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Labour crisis may worsen, but developers are learning to live with it

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Labour crisis may worsen, but developers are learning to live with it

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The property market will have to make peace with the COVID-induced labour shortage prevalent across the country and look to work around it, say real estate developers.

Labour crisis may worsen, but developers are learning to live with it
The property market will have to make peace with the COVID-induced labour shortage prevalent across the country and look to work around it, say real estate developers.
One of the methods at play is the mass re-skilling of existing construction labour, according to Niranjan Hiranandani, President, NAREDCO.
“Barring a minuscule percentage, construction labour may not turn to project sites -- thanks to a fear factor,” said Hiranandani.
“This opens up an opportunity to re-skill and train existing labour, which will help reduce dependency on existing labour," he added.
Hiranandani admitted that adapting to the new normal of post-COVID construction and rolling out these training and re-skilling modules for labour will be a huge challenge.
Migrant labour may never return
These observations come in the context of a JLL report, which paints a bleak picture of the labour shortage in the property market.
“Several migrant workers who fled big cities may never return, preferring to eke out a living on marginal farms or find work in nearby towns,” the report said.
“This could deprive industrial centres of labour for a long period," it added.
JLL’s report also claims that nearly 92.5 percent of labourers have already lost up to three weeks of work, while over 80 percent of India’s migrant and daily-wage population fears running out of food before the end of the lockdown, especially in the absence of social security.
Labour shortage will continue for two months
With construction activity resuming at several sites across the country, thanks to the phased lifting of the lockdown, developers will hope to get back to business. However, if JLL’s projections are to be believed, that is easier said than done.
“More than 60 percent of contractors predict that the labour shortage will be there for the next couple of months, which will have a severe impact on the real estate sector,” the report said.
Part of the reason for this is that most construction labour that has managed to make it back to ancestral villages have begun agricultural work. The report makes mention of this too. But developers feel this may not have a long-lasting impact on the industry.
“I believe that labour that is accustomed to working in urban environments will not be entirely able to adapt to the requirements of rural/ agriculture work,” said Hiranandani.
“The trend over the years suggests that mid-June onwards, work will sharply reduce in villages and migrant labour moves back to urban areas. How this scenario plays out in 2020 remains to be seen," he added.
Not all developers are as positive.
“We think the labour shortage will last longer and will run parallel to concerns surrounding uncertainty and health,” said Vijay Verma, CEO, Sun World Group,
“It may take up to six months and it will depend on medical advancements to counter COVID-19," he further said.
Wage-disparity between urban & rural towns inevitable
The industry believes that one of the incentives that could bring construction labour back to metropolises is the inherent difference in wages between these cities and villages.
“Labourers have returned to their homes, because of these difficult times but predicting a long-term pattern is not really a viable way to move forward,” said Ashish Bhutani, CEO, Bhutani Infra.
“The higher pay-scale that metropolitan cities offer to this section will always be attractive enough to bring them back to construction sites. I don’t see sourcing labourer as a future challenge," he added.
Retain labour, keep business going
Irrespective of whether labour will be back or choose to stay back in villages, the consensus seems to be quite simple: developers that hold on labour will stand to register improved construction timelines.
At Kathputli Colony, the first in-situ PPP slum-redevelopment project undertaken between Raheja Developers, DDA and the Government of India, work is already underway after the easing of lockdown restrictions. The developer says the first phase of the project will be complete in 120 days — commendable projections at a time when construction has ground to a halt.
“We are taking care of all protocols and directions issued by various government authorities and are setting an example in terms of the speed of construction underway at the project site,” said Navin M Raheja, CMD, Raheja Developers.
“Hundreds of workers were given accommodation within the complex with mess facilities serving breakfast, lunch, evening refreshments and dinner,” Raheja further said.
“Labour is now motivated to work overtime and fast-track the project’s completion. We may be able to deliver the first batch of houses in the next 120 days," he added.
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