SMEs blame NREGA for labour woes

Top Stories

»	Union Budget falls on Saturday this year, stock exchanges to remain open
»	Demat accounts in India hit record 185 million in 2024
»	Equity fund inflows in India surge over 14 pc to Rs 41,156 cr in Dec
»	Indian firms aiming to surpass global rivals in adoption of future technologies: WEF
»	Democracy ingrained in our lives: PM Modi at PBD convention

Saurabh Gupta | 07 May, 2011
Small and medium enterprises (SMEs) have blamed the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) for shortage of labour, which has led to increase in input cost of the products and eating into profit margins.

"Now a days there is scarcity of labourers by 25 to 30 percent in SMEs. There is a high percentage of unskilled labour, which forms the core of employee recruitment in the local small and medium enterprise sector, 50 to 60 percent of which comes from Uttar Pradesh and Bihar," Said N. Singhal, Chapter Chairman of Indian Industries Association (IIA) Ghaziabad.

According to IIA officials, the erstwhile labour has either opted for the steady employment under the MNREGA or taken up higher paying avenues in the reality sector.

"The increased labour costs are in part, a side-effect of the government's efforts to ensure some paid work for rural households under its Mahatma Gandhi National Rural Employment Guarantee Act or MNREGA, which guarantees 100 days of paid employment a year," Singhal added.

There has been a 25-30 percent fall in the number of availability of workers in SME sector in the past year. Data available on the ministry's website shows that 6.39 lakh works were completed under the rural employment guarantee scheme in 2010-11 and 47 lakh works were in progress.

SMEs have somehow managed to stay above the line with local manpower, but filling the gap is becoming increasingly difficult for them, say SME players.

"Bihar is riding high on growth rate of 11 percent. And so possibly big entrepreneurs are attracted towards Bihar to set up large projects and in turn create many job opportunities for the local population," said Anil Jain a local manufacturer of auto components in Ghaziabad.

However he recognizes the need for composite development of all the states in favour of leveled national growth. He regrets the fact that SMEs' loss has not been accounted for in the in the priority list of states or the central government.

"People of Bihar have gone back to Bihar. Opportunities and work in native place have encouraged them to work there instead of migrating to other states for better opportunities," said Prashant Agarwal manufacturer of artificial jewelry in Bareilly.

According to the IIA, workers are getting Rs. 130 and a minimum of 100 days employment in a year at their native place. "Earlier they got Rs. 50 to 60 without any job security. They generally earn Rs. 3500-4000 a month here working in a SME unit. So the earning is similar, but livelihood is much cheaper in the native state," said Singhal.

Being the backbone of economy, SMEs always have demand for migrant labour, but the pay is largely same throughout the year. So labourers opt wisely for better options. Now with opportunities being created in poor states, reverse migration is slowly becoming the norm, he added.