Realty Estate Sector Witnessing Labour Shortage

May 23, 2011

Real estate firms are feeling the pinch of skilled and unskilled labour shortage as infrastructure growth picks up and workers get tapped by retail and other service-oriented industries. Cost of acquiring and retaining talent is going up too. “Delays are high in finishing stage. Shortages of carpenters, painters and electricians are even more severe than masons. It is inevitable that there will be delays in project completion unless the shortfall in these skills is overcome,” said Aroon Raman, vice-chairman of CII-Karnataka & MD of Raman Fibre. Mr Raman says the infrastructure industry right now employs 30 million workers of which 50% are in real estate. In Bangalore alone, the shortfall in people with slightly more advanced skills in the real estate segment including infrastructure creation and minor repair and maintenance projects — both residential and commercial — is expected to be of the order of 50,000 workers.
A World Bank study also says that India is staring at a labour crisis in the construction sector. The supply of skilled and semi-skilled workers will barely keep up with the pace of growth and will fall short by 18-28% under medium growth scenario. However, under a high-growth scenario, the shortage will be to the tune of 55-64% over the next eight years. To boot, contractors are finding it difficult to hire even migrant labourers for projects. “There is problem sourcing people, as these workers are migratory. It has become difficult to retain people too,” said Solomon JP, CEO, LabourNet, a firm that aims at improving earning opportunities of workers in the unorganised sector. And shortage of labourers has hit the construction industry at a time when real estate business is on a rebound. Mr Solomon says the shortage is forcing contractors to pull out workers from one site and park them in another. LabourNet has 20,000 blue-collar workers, majority of whom are employed in the real estate sector. Most of the skilled and unskilled labourers come from Tamil Nadu, Orissa, Rajasthan, Uttar Pradesh, West Bengal and Bihar and North Karnataka.
“Demand surge has consistently outstripped supply. Companies are taking certified people on contract. It is difficult to find skilled workers,” said Rajesh AR, vice-president of Bangalore-based staffing firm, TeamLease Services. To retain talent, builders are loosening their purse strings, upgrading technology, offering joining and retention bonuses, salary payments in advance, bringing labourers from rural areas and providing them accommodation and crèche facilities in the city. The wages have increased by 20% year-on-year. For example, Chartered Housing has taken a small number of electricians, carpenters and plumbers on its payroll and has also set up a team of in-house project management consultants to mitigate these problems, said Balakrishna Hegde, MD, Chartered Housing. The firm has six projects under execution. “Labour will become biggest constraint going ahead. Adopting new technology is the only way to eliminate labour shortage,” said Ravi Ramu, director, Puravankara Projects. The firm has adopted technology where it can complete a single floor in six days and reduce manpower requirements.
Sobha Developers too has set up a skill training institute for blue-collar workers. “Significant spurt in the construction activity is leading to shortage of workers. We train people who are PUC-qualified in our academy for a month and onsite for two months. And we retain most of our workers by offering regular increments,” said JC Sharma, MD, Sobha Developers. The firm, currently, has 11,000 workers onsite and will require an additional 6,500 with new projects coming up.
Nitesh Estate has tied up with multiple contractors to tide over labour shortage. “Shortage of construction workers is an inherent predicament in our industry. It is difficult to hold workers as they are migratory in nature and shuttle between jobs, said a spokesperson. Staffing firms Adecco and TeamLease have also moved in to ameliorate the crisis. “Companies are looking at migrant labour from industrially backward states to fight the shortage,” said Sudhakar Balakrishnan, managing director, Adecco India. Adecco and TeamLease currently have 7,000 and 8,000 blue-collar temps, respectively, on their payrolls across different industries.

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