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Skilled labour shortage posing challenges for manufacturers: Survey

An acute shortage of skilled labour is posing major challenges for Indian manufacturers in sectors such as engineering, automotive, electronics, infrastructure, chemical, pharmaceutical and food processing.

According to a survey by workforce and HR management service provider Ultimate Kronos Group covering more than 300 manufacturers, 76% of the organisations reported skilled labour shortage hurting their profitability in 2023 – with 35% defining the impact as “severe”. About 19% reported a minimal impact, while 5% said there was no impact.

The survey findings, shared exclusively with ET, show 28% of the organisations witness production delays on the frontline at least once in every two weeks.

“Employees calling out of shift, labour schedule adjustments and high employee burnout are some of the major challenges faced by companies,” said Sumeet Doshi, country manager, India, at Ultimate Kronos.

About 22% of the organisations have employees calling out of a shift with a less than 24-hour notice at least once in every two weeks, while 29% of them have managers who have to adjust labour schedules to account for employee absences at least once in every two weeks.

About 23% of managers observe signs of employee burnout (e.g., exhaustion, reduced efficacy, cynicism) at least once in every two weeks, shows the survey of HR managers and leaders.High attrition – with 10-20% average attrition at 54% of the organisations surveyed – is one of the major challenges facing the manufacturing sector.The shortage or absence of labour is also leading to an increase in overtime for other workers at almost 72% of the companies surveyed (43% moderate, 29% significant increase).

The demand-supply mismatch of skilled labour is more accentuated at a time when there is an increase in the demand for goods and services (49% moderate, 39% significant increase) in the last one year after the pandemic. The higher demand also necessitated companies to increase production capacity (49% moderate, 36% significant increase).

“However, Indian organisations are taking significant measures to fill labour gaps as 40% of them are doing it through succession planning (developing their existing workforce to assume management roles) and by improving company culture,” said Doshi.

About 39% of them are doing it by offering internships and apprenticeships and 38% through reskilling. While 37% of the surveyed companies are adopting technology to augment or supplement their workforce, 37% of them are also cross-training their employees to fill critical gaps.

About 94% of Indian organisations agree (54% strongly, 40% somewhat) that employees trained to handle a broad set of responsibilities are more productive.

Some of the measures taken by companies to address the labour shortage include assigning mentors (25%), hiring third-party contract workers (33%), partnering with technical or community colleges (37%), and proactively recruiting women (26%).

Priorities for manufacturers over the next 12 months
> 47% – employee wellbeing and safety
> 41% – cyber security
> 40% – digital transformation
> Recruitment (32%), retention (23%)
> Diversity, equity, inclusion (39%)
> Sustainability initiatives (39%
> Strengthening supply chain (35%)
> AI and generative AI (35%)
> Disaster preparedness (27%)



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