pandemic has also highlighted the global shortage of health professionals and an urgent need for long-term investments in medical research and training.


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