Over the past few months, I have been meeting business owners and managers whose decisions lead to job creation. Across industries, sectors and firm sizes these business leaders say that they would automate any and every job that they can.
This decision maker’s bias for automation – even for jobs paying minimum wages – is for two reasons. The labor laws in the country is one of them and the laws are indeed numerous, restrictive and illogical. However, it was the other reason that surprised me – the perceived unreliability of an Indian employee. Employer after employer complained about the high turnover and about synchronized leaves.
Consider this tale of a manager in charge of a warehouse in Mumbai. More than half of their employees come from rural Maharashtra. These employees live twenty people to a room, two and a half hour commute away from the place of work. They survive on a diet of Vada pav and chai while performing strenuous physical labor. At the end of three months they are physically sick in addition to being homesick. So they go home to recuperate and come back to look for a new job when their savings run out. The resultant high turnover means high training costs for the company. Also, the inexperienced replacements make more mistakes making their customers unhappy.
The problem is not very easy for the company to fix. Their business model depends on paying minimum wage. Additionally, it is not clear that paying slightly more would help the situation. In a city like Mumbai reasonable accommodation is unreasonably costly. There is also the issue of the attitude of many young employees towards lifestyle choices. For example, the company experimented with opening a canteen, which served a simple but more nutritious lunch. But the experiment failed, as the employees were not ready to spend the less than twenty Rupees that were being charged.
The issue of synchronized leaves was described to be by a Chief Executive of a manufacturing firm. The company has outsourced the buffing part of their production process to a contractor. The contractor’s employees go back to their villages during the months of April and May to help harvest their crops. This ‘mass bunk’ during the two summer months, means that their production falls by more than thirty percent and they have to stock up inventory in the previous months. This stocking up increases their working capital costs, and hence increases the incentives to automate that job.
Another business owner of a small manufacturing unit in Rajasthan had a similar story to tell. His unskilled and semi skilled workers come from nearby villages and it is expected that they would not come to work during Gauri (the twenty one day period before Dipawali).
This synchronized leave phenomenon has been a recurring theme in my discussions. Many workers are from villages and have strong connections to their farmland. They absolutely have to go back home at certain times of the year for important festivals and to help with the crops. The timing of these ‘mass bunks’ depends on the cropping pattern in their villages and on timing of festivals, which in turn is linked to harvests.
This unreliability of employees, stemming from high turnover and synchronized leaves is problematic for businesses. The employers have to incur higher costs as well as deal with irate customers. This means that decision maker are constantly looking for ways to automate away jobs at all levels even when twenty five Million people turn working age every year.
Just to be clear, I am not judging the choices made by the employees. If I had to work at a repetitive job, far away from home, living in bad conditions and commuting four to five hours a day, I would also do my best to save enough so that I could go home. The fact that most employees on minimum wages get very little respect would only add to my urgency. But it does mean that as an economy, we are automating jobs faster than we otherwise would.
It is not clear what, if anything, we can do about this. Making housing better and cheaper in centers of employment should help. As should convenient, high speed and cheap transport solutions to and from places of work. An out of the box solution could be to somehow increase the dignity of labor. A manager working for a company that employed many minimum wage employees told me that they are able to reduce their turnover ‘just’ by treating their employees with dignity. Maybe there is way of societally increasing the dignity of minimum wage labor?
What do you think? Are you a business owner / decision maker who gets frustrated with the high turnover in her company? Have you tried policies that have worked?
(Yogesh Upadhyaya is one of the founders of AskHow India. Blogs are personal views.)
 For a comprehensive discussion on which laws impact job creation, read India’s BigGovernment: The Intrusive State & How It’s Hurting Us by Vivek Kaul
 Buffing is a finishing process for smoothening a surface. It is not very easy to automate for finished products of irregular sizes.