Personal Finance

Labour shortage provesa challenge in Gujarat

Virendra Pandit | Updated on September 17, 2011 Published on September 17, 2011

With Government schemes increasing job opportunities and wages in rural and semi-urban areas, people prefer to work in their home States.

Gone are the days when migrant labourers from Madhya Pradesh, Rajasthan, Chhattisgarh, Uttar Pradesh or Bihar used to flock to Gujarat in large numbers to get jobs in the western State's booming economy. Gone also are the days of seasonal migration, when these labourers would crowd public transport when they headed home for festivals or returned to their jobs subsequently after that.


Labour shortage, along with high input costs, is a deadly combination that is hitting real estate development in the State, say industry representatives. Rising interest rates, uncertainties in the market on investments, and want of interest among buyers are also increasingly exerting pressure on the realty sector in Gujarat these days, they say.

Government schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGS) and the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) have increased both job opportunities and wage rates in the rural and semi-urban areas of these States to such an extent that the people prefer to work from ‘home' in their respective States, rather than come to industrialised states such as Gujarat.

“Labour shortage is a big issue now, no longer seasonal, but a permanent one. All our 10 realty projects in Gujarat are currently facing this problem, despite daily wages being increased from Rs 80-100 to Rs 180-200 for unskilled labour and Rs 200-250 to Rs 600 per day for skilled labour between 2009 and 2011,” Mr Jateen Gupta, Managing Director, Jaypee ISCON Group, a leading realtor, told Business Line recently.

Most developers, he said, are working only up to 60 per cent of their capacities, and most projects are getting delayed by several months. This, Mr Gupta said, is forcing realtors to mechanise construction work to the maximum extent possible.

“The next five years may see them go independent of labour to a large extent,” he added. Interestingly, despite an increase of 20 per cent in the cost of construction, the projects have become bigger and larger but, at the same time, are getting delayed by 12 to 18 months due to labour scarcity. Mr Rajkumar Pugalia, Partner, NG Group, said that labour contractors, too, are shifting to other jobs as they find it difficult to keep their commitments to realtors to supply labour.


The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has also recently studied this labour crunch, which is, in fact, now affecting all sectors of the economy in Gujarat.

In a recent report, based on ASSOCHAM's interaction with nearly 150 people ranging from builders, contractors, building material manufacturers, traders and real estate consultants, it said that construction projects across the state are getting delayed, cancelled or halted in progress. These days, the realty sector has been jostling not only with steep and steady rise in prices of cement, steel rods, bricks and other input material, but also from severe shortage of approximately 40 per cent skilled construction workers.

Steel, cement and labour alone make for almost 75 per cent of overall construction cost, the report said. Slow progress of real estate and infrastructure industry in the state is another significant reason as to why the migrant workforce prefers staying and working near their native place for better stability compared to unsecured, laborious construction work.

Inflationary pressures leading to an unusual price rise in food and basic cost of living have also pushed the price of labour upwards.

Improvement in locally-generated employment opportunities from government welfare schemes have led to scarcity of labour and increased costs in other areas, said Ms Bhagyesh Soneji, Chairperson of ASSOCHAM Gujarat council.

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