Cover Story

Too few good men wanted

June 2012
The manpower crunch in the construction industry is not only acute but looks set to worsen; the efforts of a clutch of industry members can at best overcome their own hiring challenges. More trial is in the offing unless labour-related policies are given a makeover, finds Charu Bahri.

The woes of the construction industry are multiplying. In-spite of the brakes being applied on the number of infrastructure jobs being awarded, there has been no respite from the pressing manpower situation that has become more pronounced in the past several years. The supply crunch cuts across all levels of employment, fuelling the incessant upward march of employment costs and making it challenging to maintain workmanship standards. And, the situation seems poised to slide even further.

Bad to worse

As Dr PR Swarup, Director General, Construction Industry Development Council, says, "The labour crunch is quite severe. There is a shortage of personnel at all levels."

IMaCS (ICRA Management Consulting Services), a leading management consulting firm, estimates that the infrastructure and real-estate sectors employ 480 lakh people at present. Five years hence, the industry is expected to employ 640 lakh people. Four-fifths of this incremental demand would be people educated only up to Standard X or below, that is, men and women employed as un-skilled or very minimally skilled labour at construction sites. With the industry already facing a paucity of unskilled labour, this begs the question: Where will the additional people come from?

DP Singh, General Manager-Human Resources, C&C Constructions, attributes the current scarcity to the National Rural Employment Guarantee Act (NREGA) – the job guarantee programme that provides 100 days of employment to one member of each of 4.1 crore households. "With the introduction of NREGA, people now prefer to stay in their native place rather than migrate for work," he says. "We conducted an internal survey that shows that NREGA has substantially reduced the flow of labour to Tier-I and -II cities and even remote project locations. By assuring minimum wages, the act has also raised the cost of unskilled and semi-skilled labour and raised wage benchmarks all round."

Labour woes

The industry speaks in unison about this problem. "The scarcity of unskilled workers is very severe, primarily owing to NREGA," rues BNV Ramana, AGM-Human Resources, Consolidated Construction Consortium Ltd (CCCL). "We used to tap migrant labour from Bihar, Bengal, Orissa and Gujarat, but such labour is now far fewer in number."

"The labour crunch is causing reeling pressure on developers," notes Percy S Chowdhry, Director, Rustomjee, and Founder, Rustomjee Academy of Global Careers. "In the last couple of years, this shortage has resulted in significant project delays and associated cost overruns along with denting project profitability. One of the reasons for this is the success of the national employment programmes. Fewer construction workers from Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan are migrating to cities like Mumbai. Wage rates have increased significantly to keep labour from deserting construction projects. On the other hand, the lack of approvals is slowing down some realty projects and labour is purposely staying away from such sites."

And according to Amitabh Mundhra, Director, Simplex Infrastructures Ltd, "A lot of the labour available to construction companies is only to be had part-time. Labourers return to their native lands where they absorb themselves with agricultural activities during the harvesting season. This aggravates the scarcity."

Policy review

If the current situation is grim, what does the future hold? And, is the pan-industry plea for help being heard? Sure, construction barons acknowledge that populist socialist policies play a role in empowering the poor in India. Some tweaking of NREGA, however, seems in order, given the wider ramifications of the spiralling costs of industry inputs.

According to Neeraj Bansal, Director, Advisory, KPMG, "NREGA could be improvised upon to become a win-win scheme for labour and the industry. This would happen if the scheme were to be implemented in a PPP model where construction companies are invited to take up projects in defined geographic areas, employing NREGA-registered labour for the project under implementation."

M Sairam, Head-Education & Skills Practice, IMaCS, believes the profiling of NREGA rolls and the fundamental skill-building and up-skilling of suitable trainees amongst these should be taken up in earnest. "There will always be people who desire to relocate to work in the construction industry," he reasons. "Also, the industry as a whole is increasingly making use of more technology, which minimises the need for unskilled labour and increases the need for skilled labour. In future, we estimate that the number of persons employed on a site of comparable size and activity will fall further vis-à-vis the present, and the demand for more complex skills will grow."

Call it a move up the value chain, or perhaps a step towards working conditions existing in advanced nations where the concept of unskilled labour is virtually non-existent.

Manpower transition

A few companies are already making the transition. On the one hand, since 2008, Rustomjee has been training construction workers through the Rustomjee Academy of Global Careers (See box for details) centres in Kurla, Dahisar and Dahanu and adopted industrial training institute (ITI) centres at Khar, Karjat and Gadchiroli. Unskilled candidates are trained to work as semi-skilled manpower, and the semi-skilled are trained into highly skilled manpower. Thus, individuals are being provided an opportunity to climb the manpower value chain. Also, this training helps Rustomjee tide over the availability of diploma and degree holders from ITIs and vocational institutes, who lack on-the-job training and technical skills. This necessitates the company to invest time and money in an extended industry induction, usually lasting six to 12 months, and in on-the-job training to cover the aspects of execution of work at a site and teach them about the company's quality standards. "We source a lot of our manpower from this academy," says Chowdhry.

On the other hand, Rustomjee is adopting less labour-intensive mechanised ways. "We use Mivan shuttering to increase the efficiency of the slab cycle, UPVC windows to reduce costs and time taken for marble work as well as enhance output, and boom pumps to reduce manpower needed for placement at larger sites," he adds. "Boom pumps also increase labour productivity and enhance safety."

Tradesmen deficit

A focus on skilling could widen the slab comprising skilled labour or tradesmen – equipment operators, electricians, welders, masons, plumbers, carpenters – that currently makes up one-seventh of the industry workforce. Newer categories of skilled labour could emerge, such as skills in using pre-fabricated components, high-rise construction skills and comprehensive construction solution skills. Also, the number of tradesmen with erstwhile niche skills could grow, like manpower with shuttering skills, which Varughese George, Senior General Manager, Human Resource, BE Billimoria & Co Ltd, says are scarce, as are those with masonry skills. "Experienced construction equipment operators are hard to find," adds Singh.

"The industry sorely needs greater opportunities for youth to get trained to become heavy equipment operators such as crane, stone crusher, road roller operators, etc," observes Dr Manoj Kulshrestha, Associate Professor in Civil Engineering, School of Engineering and Technology, IGNOU; and Project Coordinator, IGNOU-CIDC Construction Education & Training Project. "Such operators and persons trained in shuttering carpentry and bar-bending are required for almost every kind of infrastructure project and at high-rise, real-estate construction sites. Real-estate projects also face an acute shortage of skilled masons."

Permanent solution

It's a tough call. Affordability is a major issue plaguing construction education and training courses. Fees must be kept minimal as takers are from the lower middle and lower classes of society. So far, the education system has had its eyes on more lucrative graduate and postgraduate programmes that lead to better paying jobs. "Education institutes look at the returns. They see little incentive in establishing institutes for construction education and training at the trade level. Also, the trades covered by the ITIs are mostly oriented to the manufacturing sector – welding, turning and fitting courses that are less relevant for the construction industry – while electricians and plumbers are mainly needed only for real-estate projects, which do not constitute much for the construction industry as a whole," adds Dr Kulshrestha, who believes that the certification and skill upgrade of existing workers is a huge issue as well. When IGNOU and CIDC joined hands to launch training programmes for existing workers, learner mobilisation was a challenge. "Labour lacks motivation to improve skills," he adds. "The outcome is that not a considerable number of tradesmen could be trained in the past 15 years."

A sustainable solution would need the industry and academia to join hands en masse to deliver practical training and theoretical knowhow, respectively, to the numbers of industry entrants envi­saged as needed in the coming years. "Companies should cooperate with educational institutes to set up special academies, encourage internships and offer scholarships to positively influence the quality of engineers," suggests Bansal. A commitment to employ only certified manpower would help boost such endeavours.

Self-help

In the absence of industry-academia linkages, a handful of industry players are overcoming the scarcity of skilled tradesmen by conducting their own training programmes. CCCL's training programme for school dropouts and illiterate youth from across the country in skills such as masonry, carpentry, survey, electrical and mechanics, offers training and board and lodge during the period for free. "We have budgeted for the training of up to 250 youth annually and consider this part of our social responsibility," says Ramana. "Trainees are free to take up work anywhere after training; they are not made to sign a service bond with CCCL. On an average, about 40 to 50 per cent of these pass-outs end up working for us."

The shortage of tradesmen can be all the more marked in far-flung areas of the country, where a number of infrastructure projects are being executed. Thanks to Leighton Welspun's Trade Training programme, the company is facing no dearth of such manpower. This programme targets unskilled youth from local communities where the company is executing projects. The fully funded skill-building initiative is run in partnership with TAFE, Australia, and funded from the company's training budget. Successful candidates earn TAFE's Level 1 Certificate in trades like carpentry, steel fixing, scaffolding, concreting and masonry. Leighton incurs significant costs on Trade Training, but it is a constructive means to reach out to the local community as well as ensuring sufficient skilled labour and positively impacting quality outcomes, turnaround times and site safety as the theory plus practice plus on-the-job training course is tailored to suit the company's needs. Such trained youth are then offered a career opportunity with the company, which includes the chance to work on various projects.

"Many a time, projects can get delayed owing to unavailability of workmen, lack of capability or sheer ignorance amongst workmen of the impact of their actions," says Dhananjay Bansod, President, People & Strategy, Leighton Welspun Contractors. "Besides solving this problem, Trade's Training has become a key differentiator for the business as it has ensured a seamless service experience for our clients in terms of quality, efficiency and safety, which represent Leighton standards."

Insufficient engineers

People are the biggest differentiators for a business – all the more when the individuals occupy senior ranks. Training could enhance the availability of middle-ranking supervisory staff, engineers and otherwise. According to Mundhra, "Skilled foremen are hard to find."

Supervisory staff plays a huge role in project implementation. Civil engineers hired as supervisors are expected to develop and stick to preventive maintenance schedules; possess soft skills to give and follow up orders and amicably resolve conflicts; possess general coordination and time management skills; and understand planning, estimation and scheduling, tendering processes, project risks, project legalities and costing. Sadly, most freshers lack all these skills. Engineers hired as project managers struggle to control time and cost overruns. This has far-reaching ramifications for the industry. Chowdhry goes as far as to say, "India has a huge demographic capital. The quality of this human force is a very important element that has a bearing on future industrial growth. It is sad that an insufficient supply of quality skills in the construction sector is hindering economic growth in the country."

Bansal believes that investing in existing employees to offer better-defined career structures, with a greater focus on training and higher salaries where possible, and in in-house academies/centres offering project management training for certifying project managers and leaders, is the need of the hour.

But, it is not only about skills. The numbers fall short as well. Graduate and diploma-certified engineers account for 4 per cent of the industry workforce, and several players are managing with fewer engineers than they optimally need. In Chowdhry's view, the scarcity is as high as half of the present need.

Wage premiums

By 2020, it is estimated that the real-estate sector will require 5 million civil engineers, architects and planners, but the country is expected to produce less than a million of these professionals in the interim. Not to mention that many engineers resist travelling to and being posted at remote locations. Many do not know the native language spoken by locally employed workmen, and this necessitates a careful deployment based on language skills.

As India embarks on a host of ambitious projects across infrastructure segments, contractors are feeling the paucity of engineers possessing niche skill sets. Singh is of the opinion that a lag between technology advancements and practically available skills is seen in engineers. "Industry technological and process advancements have not trickled down to engineers as enhancements to their knowledge base and practical skills," he says. "Barely one or two out of 10 engineers seeking work are employable. Engineers experienced in planning and billing are scarce as are quantity surveyors and quality control engineers."
Bansod observes that specialists like tunnel engineers command a premium and are also hard to retain. Also, engineers with experience in managing complex projects or with commercial acumen command a premium. Sometimes, project managers or experts have to be flown in to fill the gaps in skill sets, which leads to payment of higher wages –"Wage premiums are on average 10 to 15 per cent." "Premium wages are a reality in the industry today, owing to paucity of skilled persons, with the crème demanding pay higher than industry averages," adds Sairam.

Hard reality

Some companies are benefiting from agreements to work in tandem with a foreign partner. C&C Constructions, which has entered into a JV with Isolux Corsan of Spain to establish power transmission lines and electric substations, is benefiting from the advanced knowhow of Spanish engineers. "Such agreements help introduce new technologies," agrees Singh.

Engineer training budgets are mandated over and above such inflows of specialised knowhow. According to Sairam, "Training is an absolute must. While improvements to engineering and other curricula to align the content with industry requirements is the need of the hour, companies must accept that 100 per cent fit candidates are not going to be easily available any time soon."

C&C Constructions has allocated one-fifth of its human resource cost to all sorts of training. On-the-job training is particularly perceived as an effective and cost-saving exercise and advocated for many new hires.

CCCL has a separate budget for the training of full-time employees involving, "Training in practical industry skills sorely lacking in fresh engineering recruits and management development programmes for middle-ranking engineers to help them acquire managerial skills," elaborates Ramana.

Training in soft skills like communication and team building abilities is a priority as well. BE Billimoria conducts internal training for supervisory positions that focuses on technical as well as soft skills. "They are taught to read drawings so they know exactly what instructions to give subordinates and what to look for in the outcomes, that is, how to evaluate the quality of work. Soft skills help them engage more productively with subordinates," shares George. Simplex Infrastructures trains fresh recruits across all levels as well as conducts refresher training for existing employees as per the identified need.

Better hiring

Training needs can be minimised and the highest manpower productivity achieved by hiring 'the right person at the right time and at the right cost'. Optimum placements are challenging in the light of the scarce talent pool. Still, all organisations are going all out to hire the most efficient lot.

"C&C uses traditional methods like the advertising route and referrals for job hires," says Singh. "BE Billimoria sources supervisory and foreman positions from the ITIs in Mumbai, Khargar and Gadchiroli. We have established arrangements with these institutes whereby their students can undergo practical training with us in return for a stipend. Students gain exposure to actual working conditions while we get the opportunity to evaluate their skills. We pick the best from these. ITI pass-outs are good hires as they are sound in theory. We also have an arrangement with a technical training academy to conduct campus interviews. Engineering graduates and post-graduates for middle positions are picked up during campus interviews in engineering colleges. Referrals and the advertorial route are also adopted for senior positions," shares George.

Retention practices

Best hiring practices can help ensure a steady supply of manpower. Jobs must then be made more attractive for hired manpower by providing benefits like insurance, health and social security, in keeping with existing legislations that are usually ignored by unorganised players.

Healthy wage hikes help cement lasting relationships with employees as well. According to Sairam, "Average wage hikes in the past few years have hovered around 15 to 20 per cent. So far, the slowdown has not impacted wage hikes nor impacted job prospects because of the huge order books of the biggest players."

"However," says Bansal, "The increase in construction industry salaries in the past three years has mainly been to attract manpower available as an outcome of reverse migration. However, the increase has been selective and in many cases
not significant in view of the higher cost pressures."

At 20 per cent, CCCL's average pay raise last year was also above the industry average. As Ramana says, "We have made a firm commitment to employees to stick to a salary payment schedule and increment pattern. This means a lot to employees and shows up in their commitment to the company." C&C Constructions has increased its average salaries by 12 to 20 per cent over the last three years. Leighton has offered increments in line with inflation and the infra industry benchmark. "While the construction industry's average hike last year was 12 to 14 per cent, we offered 15 to 30 per cent," reveals George.

Retaining contracted labour depends on best practices to attract and retain these intermediary agencies. "Prompt end-of-week payments keep subcontractors on their toes," says George. "Also, making decent and hygienic living arrangements at the work site is the best motivator for labourers." Labour can also be motivated to perform better by filling the gaps in the skill sets of unskilled workers. Bansal says better facilities and conveniences for workers and greater engagement with labour improve continuity as well. "Providing decent living conditions helps retain labour," affirms Chowdhry. "Overcoming the language barrier (labourers coming in from different states speak their native dialect) is helpful as well. We also provide a crèche facility for our construction workers' children. At Rustomjee Evershine Global City, in Virar, children are given free meals and teachers initiate them into formal learning, get them enrolled in schools and teach them about health and hygiene."

Coping solutions

According to Mundhra, "The present situation in which demand for manpower has outstripped supply is an outcome of the unprecedented high growth across the sector in the past decade. A greater number of companies engaging in training manpower and more institutions being established to expand the applicant pool will yield positive results in time."

"Shortage of talent in the construction sector is a long-term problem, in that it will take time to get resolved," agrees Bansal. But, industry players need short-term solutions to fast-track skill building to facilitate projects in hand. There seems to be no way out for the present but to invest and commit resources to meet their own requirement of skilled manpower. For the time being, at least, each company is fending for itself.

Innovative training sans budgetary allocation

The Rustomjee Academy of Global Careers works on a self-sustainable model. It charges fees but repays the students during on-the-job training. The fees involved are Rs 30,000, and students earn Rs 32,000 over the eight months of training. This model thus eliminates budgetary needs on training and allows the company to engage with more students.

Another Rustomjee CSR initiative involves establishing vocational training programme centres across the country for individuals hailing from families below the poverty line. Individuals undergo theoretical teaching and practical training in trades like carpentry, fitting, and electricals. Around 60 students are provided lodging, boarding and training at one time.

Construction industry: In a league of its own

The infra sector is in a league of its own because of certain peculiarities. First, it has the potential to pull up growth rates, given that the economy's expansion usually trails infra expansion by 250 to 300 basis points. Second, while 15 per cent growth in GDP results in 0.15 per cent increase in jobs, in the construction sector, 1 per cent increase in growth equals 1 per cent growth in jobs. Consequently, the sector's workforce requirement, which is currently one of the largest, is expected to shoot up as spending on infra increases from $500 million in the Eleventh Plan period to $1 trillion during the Twelfth Plan. "Demand for construction professionals across the project management cycle is especially anticipated to rise and in the bargain, push up project costs and risks," observes Neeraj Bansal, Director, Advisory, KPMG.

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