Labor Shortage Leaves L&T Grappling With Worker Relocation Challenges
The construction industry is grappling with significant labor shortages, driven by workers’ reluctance to relocate for jobs. S N Subrahmanyan, chairman and managing director of Larsen & Toubro (L&T), recently highlighted these issues, emphasizing how welfare schemes have created comfortable lives for many laborers, discouraging them from moving.
Subrahmanyan asserted at the CII Mystic South Global Linkages Summit 2025 held in Chennai, "Labor is not willing to move for opportunities. Maybe their local economy is doing well, maybe it is due to the various government schemes." These remarks reflect the realities faced by the construction sector amid changing worker attitudes, signaling the need for companies to rethink their strategies to attract talent.
L&T currently employs around 400,000 laborers but deals with high attrition rates, necessitating the recruitment of approximately 1.6 million workers annually. This situation paints a picture of persistent challenges for construction companies, where labor shortages hinder the timely execution of projects. Subrahmanyan mentioned, "Imagine mobilising 1.6 million people every year."
One of the significant factors contributing to this reluctance is the array of welfare initiatives provided by the Indian government. Programs such as Jan Dhan bank accounts, Direct Benefit Transfers (DBT), the Garib Kalyan Yojana, and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) offer financial stability and make it less appealing for laborers to leave their rural homes. "If you tell techies to come to the office, he says bye," Subrahmanyan added, illustrating how these sentiments extend beyond construction laborers to other sectors like IT, where remote work remains highly preferred.
Subrahmanyan recounted his early career at L&T, noting the stark differences between then and now. "When I joined L&T in 1983, my boss said, if you are from Chennai, you go to Delhi and work. Today, if I take a guy from Chennai and tell him to go to Delhi and work, he says bye," he recalled. This shift signifies the expectations of today’s workforce, which increasingly prioritizes comfort and work-life balance over career mobility.
To tackle these workforce issues, L&T has established a dedicated department, termed 'HR for Labour.' "So we have created a separate department called HR for Labour which does not exist in the company but it does exist. And sometimes I even sit on it," Subrahmanyan stated, underscoring the urgency with which L&T is responding to its staffing challenges.
The issue of labor shortage is not new to L&T, but it has become more pronounced amid changing economic conditions and workers' preferences. Subrahmanyan attributed this trend to the improving economy, stating, "Workers prefer jobs abroad, especially those offering salaries three to 3.5 times higher than what they would earn locally." Many laborers now view opportunities outside India, particularly in the Middle East, as particularly attractive.
During discussions, Subrahmanyan also revealed L&T's innovative measures to engage laborers. He explained how traditional methods of hiring have evolved, now utilizing digital communication to connect with carpenters and other workers who can select assignments based on their interests. “We had to adapt,” he commented, reflecting on how companies must innovate to attract workers.
Despite these innovations, he noted, persuading workers to take up assignments remains difficult. Flexibility seems to be increasingly on the agenda as the younger workforce expresses their reluctance to relocate or return to offline work environments. This has prompted discussions about flexible policies, as older generations struggle to adjust to these changing demands.
Subrahmanyan recently faced backlash for his comments on promoting longer work hours, insisting on adopting 90-hour work weeks for increased productivity. He defended the need for hard work, especially as India seeks to compete with global economic powers. "If I can make you work on Sundays, I will be more happy because I work on Sundays," he stated, drawing criticism as workers question the sustainability of such demands alongside their personal lives.
Despite the turmoil, L&T remains focused on building its workforce for the demands of major infrastructure projects. Subrahmanyan mentioned initiatives like partnering with Industrial Training Institutes (ITIs) to skill workers and community efforts through Corporate Social Responsibility (CSR). He remarked on the high attrition, stating, "We have to employ 4 lakh laborers and the attrition rate is three to four times a year..."
Faced with these challenges, L&T is on the lookout to innovate, potentially moving toward methods such as 3D concrete printing to cope with labor shortages. This shift, though costly, may be necessary to maintain competitiveness within the construction industry.
L&T's strategy reflects broader trends within many industries grappling with similar mobilization challenges, emphasizing the need for companies to adapt to the modern workforce's expectations for flexibility and quality of life. The dialogue initiated by Subrahmanyan will likely influence how businesses strategically approach labor relations and mobilization as they work to shape the future of work.
Engaging younger generations might mean embracing new opportunities, offering remote work options, or providing incentives tied to government welfare schemes to encourage laborers to reconsider relocation. The onus now lies with companies like L&T to reshape traditional practices and accommodate the workforce's changing paradigm.