Causes for and potential solutions to the labour crisis in Indian real estate

Ram Kirpal works as a construction worker in Noida, but he returns to his native Bihar during harvest time. Agriculture remains his primary employment. He claims that he only works on building sites in Noida when there is no farming employment available at home.

Then there’s Dwarkadheesh, another Orissa mason worker. Builders in Noida pay him Rs 300 every day, but he is required to send money home. He wants to work in Mumbai, where contractors will pay him Rs 550 per day. His conundrum is that he would wind up paying more money merely to reside in Mumbai.

These two cases highlight a unique issue confronting the real estate industry: a labour shortage, that Indian developers have done nothing to alleviate. All of the labour welfare and training programmes have been a waste of time. Even the CSR (corporate social responsibility) budget has been mostly devoted to attracting and maintaining workers.

Some of the main issues that Indian real estate must overcome to attract sufficient labour are as follows:

• Is labour scarcity a consistent issue throughout marketplaces, or is there a city-wide lack of professionalism?
• Why do particular markets/cities appear to be more susceptible to labour shortages and a lack of trained labour force?
• What must industry as a whole do to avert a labour shortage?

Covid-19 reverse migration exacerbates labour shortages

The reverse migration during the initial wave of the Covid-19 outbreak, post-lockdown, was not handled in a way that allowed workers to return to work. Because project delays are increasingly unavoidable, the labour scarcity is causing a crisis of trust among house purchasers. While it may harm house purchasers’ feelings, it will also harm developers’ bottom lines and profit margins. Vaccination and labour welfare, which should have been an inherent component of CSR, have not progressed past initiatives to generate media attention on the side of developers. 

Although developers acknowledge that the industry is facing a labour crisis, they do not have a specific answer on the table.

Labourers are discouraged by the salary structure.

Presently, labour is employed on a contractual basis via contractors and subcontractors. As a result, there is no stable labour force. Quality and skill sets differ depending on the contractor. Migrant labour is subject to the whims and preferences of these contractors. This technique drastically reduces their compensation.

Skill growth continues to be incredibly sluggish.

According to Vinit Dungarwal, director of AMs Project Consultants, there is a need to solve the labour shortage in India because 70% of Indian office employees are under increased work pressure. In India, there is a labour shortage in many industries, not just real estate. This is caused by a variety of issues such as a shortage of housing, social security, and other necessities.

What can be done about the real estate labour shortage?

The government has promised steps to aid migrant workers’ return, including the mobility of ration cards under the One Nation One Ration Card (ONORC) scheme, which pledges to ensure that they obtain PDS supplies in their metropolitan areas (ration cards are tied to designated fair price shops).

To minimise labour shortages that cause housing projects to be delayed, developers should consider giving upskilling opportunities. Another strategy to encourage migrant labour is to provide higher perks.

Trying to ensure they have a place to stay near the job site or taking care of their children’s educational requirements might go a long way toward building an intimate attachment with the workers and keeping them from leaving.

Industry organisations may also look forward to forming cooperation with the government to solve this issue. For its advantage, the sector should consider upskilling the labour force and offering incentives such as punctuality reimbursement, employment insurance, healthcare benefits, travel costs, higher minimum pay, and production incentives.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.